Jul 3, 2020|
In-Depth Report: JD Mobile: A Customer-Centric Strategy that Drives Successful Business
by Rachel Liu
JD’s annual June 18th (618) Grand Promotion saw record-breaking sales of RMB 269.2 billion. As China’s largest retailer of electronics and the first choice of many customers to buy mobile phones, the mobile phone category performed exceptionally well during the sales promotion. In the first five minutes of June 18th, sales of Apple products surpassed RMB 500 million yuan; sales of Huawei products increased over 300% y-o-y in the first 10 minutes and 150% y-o-y from June 1s-18th; and sales of Samsung products surpassed sales of the whole day of June 18th last year in two hours.
Many customers took the opportunity to upgrade to 5G phones: over 10,000 5G phones were sold in one minute on June 18th.
JD also saw increased sales for brands that include Honor, Xiaomi, vivo, iQOO, OPPO and One Plus. In the first 10 minutes on June 18th, sales for those brands increased over 200% y-o-y.
According to the 2020 618 Mobile Phone B2C Online Market Analysis Report published by the China Association of Market Information and Research, JD outperformed its competitors in the mobile phone market this year, as the company accounted for 58% of total online mobile phone sales in China.
Mobile phones is a long-running category for JD Retail and remains one of its greatest strengths.
In 2007, JD formed the “mobile and digital products” business with approximately ten employees in JD’s previous office building in Zhongguancun, Beijing, where many technology companies were located. .
Now, 13 years later, the JD Mobile Devices team has expanded to over 400 employees and has formed partnerships with hundreds of key mobile phone brands in China. Though already dominant in the mobile phone market, JD continues to explore more innovative ways to provide better shopping experiences for customers.
“618 is an important event for us and for our partners, but we also want to focus on longer-term development and growth of the category,” said Daniel Tan, president of JD Mobile Devices. “Everything that we do, from our strategy, to services, to our precise operations, are all based on the demands of our customers. That is how we can continue to be the leader in this market.”
Customer receive mobile phone through JD Luxury Express
Advanced online services leading the way
The consumption habits of mobile phone users are changing in China – more customers now prefer to choose online platforms to buy mobile phones, especially after the outbreak of COVID-19. Given this market dynamic, it is especially important to provide exceptional customer service to those purchasing mobile phones online.
“Many customers would choose to visit a brick and mortar store to buy mobile devices so they could try the features in-person, sell their old-phone or receive help transferring data,“ said Tan. “JD Mobile has been developing a suite of services to enable customers to enjoy the same kind of services that they are accustomed to enjoying offline in the convenience of their homes or offices. Our goal is to build a one-stop platform for customers.”
One of the most popular services provided by JD Mobile is the “one-stop trade-in” service. JD has integrated the trade-in process into the ordering process, which is very simple and convenient. When customers order new phones, they can choose whether they would like to trade in an old phone or other electronic device for a credit. After providing information about the conditions of the old device, customers receive the estimated trade-in price of the old device and can directly deduct it from the cost of the new phone.
For example, if a customer purchases a new phone that costs RMB 5000 yuan, and his old phone is now worth RMB 1000 yuan, the customer only needs to pay RMB 4000 yuan when processing the order. When the new phone is delivered to the customer’s doorstep, the courier will help the customer transfer data from the old phone to the new one, apply the screen protector if needed, and take the old phone for recycling. The delivery and trade-in can be completed within two hours. The process has effectively solved the challenges associated with traditional online mobile phone sales and provides services that were previously only offered offline. JD is the first platform in China to launch this kind of trade-in service. During this year’s 618, the number of customers who used the trade-in service increased by more than 300% y-o-y.
To take the service to the next level, when the iPhone SE launched in April of this year, JD provided an exclusive full-price trade-in service, which meant JD customers who opted in to the program could buy the iPhone SE and have the chance to deduct the full price of the iPhone SE off their purchase of the next iPhone when it’s released.
JD also expanded the service to include the iPhone 11 during 618, so more customers who wanted to update their phones wouldn’t need to wait until the release of new phone. From June 1st to June 18th, sales of Apple’s service products on JD increased over 320% y-o-y.
