In-Depth Report: When Bookstores Meet JD.com

In-Depth Report: When Bookstores Meet JD.com

by Tracy Yang

Since July 2019, Wuliao Bookstore, which first opened in Wenzhou, Zhejiang province, has cooperated with JD.com. All of the books in its three bookstores are sourced directly from JD.com, with replenishment services from JD’s nationwide, in-house logistics network, helping to significantly save on labor costs and delivery delays. Instead of dealing with around 15 publishers, Wuliao Bookstore only needs to work with JD.com.

Da Zheng, head of Wuliao Bookstore’s e-commerce business said, “JD.com is famous for product authenticity and fast delivery. The cooperation with JD.com can help the store improve its operational efficiency and increase inventory turnover rate.”

At present, Wuliao Bookstore operates eleven stores total in Wenzhou, Chengdu and Shanghai. It has earned the title of the “most beautiful bookstore” in Zhejiang province.

Wuliao Bookstore advocates that “Reading makes life more beautiful,” and their team has tried its best to integrate lifestyle elements in the bookstore. For example, they will combine a bookstore with indoor archery, and incorporate cultural elements such as Hanfu, ancient Chinese clothing. In their eyes, the key to the transformation of offline bookstores is providing consumers a reason to tour around the bookstore, and that reason must be beyond buying books. Wuliao Bookstore’s business model combines retail, exhibition and advertising.

Many bookstores have an online presence on JD.com. The sudden outbreak of COVID-19 has boosted their sales, especially those bookstores who have chosen to use JD Logistics’ warehousing and delivery service. In February 2020, sales of two children’s bookstores, Caldecott Bookstore and Zhongshang Children’s Books Flagship Store have increased by 221.6% and 282% respectively, compared with same period last year. The main reasons is that Chinese consumers staying home during the epidemic period are turning to books for inspiration and encouragement. JD Logistics continued to deliver products to Chinese consumers as usual during the epidemic period and there are a series of disinfectant measures implemented to make sure that Chinese consumers can get books safely.

E-commerce seems to have disrupted the US book market. After starting to sell books online, US e-commerce giant Amazon has occupied the vast majority of this market for quite a few years now. The company’s entry into the offline bookstore market a few years ago forced offline bookstores like Borders out of business, and Barnes & Noble to close many stores across the country. What about other markets in the world? In China, where the penetration rate of e-commerce is higher than in other countries, what is the state of offline bookstores? Will China’s e-commerce giants also follow its US counterparts and put an end to offline bookstores?

 

China’s Offline Bookstore Market

According to the 2019-2020 China Offline Bookstore Industry Report, there are more than 70,000 bookstores in China, 21,800 in India, 13,968 in the US and 6,000 in Germany. In 2019, over 4,000 new bookstores opened in China, compared with just 99 in the US and 15 in the UK. The five cities in China with the most bookstores in 2019 are Chengdu, Nanjing, Shenyang, Xi’an and Chongqing.

In 2019, the bookstore industry experienced rapid growth. Supported by government policy, campus bookstores, especially university bookstores, have become the focus. In addition, the traditional bookstores have been upgraded. Longhua Book Mall, the sixth Book Mall in Shenzhen, Xinjiang International Friendship Book City, and Huanggang Yiai Lake Book City in Hubei province have opened one after another. China currently has 135 book malls that are over 5,000 square meters each, of which 35 are over 10,000 square meters.

The overall function and operations model of offline bookstores need to adapt to new consumption trends. Bookstore innovation should focus on business model, supply chain, e-commerce, big data-driven solutions and more. The industry predicts that in the next ten years, the world’s largest bookstore brand will be from China.

 

COVID-19, a Further Push for Offline Bookstores to Transform   

Although China’s offline bookstores are developing vigorously, the sudden outbreak of COVID-19 has had a great impact on retail industry, and offline bookstores are no exception. The epidemic has led to the temporary shutdown of offline bookstores, a shortage of employees due to the epidemic, a sharp drop in operating revenues, and a surge in pressure on store rents and staff spending, all of which have presented a dilemma for the industry.

