Nov 11, 2020|
In-Depth: JD Omnichannel: The Unchangeable Commitment to Customer Experience
by Ella Kidron
The Singles Day period (November 1st to 11th) is traditionally the time for customers to frantically add products to their shopping carts and compare deals across e-commerce platforms. In recent years, offline stores have also been getting in on the action, taking advantage of heightened consumer willingness to shop. Singles Day at JD, however, is not characterized by being strictly online or offline, but rather is a rich omnichannel experience. No matter where JD customers choose to observe Singles Day, there is a vast array of options available to them, and seamless connectivity across channels.
Omnichannel as a long-term priority
Based on the recognition of the fragmentation of consumer demand, shopping formats are becoming more complex. JD, focused on customer experience from day one, has been putting effort into providing a consistent experience across shopping formats. Chenkai Ling, vice president of JD.com and head of Strategy Development and CEO office, JD Retail, said: “For a retailer, the way to measure success is customer experience. Consumers are getting more sophisticated and have higher demands.” Right now, there are a lot of shopping formats – online, offline, livestreaming, content commerce, and social commerce, just to name a few. “Consumers have a very strong need to have a consistent experience across shopping formats,” said Ling.
JD’s approach to omnichannel is about what customers see and experience for themselves, as well as what happens on the backend that makes processes easier, even when they aren’t visible on the front end. Whether it is fresh food supermarket SEVEN FRESH in Beijing or Wuhan, or mega experience store E-Space in Chongqing, or even inventory integration with a fashion powerhouse like Prada, JD’s omnichannel offerings are backed by a strong supply chain that ensures seamless integration of all shopping moments across categories. Features such as price synchronization ensure that customers can enjoy benefits across channels, adding to the convenience of the experience.
SEVEN FRESH is JD’s high quality fresh food omnichannel offering. During the Singles Day period, JD opened two new SEVEN FRESH stores, one in Beijing’s busy CBD area, and another in the lively Hongshan district of Wuhan, Hubei province. Consumers have the choice to either shop and dine in store, or order for home deliveryin as fast as 30 minutes. JD has opened SEVEN FRESH stores in cities such as Beijing, Tianjin, Guangzhou, Xi’an, and most recently Wuhan. SEVEN FRESH is the offline complement to JD FRESH, the company’s online fresh food business making it possible for consumers to get high quality fresh food no matter where they are.
JD’s SEVEN FRESH in Wuhan, Hubei province
As e-commerce becomes more popular, the question of whether or not offline stores are necessary has become more and more frequent. China, which has the highest penetration rate of e-commerce globally, only stands at 25%, leaving little room to argue about the place of brick-and-mortar in the market. In fact, with the increasing penetration of online, offline has taken on a new role as space for consumers to experience products. In most stores, this “experience” entails a short stint touching a product, maybe getting to test out a few features. This could not be farther from the case at JD E-Space, JD’s 50,000 square meter experience store in Chongqing. The store’s claim to fame is that consumers can try absolutely anything in the store. For example, consumers debating between a few different washing machines are not only welcome but encouraged to take them for a ‘spin’.
This year, JD opened six home appliance flagship stores, including one in Nanjing, Jiangsu province and one in Jiaozuo, Henan province; and most recently one in Kunming, Yunnan province, opened on Singles Day. The store in Kunming is the first of its kind in the city, and represents a significant upgrade over traditional electronics stores in the region. At around 10,000 square meters, these stores function like mini E-Spaces. Earlier this year, JD announced a plan to open 20 JD E-Space Experience Stores in first tier cities (large scale), as well as 300 home appliance flagship stores in prefectural cities on a one-city-one-store basis, and 5,000 stores in towns and villages by 2025. This Singles Day E-Space is offering extended hours from November 10th until the 11th at 3:00 am, enabling customers to shop virtually all night. On November 1st, JD E-Space welcomed over 30,000 customers and saw sales increase 10 times compared with daily average sales in October. About 70% of customers are 25-38 years old.
JD E-Space in Chongqing
JD New Markets
The omnichannel based JD New Markets business is playing a key role in this years’ Singles Day Grand Promotion. Complementary to JD’s online retail and marketplace business, JD New Markets is JD’s B2B2C business. It is committed to serving China’s over 6.8 million offline mom-and-pop stores by supplying quality products and upgrading their traditional offline shops. With over 8,500 brands on the B2B ordering platform, there are already over one million users who purchase goods for their offline stores through JD, among which 70% come from third-tier and below cities. This Singles Day, products from brands such as Lay’s, Mondelēz International, and Three Squirrels (a popular Chinese snack brand) will participate in cross category and brand-specific promotions to provide the best products at the best prices to nationwide store owners. In addition, through the JD Convenience Go mini program on WeChat provided by JD New Markets, shops can bring their operations online and expand their customer coverage.
