Apr 28, 2020|
In-Depth Report: JD Wine: Offering Taste & Trust
by Rachel Liu
Standing behind a large desk stacked with wine bottles and glasses, a young woman is holding a bottle of wine. She’s introducing the brand story of Torre Oria, a wine from Valencia, Spain, and its unique characteristics and attributes to an audience that numbers in the tens of thousands through a live show. This is Cynthia Yang, a professional “wine purchaser” from JD’s wine business. Sales generated from this show account for nearly 40% of total sales for the day.
Recently, more brands and retailers are turning to livestreaming and short videos to reach customers, and Yang and her colleagues are no exception. Their expertise on wine and deep understanding of Chinese consumers gained from working at JD has made their livestream shows very popular. They also introduced Torre Oria to JD’s “online clubbing” livestream program, a creative approach to bring offline entertainment online and recommend wine products to customers. In another livestream show for Dynasty, a popular wine brand of China, the amount of wine sold in just one hour reached the equivalent of the total sales for the previous 10 days.
Behind the success of the livestream shows is the recognition and trust that JD Wine has built over time from Chinese consumers. Since its first-party business started in 2010, JD has won over many Chinese wine lovers to become one of the top retailers in China for international brands like Treasury Wine Estates and DBR-Lafitte, as well as Chinese brands Changyu, Greatwall and others. The wine industry in China has developed rapidly over the past decade. According to industry research platform, Qianzhan.com, in 2021 the China wine market is expected to reach $23 billion and replace the UK to become the second largest wine market in the world. As Chinese consumers gain more knowledge about wine – which is seen as an exotic product – it’s essential to provide them with a trusted and professional platform to find the wines they love. At the same time, international brands need a gateway to introduce their products to the Chinese market to close the cultural gap, while maintaining the original brand essence.
Trusted platform built by wine experts
According to the 2019 Chinese Liquors Industry Trend Report released by global marketing research firm Nielsen, wine consumption in online channels increased 25.4%, significantly higher than the average sales increase of liquor in online and offline channels (7.5%), which means more customers are buying wine online. Online channels can provide much richer choices than offline channels. As more customers in lower-tier markets are looking for higher-quality wine and lack access to offline wine stores, it’s more convenient to go online to find the products they want.
However, most Chinese customers have limited knowledge of wine and can easily get lost amongst the countless brands and regions. The wine market in China is riddled with complexity, and customers want to receive authentic products and have experts recommend high-quality products to them. JD’s ongoing commitment to authenticity has given the company a strong competitive advantage as a retailer of wine products.
There’s another dynamic in JD’s business that makes it unique. The JD wine team started a program in 2014 to directly import wine from overseas wineries and brands without going through middlemen. JD’s professional “wine purchasers” visit wineries to select products most appropriate to the tastes and preferences of Chinese consumers. The team has visited key wineries in France, Italy, Chile and Australia and worked directly with hundreds of international brands, wineries or their negociants, such as Lafite, Mouton, and Latour. This model greatly optimized the suppliers, ensuring competitive prices while also guaranteeing quality through JD’s unmatched in-house logistics service and supply chain.
To help Chinese customers select the best and most unique wines from around the world, JD has formed a team of professional “wine purchasers”, who all possess significant expertise in wine.
Yang, mentioned above, is a perfect example. She has over a decade of experience in the wine industry and has been with JD for seven years. She has personally visited over 40 countries around the world to research, experience and select appropriate wine for Chinese consumers from a wide variety of regions and wineries. Although she is extremely busy in her day to day work at JD, she still makes time to continuously learn about wine and stay on top of the latest industry information. She is certified with the International Sommelier Guild from USA, a WEST Diploma Candidate and is honored by Commanderie of MGSB (Commanderie du Bontemps de Medoc, des Graves, de Sauternes et de Barsac). She was also named as one of the “10 Most Influential Women of Wine Industry in China” in 2019.
Cynthia Yang visiting wineries in Rhone Valley in France
The road to success was not without its challenges, but Yang believes that only when equipped with professional knowledge can she convey trust to JD’s customers. Taking this fundamental principle as her guiding mission, she has been studying for different types of certifications.
“I have a classmate who chose to quit his job and stayed in a hotel for four months to prepare the WEST Diploma exam. But I only have time to study after work.” said Yang. “The exam offers no preparatory textbook, but requires that one understands the global wine industry deeply, technology behind planting, approach to fermentation, and even possess knowledge of the international wine trade to pass the exam. Although I still have one subject to pass, I’m confident that I’ll get the diploma very soon and use my knowledge to introduce even better and more diverse wine products to JD’s customers.”
Professional knowledge combined with deep understanding of consumer trends enables JD’s wine purchasers to find wine with the greatest potential to become hot-sellers. In 2018, Yang and her team introduced Port, the national wine of Portugal, on JD and it soon became highly popular with JD’s male customers. Yang had to re-stock the inventory for port four times in just one year. “Our job is not only to introduce the brands, but also to ‘babysit’ the brands, to give them suggestions from store launches and operations to marketing, and to help them better promote their wines to the Chinese market.” Cynthia said.
