In a bid to boost margins, JD.com is reducing salaries for its more than 100,000 deliverymen across the country by shifting to a commission-based payment scheme and reducing benefits.
The news began circulating widely on Chinese professional networking service Maimai over the weekend, the latest development for the e-commerce giant following a series of layoffs, executive resignations, and—most recently—rumors about founder Richard Liu’s impending divorce.
JD.com will replace its couriers’ fixed base salaries with commission-based compensation starting in June, according to Chinese media reports. In the meantime, it will lower contributions to employee housing funds to 7% from 12%, which still meets the minimum 5% set by the government. The shift in compensation could result in wage reductions, as the order target is “a bit hard to complete,” according to anonymous employees quoted by Chinese media.
JD Logistics, the logistics arm of the Beijing-based tech heavyweight, responded on Sunday via its official Weibo account, saying that as the number of orders from business clients increase, the company now looks to adopt “a more standardized salary policy” to reward outstanding employees (our translation).
It also stated that after the adjustment, delivery staff wages will still exceed the industry average, with many deliverymen in the southern regions earning “a monthly salary of more than RMB 8,000 (around $1,190) under the current pilot scheme.”
“As JD Logistics is providing services to more industry clients, we plan to add more than 10,000 headcount this year,” the company said.
JD.com could not be reached by TechNode for comment.
Rumors about repeated rounds of layoffs appeared on Maimai at the start of April and began circulating widely on Sunday. In an internal letter obtained by Chinese media, JD.com said it was eliminating three types of employees, including those who “could not work hard” for any reason, be it health or family.
“Spending cuts are acceptable considering overstaffing at company headquarters. However, couriers should be treated better,” said a netizen named Xue Pan quoted by Chinese media. The company’s “good reputation,” added Xue, was built on its delivery service.
JD.com later confirmed on Maimai that the internal announcement was “misinterpreted without context,” and that it is looking for employees to show initiative to improve their lives while creating a better environment for hard-working employees.
Following recent resignations of the CTO and general counsel, the Chinese e-commerce giant announced last week that Lan Ye, its chief public affairs officer, would be leaving his post for “personal and family reasons” on May 31. This is the latest high-profile departure for the company, which in February announced that it would cut the bottom-performing 10% of executives in 2019.
The Beijing-based online retailer is struggling following the arrest of its founder, 45-year-old internet tycoon Liu, on suspicion of sexually assaulting a 21-year-old female University of Minnesota student in September. US prosecutors announced in December they would not indict Liu due to insufficient evidence. Following the charges, JD.com’s stock has slumped and rumors that Liu and his wife, 26-year-old Zhang Zetian, plan to divorce have been spreading on Chinese social media.