Nov 6, 2020|
In-Depth Report: Kevin Jiang: Running JD’s Luxury Business with Authentic Products and Premium Services
by Hui Zhang
The COVID-19 pandemic has swept across the world affecting the retail industry in China at a large scale. While many companies faced tremendous pressure, JD.com has not only been able to make its own business thrive, but also help luxury brands at an extremely pressing time for the industry with its high-quality services.
At a time when many saw declining sales, JD’s luxury business saw high growth, especially during the 618 Grand Promotion (June 1st -18th). The inspiring performance of JD’s luxury business is a result of team efforts, but also a result of long-term strategic planning and persistent efforts from the man behind JD’s luxury business, Kevin Jiang, the president of International Business at JD Fashion and Lifestyle. JD had experienced transaction volume on the platform of over RMB 269.2 billion yuan, a new record with more than 33.6% up year on year during the 618 Grand Promotion. The luxury business was one of the important growth engines with the transaction volume on the first day reaching 2.7 times that of the same period last year. Transaction volume of over 100 brands including Prada, Miu Miu, Salvatore Ferragamo have increased by more than 10 times year-on-year.
Delvaux, the world’s oldest fine leather goods house, selected JD to launch its first official online flagship store since its establishment in 1829, and launched the Rainbow limited edition bag only on JD on June 1st. Guaranteeing authenticity and premium experience through a rigorous supply chain is JD’s strength and also the reason why Delvaux choose JD as its first partner to explore e-commerce. By Far, one of the world’s hottest designer brands, also chose JD as the exclusive e-commerce platform for partnership in China. During the grand promotion, 80% of its 2020 new collections were sold out through JD.
Think Bravely, Act Persistently
“I always believe that if we dare to think and do anything, then we can find a way to make it happen,” said Jiang.
Kevin Jiang, President of International Business at JD Fashion and Lifestyle
Jiang dares to think and persevere to achieve his goals. He was in fact a civil engineer before stepping into the retail and fashion industries.
After a few years in engineering, he was keen to see if there was another area he might be more interested in. His adventurous spirit and never-ending belief in himself set him off on a new journey once again. Just as he came to the United States to pursue his master’s degree with a full scholarship, he desired to change his life again by entering into the Kellogg School of Management of Northwestern University. Kellogg is a global business school with a vibrant community of faculty, staff, students and alumni who shape the practice of business and organizations around the world. At Kellogg, Jiang became interested in a consumer-related job. This interest let him to a job at Bain & Company, one of top three global consulting firms.
Bain & Company opened the door for Jiang to better understand consumer-related industries. Working at the company, Jiang was able to get involved into 4-5 different industries in a single year, and thus have access to a wide range of industries in a short period of time. Through accomplishing a lot of consumer and retail related projects, Jiang got a clear idea that he wanted to work in the high-end retail industry.
In fact, Jiang’s interest in high-end fashion began back when he was still a college student in China. He would always visit the boutiques on the shopping streets, thinking about why these beautiful clothes were so expensive and also valuable. Due to a passion for the retail industry and love for the fashion industry, he joined PCD Stores Group, one of China’s largest premium department chains, and Sasseur Group to learn from the offline retail industry.
While working at Sasseur Group, he played a key role in accelerating the company’s transformation from a small regional company into one of the largest outlet companies in China, and facilitating the company to list in Singapore. Jiang crafted and created a premium outlet + shopping mall business model, in a bid to build a premium shopping mall integrating high-quality products and a place of leisure and entertainment.
Kevin Jiang, President of International Business at JD Fashion and Lifestyle
In 2018 as the retail industry was gradually changing, Jiang believed he could do more, and joined JD.com.
“When I joined JD, online luxury retail sales began to flourish and I felt that e-commerce platforms would be the future of the luxury industry. JD, as a company focusing on customer trust and only selling authentic products, fit the e-commerce company of my imagination so I decided to join,” said Jiang.
Running Luxury Business
Since Jiang joined JD, the number of luxury brands on JD has significantly increased from previous around 20 to over 200, including Prada, Miumiu, Delvaux, Salvatore Ferragamo, Armani, Tod’s, Paul Smith, Hugo Boss, Furla, and more, making JD one of the largest e-commerce platforms involved in the luxury business. Jiang, as the key figure in promoting partnerships between JD and many global luxury brands, also played a key role in facilitating the partnership between JD and Prada Group.
As a global luxury giant, Prada, just like other luxury brands, was cautious in cooperating with an e-commerce platform at the beginning. After a long period of negotiations, every member of Jiang’s team told him that it was impossible for a global luxury giant such as Prada to embrace e-commerce as it already has a lager consumer base around the world.
However, Jiang didn’t give up as he was convinced that there would always been an alternative to seeking a cooperation which will benefit both sides. With this conviction, he insisted on flying to Milan to visit the family behind Prada. The well-prepared visit finally led to a strategic partnership between both sides. Prada was persuaded by Jiang as to how JD would help brands to reach Chinese consumers, including JD’s policies to ensure authenticity, premium delivery services, technology and big data application.
The signing of the contract, product selection, and store design to the final opening, it took only 2 months for JD and Prada to complete. It is an amazing speed for a luxury brand known for its caution towards e-commerce.
“Did Prada change its own criteria for choosing retail channels? Not really. Prada’s choice of JD as its exclusive integrated e-commerce platform remains the brand’s safest and most conservative, but at the same time, the trendiest choice,” said Jiang.
In addition to introducing a mass of top-level global luxury brands, JD also enhanced collaboration with international Fashion Weeks and designers to increase exposure to both international and domestic brands.
