Sep 27, 2019|
JD.com’s AI targets your kitchen
JD.com used AI to help Chinese hygiene products giant Vinda develop a package of paper towel that would directly meet consumer needs.
Through analysis of consumer data powered by AI algorithms, JD discovered that young people, especially female customers – the main users of this type of product – use paper towel not only to wipe counters and kitchenware, but also for handling food, indicating that food safety is a high priority feature to highlight. JD also found that consumers prefer paper towels packaged in soft packs rather than rolls because they are easier to grab.
Taking all of this into account, JD worked with Vinda to design a 2-ply paper towel package, clearly marked as food-safe, and packaged in a brightly designed package (rather than the brand’s traditional dark blue) themed with Summer Palace, given that bright colors have been shown to appeal to young consumers. JD also suggested the pricing strategy of the product, recommending a price between RMB 30 to 35. The new product, which was developed and brought to market within the span of three months, performed strongly after its launch. Sales of the product accounted for half of all new paper towel products across multiple brands from August to now.
As China’s largest retailer, JD’s consumer insights provide an invaluable resource to help brands bring new products to market that are directly tailored to consumer needs. Over the last few years, JD has worked closely with manufacturers to perfect its “Consumer to Manufacturer” – or “C2M” – process. C2M addresses one of the traditional pain points in retail. Historically, brands have reached out to consulting companies who conduct offline research for brands before they develop their products. But due to limited data, the consulting process cannot guarantee products will be appropriate for the market. What’s more, this process can be time-consuming, sometimes taking as long as 18 months – too slow for today’s fast-paced retail environment.
AI plays a critical role in JD’s C2M process, allowing the company to analyze consumption trends, consumer decision trees, which show consumer motivations for purchasing decisions, and more, based on information from JD’s over 320 million customer base.
A powerful combination of cutting-edge technology and incisive consumer insights allows JD to help brands develop new products – and the process can take as little as three months. JD provides support throughout the entire product lifecycle, from consulting, development and testing to sales and marketing. JD works with partners to roll out launch simulations including creating mockup pages on the JD app and obtain real customer feedback such as clicks, browsing duration and the rate at which products are added to the cart.
In another successful C2M partnership case, JD provided Chinese gaming computer brand Thunderbot with consumer insights and reached deep into the supply chain to help the brand design a new product. JD’s analysis found a potential market for a gaming laptop with a 16.6 inch screen – a significantly larger display area than the brand’s standard 15.5 inch model, but more portable than their hefty 17.3 inch laptop. Using this advice, Thunderbot’s screen suppliers were able to launch exclusive production lines to manufacture 16.6 inch screens for the new product. Today, the 16.6 inch laptop is one of Thunderbot’s best-selling products. JD has already worked with several brands to optimize gaming laptop specifications for its consumers. More than 30% of the gaming laptops sold on JD have been manufactured through JD’s C2M. Sales of HP’s OMEN Gaming PC series gaming laptops developed with JD’s C2M have exceeded RMB 1 billion yuan.
Longyu Zhang, Head of JD Supply Chain Innovation said: “Customers are increasingly demanding a more diverse range of products customized to their preferences, and merchants are seeking to get closer to consumers by tailoring their products for the market. JD’s Customer-to-Manufacturer initiative provides brands the perfect opportunity for brands to reach targeted consumer groups.”
“This trend also has significant implications for the back-end supply chain, as the center of the supply chain is shifting from manufacturer to consumer, and from managing goods to managing consumer needs.” Said Songtao Zhai, Head of JD Supply Chain Product during a media workshop hosted at JD’s headquarters in Beijing earlier this week. “JD’s assessment is that the ability to accurately analyze consumption data and determine trends and customer preferences will be key to the success of consumer brands over the next five to ten years.”