Jul 28, 2020|
In-Depth: Tao Ren: Building JD’s Computer and Digital Products Business Around Customer Experience
by Rachel Liu
Computer and digital products have been an essential part of JD’s business since 1998, when the predecessor of JD, JD Multimedia, was established and selling video-editing hardware, CD burners, and other electronics products was the core business.
Now, JD has grown to become the largest retail platform for computer and digital products in China, and Chinese consumers consistently rank JD as their preferred marketplace for purchasing electronics. This year, Data from the international market research firm IDC showed that JD’s sales ranked No. 1 during this year’s June 18 Grand Promotion (618) in several computer and digital product categories, including laptops, desktops and tablets.
The person leading the computer and digital products business at JD is Tao Ren, one of the company’s youngest executives. Born after 1985, Ren leads one of the most essential business units at JD and manages a team of over 500 people. As the Chinese saying goes: “It’s easier to attack but harder to defend.” Ensuring an already successful business continuously grows is no easy task. Focusing on customer experience and continuously exploring new ways to innovate, Ren is up for the challenge.
A Passion for Computers Since Childhood
Ren has loved computers since he was in primary school. When he was a child, it was rare for Chinese families to have computers at home. During summer and winter vacations, Ren would attend computer classes to learn about computer operations. Although the class was intended for adults, Ren was the only child who attended. He would stay in the classroom all day, even though the classes were only two hours long. Ren majored in automation at university, but his passion for computers never disappeared.
During his junior year, Ren and his friends founded a company, with the university’s support, to sell and install computers for university students. At that time, Ren personally installed about 70% of the company’s orders and provided computer installation training to his employees. “The reason I started the company is very simple – I wanted to provide a better computer shopping experience for my classmates,” said Ren: “At that time, very few people were knowledgeable about computers. Computer salesmen were focused on making money instead of providing good service to customers. People were even afraid to shop for computers because they didn’t want to be misled or taken advantage of. Building my own company allowed me to use my knowledge to provide customers with better products and services.”
Ren’s passion for customer service followed him as he began his career. After graduation, Ren joined Asus, where he managed their offline sales channels. Ren was excited to work in the computer industry since it had always been his passion. However, he felt the offline business model was not ideal. The cost of doing business offline is high, and the distributors’ sole priority was increasing profits, which hurt customer experience. Ren was only dealing with distributors, so it was difficult for him to interact with customers. That’s when Ren decided to focus on e-commerce, and he joined JD in 2012.
Striving for Success with International Partners
Ren felt that his commitment to always providing the best customer experience was aligned with JD’s core values. Since day one, JD has believed that by selling only authentic products and offering the best customer service, they would set themselves apart in a market where counterfeits were sold alongside authentic products. This is also why JD was able to become the leader in the computer industry. However, as time went on, selling popular products was not enough. With an increase in scale and stronger data capabilities, Ren realized that JD could do more.
Many computer brands are located in the US or Europe. In the past, these brands didn’t have any experience in the Chinese market and were slow in answering Chinese consumers’ needs. With deep industry knowledge and the support of data analysis, JD is able to provide insights on what demands customers may have in the future and jointly develop new products with brands.
JD is a strategic partner with several internationally recognized brands, including Intel, Microsoft, Lenovo, Huawei, Dell, HP, and Sony. “When working with international brands, I think of the process like making friends. We are only winning if we are winning together.” said Ren: “Our goal is the same – to always provide the best products and services to our customers. We want to help our partners learn more about China and help them localize their strategies. This has been key to our success in winning so many exclusive partnerships with international brands.”
On July 13th, HP’s gaming laptop OMEN 6 was launched exclusively on JD. On that day, sales of OMEN series laptops increased 11 times y-o-y, and sales of HP products surpassed RMB 100 million. Five years ago, HP launched its first gaming laptop product globally with JD through the C2M (Consumer-to-Manufacturer) model. At that time, JD found that many gamers were demanding laptops with more suitable functions for gaming. This led to JD to work with HP in developing the OMEN series. OMEN series laptops have bigger screens, faster screen refresh rates and shorter response times. Since first launching with JD, the OMEN series has been updated every year, and the newest model quickly sells shortly after the initial product launch. At first, the OMEN series was sold exclusively in the Chinese market, but ever since the release of OMEN 4, the product has also been sold in Europe and the US. This demonstrates that JD’s C2M product is highly recognized by the global market. JD won HP’s “Best WW partner for OMEN by HP Growth” in 2019.