For customers who are eager to receive and use their new phones, JD also provides on-demand delivery service through working with JDDJ (JD Daojia), China’s leading local on-demand retail platform. In over 110 cities in China, JD customers can shop for products through JDDJ, and the brick and mortar stores will deliver the products to customers in as fast as in one hour. On June 18th, the first order of the day, a Huawei nova 7 SE 5G phone, was delivered to a customer’s door in 10 minutes. During this year’s 618, sales of on-demand delivery orders increased over 130% compared with the same period in May.
What if a customer wants to try the phone before he buy it? This used to be something that could only be done offline. But with JD’s “free trial service,” qualifying customers can try products for seven days and return them if they are not satisfied. In offline stores, customers can usually only try the products for several minutes, not several days. During this past 618, over 10,000 products from more than 1,000 merchants were available via the free trial service.
Additionally, JD’s service package includes features that give customers peace of mind when shopping. For example, the “30365” service ensures customers get a full refund if their phones have hardware problems within 30 days after the orders were made or get a brand new product if there are problems within the first year. Customer feedback shows that these comprehensive services have encouraged more customers to choose JD.
One customer said: “After learning about all the services that JD provides, I only want to buy phones on JD from now on.”
JD believes that the future of retail should meet customer demands anytime and anywhere, which requires strong integration both online and offline. Besides, offline experiences are still preferred by some customers. JD has started to develop its own offline stores, such as JD Home, which is also called the JD Retail Experience Shops. The company later added JD Mobile Stores. JD has over 3,000 JD Home and JD Mobile Stores around China.
The JD Home stores are mostly built in CBD areas in first-to-third tier cities. The selection is focused on products that consumers often like to feel and test in person before buying. These primarily include mobile phone products, computers, digital products, fashion products and items from JD’s private label, J.Zao.
Selection is tailored on a store-by-store basis using data from each neighborhood’s shopping habits. The stores are also equipped with cutting edge technologies like the JD Smart Store Cam, Interactive Shelves, Cloud Shelves, as well as AR, VR and 5G devices. These technologies can bring a better shopping experience to customers and help JD and the store owners gain insights into customer behavior. During this year’s 618, sales of mobile phones in JD Home stores increased over 140% y-o-y, and through leveraging livestreaming, sales in JD Home stores increased 200% compared with the same period in May.
The JD Mobile Stores have a lighter-asset model. It can be a whole store or a counter integrated into a store, which is easier for the franchisers to manage. In the stores, customers in lower-tier cities can enjoy high-quality products sourced from JD and the maintenance and after-sale service provided by JD’s partners. For JD, the stores can better satisfy customers’ needs in different scenarios in specific markets and attract more new customers from these markets.
The leading category for C2M
The Consumer-to-Manufacturer (C2M) model has been popular in the retail industry in China. JD leverages its vast database of customer behavior to understand their needs and uses the insights to work with brands to optimize their products or develop new products.
“In the mobile phone industry, we used to get the products first and then look for suitable customers, which is very difficult. But C2M enables us to select or design products from customers’ needs. With C2M, we are also able to develop new product categories before customers know they need them,” said Tan.
Gaming phones is a category that JD is especially proud of. In 2017, JD was the first company to create the concept of a gaming phone globally– phones that can smoothly support the operation of mainstream mobile games with specific designs to optimize the consumer experience while gaming. At that time, over a third of Chinese were phone gamers. Through an in-depth analysis of customer feedback, JD discovered that gamers have higher requirements regarding phone specifications and design. JD quickly worked with brands, including Black Shark, Red Magic and ROG, to develop gaming phones.
This March, Black Shark and Red Magic both launched their new 5G gaming phones on JD and received a huge welcome by JD customers. ROG chose JD as the exclusive platform to sell their products. When ROG Gaming Phone 2 was launched on JD in July, 2019, with JD’s comprehensive marketing and operations support, sales of the product was 10 times of the first version of ROG Gaming Phone. During this 618, sales of gaming phones increased 150% y-o-y on JD, and Red Magic 5G ranked No.1 in both purchases and sales numbers among gaming phones.
For Tan, developing gaming phones is just a start – the next step is to build a gaming ecosystem on JD. “I want customers to think of JD first when they think of e-games,” said Tan. “JD also has gaming laptops and other related products, which were also developed through C2M. Working together on the development of traffic and customers, I think we will have numerous possibilities.”
Besides the gaming phone, JD also leveraged C2M to launch phones specifically created for e-book reading and for senior customers. In January 2020, JD launched the “Time machine,” a smartphone specifically designed for senior customers that includes smart functions and software to make their phone more convenient and easier to use.