Mar 4, 2020|
Lei Xu: JD Has A Significant Role to Stabilize the Market
by Rachel Liu and Tracy Yang
During the company’s earnings conference call on March 2nd, Lei Xu, CEO of JD Retail, pointed out that JD has played a significant role in stabilizing the market, especially in the supply of fresh produce and health-related products.
Rapid increase of new customers
According to JD’s latest financial results, since September 2019, the company saw 28 million net additional customers. This is the company’s biggest quarterly net addition for the past three years. Impressively, 70% of new customers in Q4 came from lower-tier markets. JD has been providing premium products and service to customers all over the country, and as more and more lower-tier cities customers are experiencing online shopping, many of them tend to go to JD for the products they want. Some lower-tier market customers have more disposable income than customers in 1st and 2nd tier cities, and they demand high quality products. For other customers, JD has also been working with quality manufacturers to provide them with affordable products.
A key to attracting new customers is providing them with products that meet their specific demands. JD’s C2M (Consumer-to-Manufacturer) initiative that helps brands tailor their products also made further progress in Q4. During the Singles Day Shopping Festival in 2019, sales of tailored personal computers increased by over 490%.
Growth of social e-commerce platform orders
Social e-commerce is playing an increasingly important role in customers’ daily shopping behaviors, and JD’s social e-commerce also grew rapidly in Q4 2019. For example, the Jingxi platform that mainly targets lower-tier markets saw orders exceed one million per day before the epidemic outbreak. On the customer profile of social e-commerce platform consumers, Xu said, their shopping habits tend towards more social interactions. They are more impulsive in shopping decisions and have a very high conversion rate. The attraction of new customers to social e-commerce and a focus on their entire consumer lifecycle will be a key focus of JD from now on.
JD has also collaborated with manufacturers from over 100 industrial belts to expand its products base. The industrial belts will be mainly supply suitable products for social e-commerce customers, and JD Logistics will be closely involved to fulfill the whole supply chain.
Competitive advantage
The breakout of COVID-19 in China in the beginning of 2020 has largely impacted Chinese people’s daily lives and the development of many industries. During the epidemic, JD’s self-built supply chain and logistics infrastructure have supported the successful delivery of donations and daily necessities to people in Wuhan and all over the country. As a result, more customers are turning to JD for their demands. More new users are being more active and making repeated purchases on JD. “We see more old customers returning to JD and some inactive users on our platform are becoming more and more active. We are waking them up,” said Xu. “In the future, we will leverage our operation abilities with these existing and new users to improve their experience and increase their stickiness.”
Brand partners and merchants recognize the advantages of JD’s business model and looking for deeper collaboration. JD has been actively working with them to stock their products in its warehouses and develop omnichannel solutions to get their products into customers’ hands more easily. Deepening of cooperation with first party partners also extends to advertising. “As we leverage the advantages of our self-operated model, we have seen strong advertising demand from our first-party partners too,” said Xu. The company has also worked closely with merchants to support their warehousing and stocking, which has enabled the first-party business to perform strongly during the epidemic.
Sep 27, 2024|
Leveraging AI to Drive Innovation, Reduce Costs, and Create Jobs: Insights from JD.com’s Chief Economist
At the 2024 FORTUNE Global 500 Summit in Guangzhou on September 26th, Dr. Shen Jianguang, Chief Economist of JD.com, shared how the company utilizes AI to transform its operations across retail, logistics, and more, while driving significant workforce expansion. “By integrating advanced technologies throughout our business, JD.com has more than tripled its workforce in the past six years from 180,000 to 620,000, all while increasing salaries,” Dr. Shen explained during the panel discussion titled “‘Changes and Opportunities’—Chief Economists’ Perspectives.”
AI tools have enabled JD.com to boost efficiency and elevate the customer experience. For example, JD’s AI-driven digital human livestream hosts have helped over 5,000 brands increase off-peak hours’ sales conversion rates by 30%. Additionally, AI-powered customer service representatives offer more personalized support, and logistics couriers use AI to deliver packages faster and with greater sustainability.
JD.com’s customer service representatives
“The competition in China is so fierce, and that’s what drives innovation—you have to innovate to survive,” said Dr. Shen, underscoring the role of innovation in reducing costs and increasing productivity. This is especially crucial in China’s e-commerce landscape, where consumers are becoming more price-conscious. “Consumers are looking for the ‘extreme quality-to-price ratio,’ meaning they want high-quality products at lower prices,” he added. At the same time, Dr. Shen noted a growing trend in rural and lower-tier markets, where significant growth opportunities are emerging.