The C2M model can shorten the cultivation period for new products. Typically, a product’s cultivation period lasts about 12 to 18 months. However, JD can reduce that time to 6 months. “That is to say, when some platforms are still testing new products on customers, it has already become a hot-seller on JD,” said Ren: “Through our pre-analysis on customer demand, we already know which products will be a big success once they’re launched.” Compared with the traditional new product development model, JD’s C2M can reduce the research time by 75%, and the circle of new product launching by 67%.
Earlier this year, Ren took his team to Las Vegas to participate in CES, the world’s largest consumer electronics show, and strengthened partnerships with many of JD’s key partners in the industry, including Microsoft, Kingston, and West Digital. Take Microsoft, for example. Since the launch of the Microsoft Surface, JD has helped Microsoft expand in the Chinese market through its supply chain and marketing capabilities. The two companies have been partnering closely during recent years to bring the omnichannel retail experience to Chinese users and have launched the Microsoft Retail Reimagined at JD’s Retail Experience shops in cities including Wuhan, Suzhou and Meizhou.
Another example is Kingston, a brand that partnered with JD over 10 years ago. Sales of Kingston on JD now is hundreds of times higher comparing with that time. “For us, JD is far from just a sales channel.” said Tina Wang, VP Sales & Marketing, Kingston. “It’s also a research platform. JD’s big data provides precise customer profile for us, which allows us to develop or redesign products that customers really need.”
Tearing Down Barriers for Brands in Offline Stores
With the experience of working in offline channels, Ren understands firsthand the pain points of offline computer stores in China. China’s offline stores are not like BestBuy in the US – products here are sold by brands instead of by categories. For example, when a customer enters a store, a salesperson from a specific brand will only focus on showing the products from their own brands, not the products that are the best suited for the customers’ needs. Customers do not feel comfortable in this type of environment, and it makes it difficult for them to find a product they are satisfied with. Ren wants to break the barrier of brands in JD’s offline stores and build a truly customer-centric experience. In these stores, products are displayed by categories, and all products are sourced from JD. A professional sales guide will help customers shop from all of the available products. For Ren, as always, moving offline is about providing an outstanding customer experience.
A better experience is not just for customers in first or second-tier cities, but also lower-tier cities. One of the key strategies for Ren’s team in 2020 is to develop in lower-tier markets. Shopping for electronics products in China’s lower-tier cities is still not an ideal experience. Due to a weak supply chain, customers can only choose from limited types of products, and the price is usually higher after passing through multiple distributors. With JD’s location-based service, customers can select products online and experience the products offline.
Social e-commerce is also adding value to the offline experience. With social ecommerce, sales representatives can recommend products to customers through online chatting. Sales representatives can also answer customers’ questions at any time of the day, which helps build relationships with customers. “In our offline stores, about 40% of sales occur online. We are actually not selling products, but operating customers,” said Ren “I believe the future of retail should be focused on customer relationships, supply chain and technology. This way, we are not making short-term gains by hurting our customers’ interests, but building the business long-term and putting our customers’ interests first.”
A Leader Who Loves to Think
Leading a business with such scale and significance, Ren spends a lot of time thinking about how to make sure the business is always on the right track. He likes to hold meetings for discussion and always opens the meetings up for every team member to join. During the discussion, he likes to use the Socratic method to inspire the team to think thoroughly about one issue by continuously asking them questions. Some team members even feel stressed under his persistent inquiries, but it encourages them to think deeper. Ren is also a passionate learner himself. In 2019, he spent 1,115 hours in total listening to audiobooks. “My team has inherited JD’s values and culture very well, and everyone strives to do their best at work. My job is to take them to the next level by helping them think about the bigger picture, instead of being distracted by day-to-day trivialities.” said Ren.
Ren also values group learning and encourages open communication in the team. He opens his strategy meetings to anyone who wants to join, and every quarter, he holds a two-hour meeting with all team members to share his thoughts and offer feedback. Anyone can ask him questions, even the young graduates who just joined the company. Ren believes this is also a chance for everyone to put their questions on the table, creating an open and fair working environment.
Moving forward, Ren will be focused on improving customer experience and improving supply chain efficiency. He recently formed a supply chain management department that uses sales predictions to help brands make more informed production decisions. JD’s logistics capabilities also lower fulfillment costs and empower brands with customer insights that give them the information necessary to design new products. Ren said: “At first, JD stood out among competitors in the computer industry for transparency and efficiency. Now, to keep leading the industry, we need to build a customer-centric business both online and offline and leverage our advantages, which include our vast amount of products, supply chain efficiency and industry insights, to win the market. I am very confident about what the future holds.”