by Ling Cao

When making a purchase online, some consumers may opt to filter search results by top sales performance – this is a simple expression of a consumption trend. A more complex version is a report which considers multiple factors. For example, as Spring Festival is approaching, a report has revealed trends that C2M (Consumer-to-Manufacturer), which uses big data to provide advice to brands about how to create products to better meet market demand, house decoration and local specialties are popular. This report could also serve as a guide for consumers who haven’t bought New Year gifts yet. In China, there were 83 billion parcels circulated in 2020, according to the State Post Bureau, equal to 59 parcels per person per year on average. This massive parcel volume has formed a unique database that let consumption trends emerge.

The JD Big Data Research Institute, an open and professional platform based on the big data of JD.com, has generated around 120 reports in 2020, three times higher than that of 2017, when it was just launched. The Spring Festival report is just coming out by working with Chinese financial media Jiemian.

Hui Liu, chief data officer of the Institute shared, “Unlike peers, JD’s core advantage regarding data is the long value chain. For example, starting from a customer searching on JD’s website, to purchasing a product, to last mile delivery and after sales, the integrated process can be connected as part of JD’s big data.” Liu added: “The integration and complexity allow us to produce accurate customer profiles and consumption trends. Ultimately, we can know the why and how behind a transaction.”

Hui Liu (center) with JD colleagues

How to create a report

There are always interesting trends on people’s radar. Ahead of last Chinese Valentine’s Day (Qixi七夕, July 7^th on the lunar calendar, falls on July 25^th last year), the institute found that when it comes to adult, COVID-19 may have impacted their purchase choices, but certainly hasn’t caused consumer interest to wane. The report was popular, and was even reported on by leading marketing media, The Drum. The outlet wrote: JD’s data “saw dramatic changes in related search keywords when people in China went into lockdown as it drove a huge increase in demand for contraceptives and stimulated long-distance partners’ desire to make purchases for their counterparts from afar.”

Liu shared, “Qixi is the best time to discuss such a topic, and even to take advantage of it since people are usually too shy to talk about it. Leveraging the timing and our big data ability, we can show the society the culture of this category in China. And we also have industry data showing that we have a comparative advantage in this category such that we can represent the online consumption of adult products in industry.”

Liu shared four general steps for generating a report: 1) Forecast insights by reading relevant materials and interviewing business teams at JD; 2) Consider holding a workshop with internal and external experts. 3) Reflect the insights in the task of data selection, 4) Proof or override the forecast insights based on data analysis. If the data don’t agree with the initial forecast, the team will find new insights and conduct further research.

“Generally, it’s important to forecast insights at first, otherwise insights will be buried in the massive amount of data,” added Liu.

The institute is focused on much more beyond the basic process of putting together a report. Fei Lu, senior researcher at JD’s Big Data Research Institute was responsible for making the adult products report. He shared an innovative way to combine objective data analysis with a subjective questionnaire, which could make the result more persuasive. For example, data can reflect certain sales performance, while the questionnaire can reflect reasons behind the purchase. Lu also shared another creative way of making cross analysis, especially comparing two items which seem unrelated. Lu said, “Most of the efforts are in vain but there is still the possibility of an unexpected surprise.”

For instance, last Chinese National Day holiday was a time to test whether China’s offline consumption had recovered amid the pandemic. As a major online platform, JD also planned to work on a consumption report. Lu cross-analyzed many different aspects of data. For example, Lu has put Hubei’s (Hubei’s capital city Wuhan was the  epidemic epicenter of the COVID-19 outbreak in China last year) local food sales performance together with third party tourism data, which unexpectedly showed that the increased growth rate of the food may be related to population mobility. Taken together, this implied that Hubei’s consumption growth rate had recovered to the level before the epidemic. The data was used in several domestic media reports.

The institute has consistently provided insights during COVID-19, finding for example, that the younger generation took on much more responsibility; JD has become one of the most trusted platforms by customers; and consumption upgrading and rationalization are carried out simultaneously. These trends could provide a direction and insight in the industry.

Lu added: “Our internal business team came to us after we published the adult products report, and said it could be good material for business development purpose. I felt like this is also part of the value of our job.”

Why launch the institute

Right now, the institute not only produces consumption-related reports, but also has expanded to cover to industrial or regional economy research, providing broader value. This is far beyond the objectives when the institute was first established. “In the beginning, we found that JD’s R&D team had already used big data to make valuable analysis for internal use, such as to determine the most active customer group,” explained Liu. “This inspired me to consider how to expand its external value.”

There were several objectives at first: 1) Response to media requests, supporting reporting with certain trends; 2) Response to business team’s needs, making vertical industry reports covering electronics, home appliance, FMCG(fast moving consumer goods), as well as baby and maternal products; 3) Work with external think tanks or institutions to produce meso-economic and industrial reports, such as a rural e-commerce analysis; and 4) Visualize the data in a command center during important promotions such as the 618 Grand Promotion, and introduce the findings to a multitude of internal and external stakeholders.

