- Jan 07, 2021
- Business Update
JD Empowers Duty Free Industry through Supply Chain and Digitalization
by Rachel Liu
JD Worldwide, JD’s platform for imported products, opened a duty free store in Sanya, Hainan province on December 30th, 2020, together with a cross-border experience store through partnering with Hainan Tourism and Investment Development Co. Besides makeup products, fragrance and chocolate, which are common in many duty free stores, the JD stores also provide a wide range of electronics products, providing travelers with more choices.
By joining the duty free business, JD can benefit brands and traditional industry players with supply chain capability and digital tools.
According to research conducted by Industrial Securities, during July to October 2020, makeup accounted for 48% of total sales of offshore duty free products in Hainan province, with watches accounting for 14.7% and accessories 15.4%. The categories of duty free products are very limited. Although customers have the demand for a wider variety of products, many brands do not have the ability or resources to get into the business.
With JD’s experience in logistics and finance, as well as its close connection with international brands (especially electronics brands), brands can get into the duty free business easily and quickly through cooperating with JD. With more brands joining, they will have more control over the product price and channels on the duty free market, thus making the industry more regulated.
JD’s participation will also help traditional duty free players with their challenges. In China, only five companies are approved to do duty free business, and they mostly focus on operating offline stores. As digitalization is the trend of the retail industry, JD’s joining could help them with digital transformation, such as more detailed and efficient customer operations, targeted marketing campaigns and more. Take customer operations for example: customers for duty free stores are usually travelers, which means they are not likely to revisit the stores frequently. JD’s digitalization capabilities can help the stores move the customers online and use LBS (Location Based Service), targeted advertisements and more to activate them.
JD’s store management tools, such as electric price tags, a smart advertisement board and customer road map, will bring customers a better shopping experience in the stores.
“With the change of policy on Hainan’s duty free business, both customers and industry players demand new experiences and opportunities. Instead of competing with existing duty free companies, JD’s joining can not only supplement traditional product categories, but also bring omnichannel experiences into the duty free industry, as well as making the industry more standardized and efficient,” said Mark Ma, operations head of JD’s duty-free business.