Nov 24, 2020|
In-depth: JD Boosts the PC Industry with All of Its Competitive Edges
by Kelly Dawson
In recent years, the global market for PCs has steadily declined at a rate of 2% since 2011, thanks to the rise of smart phones and tablets and a longer product life cycle. In this context the global pandemic and associated economic decline could have dealt a fatal blow to the PC industry—and yet many PC brands are seeing a resurgence in 2020, helped by both a renewed need for home office tools and in great part by cooperation with e-commerce platforms like JD.com.
According to the latest data from global market intelligence firm International Data Corporation (IDC), global PC market shipments reached 81.3 million units in the third quarter of the current fiscal year, an increase of 14.6% YoY.
These figures were reflected on JD.com during this year’s Singles Day Grand Promotion: During the first ten minutes of the promotion, sales for ThinkPad and Huawei laptops increased by more than 3 times YoY; and sales of high-end gaming desktop PCs achieved a YoY increase of 120%. Additionally, during the first 30 minutes of this year’s National Day holiday (October 1st to 8th), sales of laptops increased 23 times YoY; and sales of gaming computers increased 400% YoY. When Intel launched a super brand day during that period, the brand sold 10,000 Intel laptops within one minute of opening the sale.
These figures demonstrate how JD’s cooperation with PC brands and other partners are contributing to the real economy, during a period of global economic uncertainty.
Driving this impressive turnaround for the PC industry is the adoption of the Customer-to-Manufacturer (C2M) model, which JD has embraced for its focus on the customer. JD’s C2M initiative leverages the company’s big data insights to jointly develop tailored products with brand partners based on exactly what customers want, as revealed through their shopping behaviors and preferences.
During this year’s Singles Day, more than 60% of PC sales on JD.com were for devices developed through the C2M program. Some successful examples of JD’s C2M cooperation with PC brands include the Dell Inspiron 7000 laptop for designers, which was co-developed by JD and Dell to address a clear customer demand for notebooks with powerful performance at a reasonable price point. JD leveraged big data to identify specific pain points related to other laptops for designers, and worked with Dell to address those issues. Since its launch on JD, the device has been consistently popular.
As Professor Xu Xianchun, director of Tsinghua’s China Data Center (CDC) said of the electronics market, “Whoever has a better understanding of the market and future trends will rise to the top.”
JD is also focused on expanding into lower-tier markets and rural areas, where China’s internet penetration is 46.2%, more than 30% lower than in urban areas, according to a report released by the China Internet Network Information Center (CNNIC) earlier this year.
In these areas, consumers have been slower to warm to an online-only model for electronic devices, preferring to test products first before purchase. In response, JD opened the first computer and digital products experience stores at a university in 2018. Two years later, there are around 700 such JD stores across China, with 90 offline stores opened in April alone. Of these stores, 533 are in 3rd to 6th-tier cities, covering 30 provinces，municipalities and autonomous regions.
JD’s offline computer stores are part of its commitment to omnichannel, which the company believes will likely be the key to long-term success in a rapidly evolving industry. While customers are turning more and more to online shopping, there has also been clear indication that an online-only model is not enough to satisfy customer needs, especially for higher-end electronics products.
One PC brand that has benefited from cooperation with JD’s offline store network is Honor, which saw a sales increase of 200% YoY in JD Computer and Digital experience stores. The stores have created special on-site experience sections showcasing Honor devices. Additionally, JD has leveraged its omnichannel advantages to promote online and offline events on university campuses in lower-tier markets.
JD has also leveraged big data to appeal to consumers in these markets, creating customized products for series including Lenovo’s AIO business-integrated desktop PCs.
Weichang Li, general manager of Lenovo’s PC consumption department, said that Lenovo’s cooperation with JD felt significantly more hands-on than with some previous partners.
“What we talked about the most with foreign supply chain partners was just the price, while the cooperation between JD and Lenovo has always focused on consumers’ demands,” Li said. “That has helped us co-develop products that truly meet consumers’ needs.”
“Additionally, the data analysis provided by JD has brought great help to Lenovo’s product design, and has helped us target consumers more accurately and provide the right products for them,” Li added.
The combination of C2M products specifically targeting this demographic and JD’s offline digital experience stores have proved to be a winning match, enabling JD to give full play to its omnichannel advantages in order to gradually increase penetration in lower-tier markets.
Another way in which JD benefits the real economy is through its individual ownership model for JD Computer and Digital Experience stores, with owners benefiting directly from JD’s enormous resources, including an advanced logistics network, digital marketing tools, livestreaming platform, and more. During JD’s Singles Day promotion, JD Computer and Digital Experience stores reported a sales growth of 207% YoY, effectively boosting consumption in lower-tier markets.
The association with JD also brings brand awareness and a quality guarantee for the offline stores. According to a survey released by iResearch consulting firm earlier this year, JD is rated the most trustworthy e-commerce brand, thanks to product authentication and a highly efficient, reliable logistics network that ensures timely, safe delivery of higher-end products. Global data analysis firm identified JD as the first choice for consumers to buy 3C products (computer, consumer electronics and communication products) during this year’s Singles Day.
Access to offline stores for post-purchase services has also provided peace of mind for consumers who are still acclimating to the online shopping model.
Thanks to these many resources, of JD Computer and Digital Experience stores were able to smoothly navigate the economic slowdown at the height of the pandemic earlier this year. While many PC stores and online channels across the industry saw an uptick in purchases due to an increased need for home office devices, customers soon realized that JD’s self-built advanced logistics network was a major advantage during a time when many companies were experiencing disruption to supply chain and logistics networks.
JD’s logistics network not only ensures reliable delivery—it also increases the speed of deliveries. For example, JD Daojia’s crowdsourced logistics resource Dada Now enables JD’s offline computer stores to offer ultra-fast delivery of high-end products to consumers within a radius of three kilometers. Earlier this year, one store was able to achieve delivery of a Lenovo notebook within 11 minutes of the customer’s purchase.
One individual store owner who benefited directly from JD’s resources during the worst of the pandemic is Zhiling Dou, the owner of a JD Computer and Digital Experience store in Hunchun, Jilin province in northeast China. At the height of the outbreak she turned to livestreaming on JD Live, ultimately increasing her sales to RMB 3.6 million yuan in July, seven times higher than her previous average monthly sales.
“The biggest change after cooperating with JD is that I am delighted see repeat customers who come to my [computer and digital experience] store often, whether they are buying a computer, a mouse, a pair of headsets or even non-relevant categories such as nuts,” another store owner said. “Better yet, now we can always meet their demand quickly because of JD’s comprehensive inventory and fast supply chain capability.”
JD’s successful cooperation with both PC brands and small business owners in its network of JD Computer and Digital Experience stores are a testament to its commitment to integrating the digital economy with the real economy.