In-Depth Report: JD.com Brings E-Commerce to Tibet

In-Depth Report: JD.com Brings E-Commerce to Tibet

by Rachel Liu

The sun is about to rise in Lhasa, Tibet.

It’s 5am in the morning, Mar. 27th, and Xianfeng Wang and Danhua Nie are already awake and working. Previously based in Beijing as part of JD.com’s digital smart agricultural team, they have just moved to Lhasa to support the company’s partnership with Tibet full-time. Although suffering from altitude stress, the two have risen early to ensure that JD’s participation in the local “Peach Blossom Festival” goes well.

Held in Nyinchi County, Tibet every March, the “Peach Blossom Festival” is one of the most important local festivals of the year, drawing many tourists to visit the county to see the beautiful peach blossoms. It is also a good opportunity for local brands and farmers to showcase and promote their products to the massive amount of tourists.

For Wang and Nie, the festival is the first such program they are responsible for after JD formed a long-term partnership with Tibet to help develop e-commerce in the area. They applied and were approved for an exhibition booth in the event venue to display unique Tibetan products, and also held a livestream in the evening through JD’s livestream platform to introduce Tibetan products to JD customers.

Wang on the site of livestreaming

To make this happen, Wang and Nie worked hard to find diverse products that customers would not commonly see, such as Tibetan incense, honey, highland barley cookies and yak milk. The livestream show lasted for four hours from 6pm to 10pm, and attracted over 100,000 audiences.

One of JD’s missions in Tibet is to help local products reach more customers nationwide through e-commerce; other goals are to allow more customers to enjoy the convenience of online shopping, as well as ensuring the supply of daily use products to local people.

“We hope that we can use JD’s abilities to do things that can really help Tibet,” said Carol Fung, president of JD FMCG Omni-channel and head of JD’s agricultural program. “We put this project as one of our top priorities, and are ready to invest long-term resources to help Tibet.”

 

The Challenges

Tibet is located in the southwest of China, covering an area of over 1.22 million square meters, 12.8% of China’s total area, and the size of South Africa. The average altitude of Tibet is over 4,000 meters, and the terrain of the area is complex, with a mix of plateaus, mountains and valleys. The geographical condition of Tibet makes it difficult for the area to develop logistics infrastructure.

As a result, Tibetan people cannot enjoy convenient e-commerce service, despite having the need and purchasing power to consume high-quality products. “Through our previous surveys and JD’s big data analysis on the preference of Tibetan consumers, we found that they have rich demands on consumer goods, fresh fruits and vegetables, as well as other popular products on the Internet, such as sparkling water,” said Fung. “We want to enable customers to buy these products as conveniently as the customers from inland.”

However, without e-commerce, only limited kinds of products can go into Tibet. As for logistics, usually it takes around 15 days to deliver a product to Lhasa, the capital and largest city of Tibet, not to mention other areas that are even more difficult to reach.

There are also a lot of difficulties for Tibetan agricultural products to go out. Haifeng Chen, General Manager of Digital Smart Agriculture Ecology Development Department, said: “There are mainly four pain points of the agricultural industry in Tibet: 1) It lacks modern agricultural infrastructure; 2) The circulation of agricultural products is mainly based on a traditional wholesale model with low efficiency; 3) It lacks a classification and standardization system for agricultural products; and 4) It lacks popular local brands that are widely accepted by  inland consumers and the ability to build valuable brands.”

Even with mature e-commerce infrastructure, Tibet also lacks local talents for operations. Nie said: “Most of the residents there are not as familiar with e-commerce operations as people in first or second tier cities, , and do not know how to expand sales channels of agricultural products through e-commerce.”

 

The Significance

Though faced with many challenges, developing e-commerce in Tibet is a meaningful work for local consumers, farmers and the agricultural industry. By helping Tibet develop e-commerce, JD hopes to improve the living condition of local people, bring more high-quality Tibetan products to customers, increase the income of local farmers and promote an industry upgrade.

“There are some examples that I like to give to address the key issues of Tibet,” said Chen. “First, the price of the same product in Beijing is usually lower than the price in Tibet, because the product need to go through many layers of middle dealers before reaching customers there, and up to 20% of products are wasted during transportation. Additionally, the pricing of Tibetan products on e-commerce platforms is usually higher than average, because the cost of logistics and transportation is too high. Finally, most people can’t name any famous Tibetan brands. The place currently lacks ability to cultivate brands.” With the development of e-commerce, local residents will be able to enjoy richer products with competitive prices.