Imported products consumption highlights exhibited at the command center during 11.11 Grand Promotion in 2020

Combine strength of JD and external experts

Fei Dong, senior researcher at the Institute shared, “JD’s own data mostly represents an online sales trend, while we will consider whether it’s thorough enough to reflect a macro trend. That’s why we are willing to expand cooperation with external experts, such as universities, and enterprise-level think tanks at companies such as Tencent and Ctrip.”

One case was an employment report produced by JD and Maimai, China’s workplace social networking platform. Under the program, both companies provided data to complement each other.

Experts, such as professors at universities, have the advanced knowledge architecture, and a more far-reaching understanding of the industry, as well as better analysis methodology. When looking at certain topics such as lower tier market penetration, JD will invite them for a workshop, to discuss the macro trends in society.

For example, JD and Renmin University of China have cooperated on an environmental protection program, which targeted to research how green awareness will impact customers’ consumption. Specifically, by combining the university’s methodology with JD’s data, the team labeled two groups of products. Group A showed green related labels in the product description page, and group B was normal. The differentiation in sales, customer profile and more were compared.

Dong added, “The Institute focused more on consumer related reports before, but as we have recruited colleagues with different expertise backgrounds, as well as cooperated with more and more external experts, we have more confidence to do industrial forecasts.”

Future direction

Liu pointed out the importance of providing value for brands and partners at the industrial level. He shared an example of how regional economy research can effectively help brands better manage their business and set goals. Take Chongqing for example. JD will analyze how Chongqing’s local specialties perform in and outside the region, and compare the customer profile of local residents with the national average. This can help brands better understand the industry and know whether customers have awareness of certain products, so as to judge where the potential opportunities are. Liu added, “JD is designing an interaction system, enabling partners to search for regional economy development rankings in China, with specific profiles for a particular province, and performance for certain products.”

Liu also added, “We hope the institute can not only provide value to brands, customers, industries, but also to young talent. Going forward, we are thinking of open up part of our data and case studies to them, providing value for their academic research. In the same time, they can bring fresh thinking to us.”

Consumption trend reports or vertical industry analyses are mostly dealing with micro economies. JD hopes to extend from data analysis to deep case studies, producing industrial-level and meso-economics-related reports, on topics such as the development of the industrial internet. JD will expand its retail-centered analysis to service and technology, extending the value of big data to broader areas.

Liu concluded, “In fact, data is just a foundation. It’s all about how technology can shape the real economy.”

(ling.cao@jd.com)

by Ella Kidron and Vivian Yang

Feb 12 is Chinese New Year’s Day. It is time for family reunion, people shop for a fresh start and for good omens. It’s more of a gifting holiday, and less about shopping for oneself.

Over the last decade or so, China’s massive shopping festivals, including Singles Day (Nov. 11) and JD’s 618 Grand Promotion (Jun. 1-18) have gradually become known around the world. What is less known, however, is the importance to retailers of Chinese New Year a.k.a. Spring Festival. Where China’s e-commerce holidays are about ushering the newest of the new in terms of gamification, products and more, CNY is celebrated by observing traditional cultural norms and customs.

All said and done, CNY is a golden time for shopping even in face of COVID-19. On the surface, people have elected to make major changes to their holiday plans to minimize infection risks, reducing travel, social gatherings and large-scale entertainment activities. Yet, as indicated by JD’s data* their emerging consumption behaviors and preferences in the new reality have underlined their unchanged desire to preserve the unique nature of the festival – a way to maintain a sense of belonging and security in the fast changing world.

These trends can be broken down into eat, wear and use.

Eat

Consumers have increasingly turned online for their food-related shopping, especially under COVID-19. Traditional CNY dishes are no exception. According to JD’s data, sales of Buddha-Jumps-over-the-Wall (佛跳墙), a nutritious soup or stew which includes more than 20 ingredients such as quail eggs, bamboo shoots, scallops, sea cucumber and more, increased 320% YOY. Other staples of the CNY dinner table, including pastries and alcohol, increased 51.4% and 67% respectively. With heightened health consciousness among Chinese consumers, nourishing products increased over 93% YOY.

Instant package of Buddha-Jumps-over-the-Wall on JD.com

Consumption of baijiu in China’s lower-tier cities makes a higher proportion of overall alcohol consumption than in the first and second tier cities where imported liquor and wine are becoming increasingly popular. Looking across all age groups, baijiu accounts for more than 70% of overall alcohol purchases ahead of CNY. Imported liquor is most popular among Gen Z consumers (aged below 25), making up 10% of pre-CNY liquor consumption. Across all ages and city tiers, beer makes up roughly or just under 5% of consumption. Age 56 and up consumers represent the highest proportion of wine consumption, reflecting increased attention towards health, which also shows people of this age group have more disposable income on alcohol spending.