JD’s Omnichannel Fulfillment supply chain innovation program sources products from offline outlets located near customers, eliminating unnecessary touch points, increasing efficiency while reducing costs. When a consumer places an order online, the platform matches the order with offline supply closest to the customer in real-time, and then arranges for a courier to deliver to the consumer along the most efficient route. Instead of relying solely on the stock in JD’s warehouses, the omnichannel fulfillment platform will calculate which brick and mortar stores nearest to the customer have the items in stock, and then source the inventory from there, both ensuring supply and delivery speed. As of November 4th, JD has achieved one-hour delivery through the cooperation with JDDJ (JD Daojia, China’s leading local on-demand retail platform) in 328 cities.
Life services – buy online, enjoy offline
When consumers look at the JD Auto Service store model, they might only see offline auto repair shops. But there is in fact a complicated supply chain system making the magic happen behind the scenes. With JD Auto Service, a customer can place an order for a part online on JD and select for it to be delivered to the nearest JD Auto Service outlet. Customers don’t have to worry about a heavy rubber tire arriving at their doorstep and lugging it to the repair garage. Plus, there is the added guarantee of JD quality so they can have peace of mind as to the authenticity of the part. The “order online, enjoy services offline” model provinces a one-stop digitally tracked solution for comprehensive automotive and after sales services. From November 1st -7th, the order volume of JD Auto Service car maintenance packages increased 118 times compared with the same period last year.
JD Auto Service
The real estate market has also been a popular omnichannel experience for consumers to enjoy through JD. During the Singles Day period, transaction volume of property viewing services orders at selected offline outlets hand-selected by JD increased over 20%.
JD Health is quickly becoming the go-to destination for consumers’ online drug purchase needs. JD’s omnichannel pharmaceutical products express delivery enables ordering online and delivery to door in as fast as 30 minutes, covering more than 200 cities. On November 1st, the turnover of services increased 14 times compared with the same period last year.
This year, JD pioneered omnichannel in luxury fashion, marrying the rapid logistics service of online with the experience of purchasing something from a top luxury brand. Prada and Miu Miu were the first brands to partner with JD on this project, integrating JD’s inventory with the brands’ internal inventories to bring a wide range of products to JD’s customers. From July 29th to August 13th the program brought an additional 30%-plus in sales to Prada and Miu Miu. Prada’s sales on Chinese Valentine’s Day (July 7th of the lunar calendar) exceeded RMB a million yuan, boosted by the omnichannel cooperation. Customers appreciate the expanded selection as well as seeing that their product came from the Prada or Miu Miu store, giving them yet a further guarantee of authenticity while dampening concerns related to buying luxury online.
From buzzword to everyday phenomenon
Today, omnichannel is a “buzzword” associated with convenience that is popping up across the retail industry more and more. When that level of extraordinary convenience becomes ordinary, the question becomes is it still omnichannel or is it simply just retail? A global October 2019 survey of e-commerce decision makers by Statista and SearchNode revealed that 48% of global e-commerce companies viewed omnichannel as a very important strategic priority for their company in 2020. An additional 31% of companies viewed it as “somewhat important” for 2020.
All of this data collection happened before COVID-19 hit. The pandemic has had a transformative impact on retail channels globally. As Deloitte writes in an October 2020 report, “The epidemic has forced retailers to reach new heights in channel integration. They have had to diagnose their omnichannel capabilities and develop roadmaps for new situations – the first step for businesses seeking to achieve omnichannel transformation.”
With omnichannel looking like an inevitability – a necessary way to operate in the new normal, it could be argued that JD is ahead of the curve. The company’s omnichannel strategy began long before COVID-19 was a reality, and has only been strengthened as consumer shopping habits are increasingly fragmented. It all stems from one place: Making a point to enable customers and partners to shop and do business anytime, anywhere. This demonstrates that omnichannel is not just a fancy term, but rather an essential piece of supply chain management, inventory integration and first and foremost, customer experience.
Rachel Liu, Yuchuan Wang, Ling Cao, Vivian Yang, and Hui Zhang, all staff members in the Global PR Division at JD.com, contributed to this article.