Quest Mobile, a mobile Internet data analysis agency, released a special report on the fight against COVID-19 in China’s Mobile Live Broadcast Industry. The report shows that under the epidemic, the development of the live broadcast industry has accelerated, showing major trends of “further expansion of live scenarios and content”. Considering offline entertainment is cancelled, people socialize, entertain, obtain information, learn skills, seek medical advice, and sell products on the Internet, all from home. As a result, various live broadcast formats have caught the public’s eye, including online clubbing, online travel, online museum visit, online theater performance and others.

Based on this observation and combining scenario advantages of offline stores, JD.com’s offline book team came up with an idea to help offline bookstores to do live broadcasts to drive traffic to the bookstores and promote their brand awareness. Offline stores usually pay special attention to decoration, layout and products, so they are a perfect venue for live broadcast in term of providing robust scenarios and content. Considering bookstore owners have limited knowledge about live broadcast, JD.com’s offline book team has provided a series of supportive measures, including training for live broadcast, account sign up for bookstore owners, a channel to propose and discuss the themes, and promotion opportunities.

Jiao Zhang, Operations Manager of JD’s Offline Book Team said, “Supporting offline bookstores to do live broadcast is a good example of how JD.com has been using its resources to help offline bookstores to transform their businesses to better cater to the needs from Chinese consumers, especially when there is limited traffic in offline bookstores during the epidemic period.”

Usually each live broadcast will last one hour and bookstores might increase the time to 2-3 hours based on the topics of the session. Bookstore staff will serve as the moderators, guide a tour of the bookstore and give a detailed introduction to recommended products. If the products are available on JD.com, they will appear on a separate page and consumers can buy them immediately, and have them delivered in as fast as 12 hours. Take a model of a globe for example. When customers are just browsing in a bookstore, they might simply look over the globe. But through the live broadcast, they can understand more of the special features of the product, increasing the chance they will make a purchase of something they may have totally ignored.

Apart from trying out live broadcast, offline bookstores are also starting to think about other ways to deepen their cooperation with JD.com. Da Zheng, head of Wuliao Bookstore’s e-commerce business said, “We are also considering opening an online store on JD.com to drive traffic to offline stores and testing the new supply chain innovation program, namely the integration of online and offline sales of the books.”

First launched in September 2019, this program was first carried out in the fast-moving consumer goods category. Currently bookstores are welcomed to join the program. With the system integration between offline bookstores and JD.com, after the consumer selects products, they can choose to have them delivered from the nearby bookstores or from JD’s warehouse. If the products are delivered from nearby bookstores, the consumer can get them within two hours – much faster than the standard same and next day delivery service provided by JD Logistics.

 

Innovative Ways to Promote Book-Related Industries

In addition to empowering offline bookstores, JD.com is also eyeing using the Internet+ model to upgrade the library industry. Traditionally, the library buys the books and offers them to members. Currently, with the integration of JD.com’s system and the library’s system, its members can select books from JD.com directly and have them delivered by JD Logistics, while the payment will be handled by the library. When the members finish reading their books, they can return them to the library, which will have the books cataloged on the shelf in the library, after which they can be checked out by other members.

Chongqing University is a pioneer in embracing the new model. Not only is the process of book purchase is simplified, members can also get newly-published books from the library immediately. After ten days of implementation of the program, book sales reached RMB 260,000 with 4,000 books purchased by over 1160 consumers. New books published in 2019 accounted for 43% of the sales.

Qingtai Zhang, Channel Manager of JD’s Book Team said, “JD.com’s books can be regarded as books in the library, so the library does not need to purchase a large number of idle books. This helps overcome the limitations of the traditional collection model and further improves members’ satisfaction.”

Despite the fast growth of the online book business in China, e-commerce does not seem to be disrupting the offline bookstore industry. Instead, Chinese e-commerce companies acts as enablers to assist in the transformation of offline bookstores to be more innovative and to better cater to the needs of Chinese consumers. Chinese e-commerce companies like JD.com are also involved in helping publishers and printing companies – the upstream suppliers of the book industry – to be more agile and efficient thanks to its strong supply chain and logistics capabilities built up over years.

 

(tracy.yang@jd.com)

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