Dr. Shen also discussed China’s recent economic stimulus packages. “Policy initiatives are important. When people perceive a shift in policy, the market responds,” he said, referring to the government’s subsidies for home appliance trade-ins introduced earlier this year. This program has stimulated demand for affordable, high-quality products, as reflected in the increased sales of subsidized items.
Guangzhou, the host city for the summit, launched a new round of consumer goods trade-in subsidies on September 1st, positioning online platforms like JD.com as essential providers of seamless trade-in services. Over 800 home appliance brands have partnered with JD.com in Guangzhou, offering more than 8,500 products. Additionally, JD.com is working with its brand partners on a Customer-to-Manufacturer (C2M) model, leveraging consumer insights to drive innovation for more tailored products.
JD.com provides one-stop trade-in services for home appliances and home goods
The panel discussion featured Dr. Shen alongside Minggao Shen, Global Chief Economist at GF Securities, and Robin Xing, Chief China Economist at Morgan Stanley, with FORTUNE Editor-in-Chief Alyson Shontell moderating. The panelists agreed that while AI is still in its early stages, its potential is vast. With China’s stimulus policies and a functioning capital market, the private sector is well-positioned to unlock considerable industrial and social value.
JD.com ranked #47 on the 2024 Fortune Global 500, moving up five spots from the previous year. Guided by its mission to “Make Lives Better through Technology,” the company remains committed to cost management, operational efficiency, and enhancing user experiences, while continuing to invest in employee development and upskilling to foster both business growth and workforce advancement.
(vivian.yang@jd.com)
Apr 1, 2024|
JD Chief Economist: Tech-Driven Supply Chain Revolutionizes Gen-Z Consumer Engagement in China
At the inaugural FORTUNE Innovation Forum in Hong Kong on March 28th, Dr. Jianguang Shen, chief economist of JD.com, highlighted the transformative impact of tech-driven supply chain solutions in meeting the dynamic needs of Gen-Z consumers in China.
“Gen-Z consumers are very discerning and pragmatic,” said Dr. Shen. “They don’t care if the brand is local or global.” Dr. Shen began by discussing the increasing sophistication of younger Chinese consumers. “The rising popularity of local products can be attributed to China’s supply-side reform, which has enabled brands to provide lower-cost products with higher quality,” he said. Shen also emphasized the strategic advantage that brands can achieve by leveraging advanced digital supply chains, which offer deep insights into consumer behavior, thereby tapping into substantial market opportunities.
Joining Dr. Shen were industry leaders including Angela Wei Dong, Global Vice President China at Nike; Pontus Erntell, President and Chief Sustainability Officer at IKEA China; and Doreen Wang, CEO of Kantar China and Global Head of BrandZ. Together, they shed light on the shifting preferences of China’s youth towards quality, sustainability, and enhanced social engagement in their retail experiences, especially amid economic headwinds, prompting brands to adapt swiftly.
Drawing examples from JD.com’s platform, Dr. Shen discussed the rising popularity of eco-friendly mini refrigerators among Gen-Z consumers. These products, aligning with Gen Z’s penchant for tech-savvy and environmentally conscious offerings, underscore the necessity for brands to evolve and align with consumer preferences.
Furthermore, Dr. Shen discussed the positive impact of a new government policy encouraging trade-in of consumer goods, which is expected to boost consumption. Leveraging JD.com’s robust supply chain capabilities, customers not only can easily trade in old appliances for more modern and eco-friendly goods but also benefit from a suite of JD’s attentive services such as doorstep pickup, installation, and recycling.
The conversation also touched upon the strategic collaborations under the Consumer-to-Manufacturer (C2M) model between JD.com and numerous brands, aiming to streamline the journey from product ideation to distribution. This collaboration has welcomed over 4,000 brands to JD.com’s C2M platform, drastically reducing product research and market introduction times by 80% and 70%, respectively, thereby fostering a mutually beneficial ecosystem for brands, retailers, and consumers.
Dr. Shen concluded by emphasizing JD.com’s commitment to technological innovation, with its deployment of AI-driven chatbot customer service, highly automated warehouses, autonomous delivery vehicles, and integrated retail solutions that bridge both online and offline domains. These innovations are designed to meet the dynamic preferences of consumers, enhancing the overall shopping experience and setting a new standard in consumer engagement.
In Line of Fire: A Driver at JD and His Wife in Wuhan