Wang and Nie with local partners in Tibet

Improving the efficiency of the agricultural industry and building digitalized agricultural solutions for Tibet will promote the development of the local economy, and improve the income of farmers. Building local brands will help introduce more Tibetan products to customers. “Tibet is a treasure box with a great amount of high-quality, natural products, such as mineral water, high-land barley, yak milk, honey. Building and cultivating brands will help us better introduce these products,” said Chen.

Supporting Tibet is also a social responsibility for JD, as a leading company in China. The project provides an opportunity for JD to create value for society, serve customers and bring more happiness to local people.

 

What will JD Do

In the past years, JD has done a lot of work in Tibet, and built the foundation for further developing e-commerce there. JD built the first delivery station in Lhasa in 2011. In Apr. 2015, JD began to deliver large-size home appliances in Tibet. In 2016, JD became the first company to achieve 100% coverage of large-size package delivery in all of Tibet’s more than 70 counties. In 2017, JD also built the first e-commerce logistics park covering nearly 10,000 square meters in Tibet to speed up the delivery service.

Another favorable condition for JD to step into Tibet now is that JD Retail has formed the Digital Smart Agricultural Ecology Department, which is Chen’s team, to focus on providing agricultural industry solutions. The team led JD to establish cooperation with China’s leading agricultural wholesale and circulation company Dili Group last year, which has enabled JD to build a comprehensive supply chain for both 2B and 2C customers. Agricultural products can not only be sold to individual customers through JD, but also to retailers, wholesalers and other business partners to expand the sales channels.

As a supply chain based company, it is high time for JD to put up with a comprehensive industry solution, said Chen. “To achieve our goals, we want to establish ‘four systems’ for Tibet, through which we believe the e-commerce and agricultural industry will both see improvement,” said Chen.

The “four systems” include establishing a dual circulation system for local products to “go out” and e-commerce products to “come in”; a comprehensive e-commerce operating system, especially in the rural areas; an e-commerce service system; and training system for local e-commerce players.

For products to “come in” to Tibet, local customers have their unique preferences. The products that are popular on JD may not be easy to sell in Tibet. So JD will select products that are suitable for Tibetan customers, and build omni-channel sales network to make sure the products can reach customers’ hands even in remote areas.

For Tibetan products to “go out”, JD will leverage its agricultural products circulation middle platform to sell Tibetan products around China. “The middle platform is the most comprehensive agricultural digital solution in the industry and will be used around many agricultural areas in China,” said Chen. Based on JD’s big data and consumption trends, JD can identify what Tibetan products will become popular, and collect the products from their originating places. The products will go into JD’s warehouses in Tibet to be classified and packaged for different kinds of sales channels, and then be delivered and sold through JD’s own channels such as the JD App, SEVEN FRESH or Jingxi, or through JD’s partners such as Walmart and Dili Group.

Wang talking to local farmer

For example, in July, JD will leverage the middle platform to support the sales of plumes in Tibet. Few people know that Tibet is an important originating place of plum. JD will work directly with local brands and farmers to collect more high-quality products. What’s more, JD can also go deep to the upstream of supply chain to build valuable brands with local companies, and develop products that can become “hot-sellers.”

To improve the e-commerce operations abilities of local brands, JD will help them build standardized e-commerce supply chain, including using big data to select products, for sales analysis and optimization, and to develop valuable brands for local products. Furthermore, JD will also use IoT and block chain technology to build a tracing system which includes all the information of agricultural products from their planting in the fields to transportation to customers’ tables, ensuring that customers can enjoy safe and authentic products with peace of mind. The data on the block chain is transparent and will be shared by JD, brands, sellers and testing organizations. The tracing system can also collect data such as the temperature, humidity, and soil condition of agricultural products, to practice scientific and digitalized production.

Besides building the infrastructure, JD will help cultivate more e-commerce talents in Tibet, step by step. As e-commerce veterans, Wang and Nie have taken the responsibilities to teach local e-commerce employees. “They are eager for all of e-commerce knowledge—and the reason that we came here is to provide them 100% support.”

JD will build an offline E-commerce Operations Center in Tibet, and welcomes merchants to join. In the Operations Center, JD will provide service and trainings on store operations, product selection, marketing strategies and other information that is required to better operate online stores. JD will also help local government and companies build their livestream ability, including building a livestream base for merchants to use and promote their products on JD’s livestream platform.

“My vision for the future of Tibet is that the can enjoy a higher-quality of life. It sounds simple, but takes a lot of efforts to realize.” Chen concluded: “Our work in Tibet will bring many changes and benefits to local people and the economy. Among all the changes, the one that means the most to me is that we can bring a happier life to Tibetan people.”

 

(liuchang61@jd.com)

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