In 2019, JD.com and the British Fashion Council (BFC) signed a three-year partnership agreement that includes support of on-schedule designers and events at London Fashion Week (LFW) and London Fashion Week Men’s (LFWM). Additionally, JD.com has been named the exclusive Chinese retailer partner of London Fashion Week. The partnership aimed to introduce British and international brands to the increasingly sophisticated Chinese consumer market as well as to increase the visibility of Chinese brands within the global fashion landscape, through collaboration with internationally renowned designers.
Luxury Business During the Pandemic
Since outbreak of the pandemic, many industries have been affected and luxury is no exception. It has encouraged many luxury brands to explore the possibility of making their revenue online.
Since the beginning of January, around 20 luxury brands have opened stores on JD, including the world’s oldest fine leather goods house Delvaux, Chanel-owned jewelry brand Goossens and luxury cashmere specialist Barrie, British luxury leather brand Smythson, cashmere knitwear brand Pringle of Scotland, and international designer brands MSGM and Proenza Schouler.
“JD’s supply chain advantages and the support we provide have attracted brands to deepen their partnerships with us. It showed trust from both luxury brands and our consumers,” said Jiang.
Some of the support JD provides to luxury brands includes livestreaming and social e-commerce. JD helped Canadian fashion brand Ports host a nine-hour fashion show through livestreaming to present the new Spring-Summer 2020 collections from a dozen brands under Ports, such as PORTS, PortsPURE, and Ports V. The livestream resulted in sales of more than 10 million RMB in a single day.
JD’s luxury team, under the guidance of Jiang, is also exploring omnichannel solutions with brands. One unique omnichannel solution offered by JD is called “Wholesale + Direct from Stores”. JD can wholesale from brands’ core assortments, with the addition of brands’ offline stocks, all presented in the same JD brand store. Customers like to see that the product is shipped directly from offline boutique as it helps to further convince them its authenticity. At the same time, the omni-cooperation can also help luxury brands better manage their inventory.
Prada and Miumiu are the first group of brands to benefit from this omnichanel solution. JD introduced its unique omnichannel solution during the pandemic, and successfully launched the model on August 1st this year.
JD Luxury in the Future
Since joining JD.com, Jiang has always firmly believed that JD is the most suitable platform for luxury brands in China and that JD’s consumers are the potential consumers of luxury brands. He never doubted that JD will become one of the largest luxury platforms in the future. His confidence comes from his deep understanding of JD.
“Young consumers who buy luxury products consumption is booming, and many of these consumers are in lower-tier cities where is less accessable to brick-and-mortar retail stores. Additionally, there has been a trend for middle and upper middle-class consumers to buy luxury products within China, rather than abroad. They are more likely to buy non-standard products such as apparel and shoes online at full-price due to effective and premium shopping experiences online,” said Jiang.
Echoing with the luxury consumption trend, JD’s consumers with higher education and stronger spending power, align well with that of luxury brands. JD has 20 million PLUS members and most of whom have shopped on JD for over three years. Seventy percent of JD’s luxury consumers are below 35 years old and 51% of them have PLUS memberships.
JD believes that authenticity creates trusts with consumers, which is in line with the belief of luxury brands.
From day one JD has insisted on following the most stringent inspection standards for luxury goods. JD is currently the only e-commerce platform that has a three-stage inspection standards program. For example, Armani’s own warehouse has a strict quality inspection process in the first instance. A third party will re-inspect each product after the brand’s delivery to a third-party warehouse. The product will be inspected for the third time when it finally arrives at JD’s warehouse.
Multiple cooperation models also bring peace-in-mind to luxury brands who are conservative to working with e-commerce companies.
Luxury brands are usually particularly concerned about delivery services and product authenticity guarantee when choosing an e-commerce platform. In order to alleviate the concerns of luxury brands and enhance the shopping experience of consumers, JD provides different cooperation models and supporting solutions that brands can choose according to their individual needs.
The first cooperation model is JD’s unique first-party business model. The first-party store is operated by JD. This is particularly favorable for brands who have no one taking care of their e-commerce business in China. All the goods in the first-party flagship store are directly supplied by the brand to guarantee the quality of every luxury item purchased by consumers and thus to enhance consumers’ trust. The business model will also be able to enhance consumers’ shopping experience thanks to its effective fulfillment capabilities and its premium services.
The premium delivery service, JD Luxury Express, offers a highly personalized, intimate and innovative offline element to the e-commerce experience. All products are selected by JD luxury buyers based on big data analysis, so the goods are more in line with Chinese consumers’ aesthetic preferences, helping the brand to penetrate the Chinese market more efficiently. Paul Smith and Prada, which joined JD last year, as well as MSGM and BY FAR, which joined this year, have all chosen this model of cooperation.
JD Luxury Express
The other cooperation model is the third-party business model. Through JD’s open access to a series of infrastructure services and facilities, such as JD’s finance services, AR technology and JD luxury express, it helps luxury brands to ensure that consumers can enjoy a convenient shopping experience when they shop online.
JD has also streamlined the process of getting stores up and running to help luxury brands open more easily. In addition, the company is providing a free service for luxury brands to launch WeChat mini-programs within just one week in order to gain more traffic.
For future plan, JD is ambitious to make itself the destination for consumers to purchase luxury products. Jiang said JD will continue introducing more luxury brands to provide consumers with a wide range of brands. Constant application of technology, such as AR.VR, and premium services will further improve consumers’ experiences, in a bid to enable consumers enjoy a premium experience commensurate to what is offered in offline luxury stores.
JD is also committed to developing VIP operation to provide even better services for consumers.
“We will make efforts to improve VIP operations in the near future to bring our consumers the same service as offline stores,” said Jiang who is ambitious to make JD Luxury a new destination for luxury products.
“Our ultimate goal is to make JD the destination for Chinese consumers to buy luxury products. We believe that authentic products and our premium services will reassure consumers to come to JD to buy their favorable products.”