Thread by @lillianmli

1) Let's talk about the history of JD.com and its complicated founder Richard Liu - a man who grew up in poverty and arrived in Beijing with 76 eggs.
Today JD.com is worth $110bn and has 3 successful spinouts to its name.

2) Growing up in a small village Jiangsu, Liu had no stable electricity or running water. Meat was a treat served on special occasions, and his grandmother would bribe the butchers with peanuts for a fattier cut each year.

3) In middle school, he took his entire savings of 50 RMB and went to Nanjing by way of Xuzhou. In Nanjing he saw the Jinling Mansion Hotel, a 37-story building, the tallest he had ever seen.
He realised there was an entire world outside of Suqian and he wanted to see it.

4) Studying came naturally to Liu and was accepted into the prestigious Remin University in Beijing. His family were too poor to come up with the money for the train tickets but the entire village chipped in. Those that didn't have money gave him eggs.

Very Hamilton-esque.

5) So the story goes Liu arrived in Beijing with 76 eggs and 500 RMB sewed into his undergarments, and vowed never to ask for money from his family again.
But as a sociology major, he realised quickly his future wasn't destined for cash unless something changed soon.

6) Liu started learning programming in 1993 and then earned money on the side with his new skills. He put his savings to use in his final year, by opening a restaurant with his gf (and later first wife).
Business life was about to deliver its first blows

7) Even though Liu paid above market wages, the chef and waitress stole from the restaurant and forged receipts. The restaurant quickly shut and left Liu in debt but also with the notion that in business, you can't delegate out the operational responsibilities

8) Post university, Liu set up a small stall in Zhongguancun, an electronic bazaar. There he peddled hard disks but quickly realised that consumers wanted specialist high-end goods rather than the cheap electronic commodities that flood the bazaar.

9) 360buy (as it was known at the time) operated on a no-haggling but quality guarantee, and by 2003 it had opened 12 shops around China. Business was good, and Liu was intent on becoming the best electronics retailer in China.
But then, SARS hit China and everything changed

10) Forced to close his 12 shops down but facing mounting inventory challenges, Liu dusted off his programming books and started posting and selling online.
Sales trickled in and 360buy managed to survive. Post SARS Liu kept the online channels and made a discovery.

11) Online sales with almost no overhead had surpassed the sale of most of his offline stores. Liu made the decision there and then to pivot to an online model, shutting down his sites one by one while writing the code for the new website himself.

12) The website steady grew and focused on 3C products (computer, communication, and consumer electronics). In 2007, it raised $10m from Capital Today (after being turned down by every VC firm) rebranded to JD.com and announced that it will own its fulfillment

13) This was unthinkable at the time, even Amazon, so the saying went, didn't have its own logistics structure. Who was JD.com to start such a capital intensive venture?
Liu knew something though, that at the end of the day, owning your operations was a moat

14) It delivered a superior customer experience because your employees cared, it allowed faster turnaround because you owned the structure, and because you were selling electronics, couriers wouldn't steal your packages as often.

15) JD has positioned itself with consumers as a platform for authentic electronic goods and supplement that with speedy delivery service. It's tagline "Authentic Products, Delivered Today" is a dig at Taobao.
Their customers reside in tier 1-2 cities and are mostly male

16) Along the way JD.com has a series of spinouts in the form of JD finance, JD Logistics and JD health. More is also on the way, JD property and JD Cloud are additional pieces. The reasons for this are in another thread.

17) JD.com's strength remains in electronic goods and top tier Chinese cities as its consumer base trade convenience for price. It's held steady in market share against Taobao and PDD across the years but due to the 1P fulfilment structure margins are razor thin.

18) Relative to the marketplace model of Taobao and PDD. JD.com is a digitalized retailer that owns its inventory and uses logistics as a moat. Similar to Amazon, they are their first and best customer before opening these platforms to third parties

19) What seemed like a money burning move in 2007 now seems prescient in 2020 as each e-commerce platform are all building their own fulfilment channel. But how many can reach the scale of JD and how JD can keep growing with such competition is another question

20) Liu is not a simple rags to riches story, his own history with its many ups has also been since checkered with dismissed sexual assault charges, and outcry over his endorsement of 996 work culture.
But the ups and downs of his story is familiar, it's another China tech story