Wear

Red is a lucky color in Chinese culture and red clothing is a distinguished feature of the Spring Festival. As 2021 is the Year of Ox, ox-printed facemasks, t-shirts and shoes, are in high demand during the New Year sales. Of course, red underwear, believed to secure luck, cannot be forsaken. This is particularly true for people born in the year of the ox, as it is widely believed in China that when the zodiac coincides with people’s own year of birth, they will have good chances to encounter misadventure, and the most popular way to equip oneself and avoid the bad luck is with red accessories such as underwear, bras, socks and belts.

Red underwear gift box on JD.com

JD’s data shows that since the beginning of the New Year sales, search volume of red underwear on JD.com already increased 750%. A marketing manager at JD Retail noted that since people are spending more time at home, red color pajamas and home wear have attracted more customers’ attention. High quality pajamas, like 100% silk ones became popular gift choices.

Silk pajamas in red gained popularity during the New Year Grand Promotion on JD.com

Wearing Hanfu, a kind of traditional Chinese clothing from the 17th century is a popular fashion trend in recent years. Sales of Hanfu have witnessed strong growth during the New Year Grand Promotion. JD’s data shows that Hanfu sales increased 67% YoY during this period. Among the buyers, 76% are young people under 25, 80% are female and 30% female buyers also bought Hanfu for children.

Red Hanfu for children on JD.com

Use

Last year, around this time, consumers all over China were scouring stores and e-commerce platforms for masks – most of which were the light blue surgical masks or other drug store masks originally used to combat air smug. The blue masks are now ubiquitous, and in many instances have been replaced by their fashion forward cousins as mask wearing has become an inseparable part of daily wardrobes. In fact, JD recently launched a line of custom masks, in red to match the red outfits customarily worn for Chinese New Year (CNY).

Custom New Year Facemask on JD.com

From a category perspective, while sales of medical and health products have increased 65% and jewelry sales has increased 40%. At the same time, sales of personal care, maternal and child and beauty product purchases have increased 59%, 54% and 44% respectively, indicating that in addition to gifting things like health products and jewelry, other categories for self and family care are also gaining popularity.

One of the biggest differences compared to previous years will be diminished travel during the CNY period.  Looking at JD data gives a bit of insight into how consumers separated from their family by distance might change their spending pattern. Computer and office supplies and education supplies increased 65% and 64% YOY respectively. It’s also possible consumers might look to get caught up on their reading as books were also in the top 10 categories in terms of increase ahead of CNY.

A Chinese New Year celebration would be remiss without decorations. Posting spring couplets on walls and paper-cut art on windows are two CNY must-haves according to Chinese traditon.

As an auspicious symbol, the spring couplets are composed of a pair of propitious verses vertically pasted on both sides of the front door and a four-character horizontal scroll affixed on top of the doorframe, with black characters written on red paper. These couplets have since evolved, moving from doorframes to computer screens, cell phones, closets, pet homes and more, as can be found on JD.

Handmade paper-cuts have gained prosperity through the internet. Zhang Junjie, a paper-cut craftsman who used to sell his arts offline with an income of RMB 3,000 yuan per month, opened his online store on JD.com which turned out to be a big success. Nowadays, Zhang’s online business can generate more than RMB 200,000-yuan monthly.

Moreover, based on customers’ feedback online, Zhang started to develop new products to meet his fans’ needs, such as paper-cut bookmarks, Chinese shadow puppetry models and more.

Logistics

With the lack of travel, it is no surprise that “remote” orders, or orders where the sender and recipient city differ, have skyrocketed, especially in the largest cities in China such as Beijing, which is the top city in terms of receipt of remote orders.

Across all regions, remote orders for items such as rice, flour and cooking oil increased by 30-50% YOY. This may be attributed to a desire to ensure loved ones are well fed and safe during a time when many families are separated. The contents of remote orders tend to demonstrate a nostalgia for the specialty snacks and treats of people’s places of origin. For the month of January, remote orders sent from Beijing had increased 55% YOY. Shanghai, Guangzhou and Shenzhen had seen remote orders increase 45%, 45% and35% respectively.

For the ninth consecutive year, JD Logistics has committed to delivering throughout the Chinese New Year holiday period ensuring consumers can celebrate safely no matter where they are. As Chinese people continue to shop for happiness during the most important festival in the year, the role of retailers remains to provide better choices and trusted services to meet their needs.

*”JD’s data” refers to data is from Jan. 1-25, YOY increase refers to the lunar calendar

(ella@jd.com, vivian.yang@jd.com)