Port wine launched on JD
April 17th is World Malbec Day, which is a day appointed to celebrate the classic Malbec wine from Argentina. This also offers a great chance to introduce Malbec to more customers. Yang then devised an idea for the store operator to launch promotional pages, marketing programs and livestreams shows dedicated to Malbec on April 17th, to introduce the festival and culture to customers. The suggestion was greatly appreciated by Wineries of Argentina.
Gateway for international wine brands
While JD purchasers consistently search for the best wines from around the world, they have also made JD a gateway for many international wine brands to reach China, with JD’s authenticity guarantee, unparalleled fast logistics service and continued focus on professionalism. In 2018, JD formed the Global Wine Regions Alliances with leading brands, regions associations and embassies around the world, to introduce their wine in a way to consumers that is direct and convenient. This has led to the birth of JD Wine’s successful project: country and region pavilions, the model from World Expo.
JD has launched ten country and region pavilions for wine that integrate the leading wine products from each country to promote together to customers. They not only include countries and regions that are already well-known among Chinese consumers, such as Australia, New Zealand, South Africa, Germany, United States and the Chinese wine region Ningxia Hui Autonomous Region. They also include the lesser-known ones for Chinese customers that offer high-quality products, such as Moldova, Georgia, and Hungary. The Moldova Pavilion was launched in December 2019, when many JD customers learned for the first time that Moldova was one of the five founding countries of the International Organisation of Vine and Wine, alongside France, Germany, Italy and Spain. The pavilion also introduced Milestii-Mici, the winery that holds a Guinness world records as the largest wine cellar in the world. After joining over 50 offline stores in China, this was the first time for Milestii-Mici to embark on ecommerce to bring their wine to over 360 million JD customers.
Moldovan wine exhibited on the Moldova Pavilion launching event
All of the pavilions are authorized by either foreign embassies, government agencies or the industry associations in their respective region, which gives customers peace of mind when they shop. The country pavilion model allows JD to not only sell the products but also introduce the culture from the wine-selling countries and regions, which is what Chinese consumers need most. For example, the South African Pavilion has achieved great sales performance since launching with an average basket size of over RMB 1,200 yuan. Its pavilion sales also made it into the top 10 best-selling wine stores during the 2019 Singles Day (November 11th ) shopping festival.
Tasting event of South African wine attended by Charles Manuel, Minister Counselor of Economics, South African Embassy to China
JD also formed partnerships with world-leading wine competitions and exhibitions to expand the channels of international brands to join JD. On January 2020, JD formed a partnership with IWC China to sell the medal-winning wines in China. IWC is known as “The Oscars of the Wine World”. In February, JD became the official e-commerce partner of Vinexpo, the top wine exhibition in the world, hoping to use JD’s platform to help more wine brands grow their business in China. Early in 2019, JD has worked with China Alcoholic Drinks Association, to invite wine experts to grade hundreds of wine sold on JD, giving customers simple and reliable guidance when they shop.
Besides introducing hot-sellers, JD’s wine purchasers introduced a series of “king of wines” categories to meet the demand of wealthy customers. According to the Global Trends in Wine 2020 report released by Wine Intelligence, in China the average cost of consumers for one bottle of wine may be up to US$ 70 dollars each, while in the United States the price is US$ 15 dollars per bottle. This implies that that China is full of wealthy wine consumers. In 2018, JD launched several bottles of Romanée-Conti during the Singles Day sales festival which were sold out quickly. During JD’s June 18 Anniversary Sale in 2019, Chile’s King of Wine Almaviva was introduced to JD customers with chances to use JD’s luxury delivery service. Opus One, American “King of Wine”, is also now available on JD. The Wine Intelligence report shows that from 2011 to 2019, the sales of Californian wine in China increased from 16% to 21%.
Closing the gap between online and offline
The biggest concern for customers to buy wine online might be that they are not able to taste the wine before buying, and most Chinese customers do not have adequate knowledge of wine to help them make a confident decision without tasting it first. To solve this problem, JD has been hosting wine tasting parties and encouraging brands and store owners to join in. This is also a great way to educate customers on wine. An average of one tasting event was held every day for customers over the duration of 2019.
Wine brands have also joined JD’s Omnichannel Fulfillment program to meet customers’ on-demand needs. For example, customers may have prepared a great meal but suddenly realized what’s missing is a good bottle of wine. The Omnichannel Fulfillment program is a supply chain innovation increasing efficiency by integrating offline stores. It allows JD to transfer orders to offline wine stores that are in close proximity to where customers are. If it’s more effective to deliver the wine from the store than from a JD warehouse, the store will handle the delivery directly. To date, JD works with many wine brands and chain stores to provide this service, and the delivery time can be shortened to within 29 minutes.
Meanwhile, Yang and her colleagues’ livestreams continue. The goal for JD wine was never just to sell the product, but to become a leading global wine service platform offering the best quality, richest variety of brands and greatest tasting wine.