by Yuchuan Wang

The omnichannel-based JD New Markets business has become the offline home court of JD.com. JD New Markets is a B2B2C model. Committed to serving China’s over 6.8 million offline mom-and-pop stores, the business leverages JD.com’s expertise in e-commerce, logistics and technology to connect the supply from brands to nationwide offline stores.

Launched in December 2015, through its “Retailers’ Helper” purchasing app, smart store management system and the omnichannel mini program JD Convenience Go, JD New Markets is able to provide small-and-medium sized stores with digital solutions to attract both online and offline traffic and increase shop owners’ earnings.

 

Supplying nationwide mom-and-pop stores

At a mom-and-pop store in some rural areas in China, it is not uncommon to find copycat versions of large brands.

A popular beverage (left) and its copycat (right)

In the past, shop owners either purchased goods from wholesale markets or salesmen at various distributors for different products and brands. In addition to copycats, price differentiation was also an issue.

“Retailers’ Helper” (zgb.jd.com) was launched by JD New Markets in 2016 to combat these challenges. The one-stop B2B purchasing platform designed specifically for mom-and-pop stores enables shop owners to order authentic and quality products from JD and brands through the app. Leveraging JD’s resources, including suppliers, goods and ecosystem partners, Retailers’ Helper provides an integrated full-category purchasing experience. It also handles the delivery to stores.

There are already over 8,500 brands and over one million users on the platform, among which 70% come from third-tier or lower cities.

In 2018, JD New Markets further improved the purchasing ecosystem by launching the “Joint Warehouse” program, aiming to add brands’ authorized distributors and wholesalers’ local stock and delivery capability to provide timely delivery of goods to mom-and-pop stores, in addition to JD’s own warehousing and distribution network. Under this model, products with a high turnover are prioritized by joint warehouses while other products can be sourced and shipped from JD’s centralized warehouses, but fulfilled by joint warehouses.

Goods inside joint warehouses of partners

As of now, JD New Markets has a network of more than 4,000 joint warehouses covering over 300 cities and 1,800 counties, with 64% of them in third-tier or lower cities. The program has greatly enhanced JD New Markets’ product offerings and coverage, improving cost, efficiency and experience for the stores.

 

Multiple store formats, omnichannel fulfillment

By offering access to JD’s brand collateral (i.e. logo), and providing guidance in store designs, management, service standards, procurement and logistics, traditional stores have become “JD Convenience Stores”, “JD Maternal and Baby Shops”, “JD Wine Shops” and more.

Qumarlêb is a county in central-south of Qinghai province, in the northwest of China with an elevation of around 4,200 meters. The high altitude means cold weather and difficulty accessing supplies. With the help of JD New Markets, resident Di Gao, opened a JD Convenience Store in the county. With access to JD’s inventory resources, local residents can buy a much wider selection of products than before and at transparent prices. In addition, leveraging JD’s smart store management system, Gao knows what products are most popular and when to sell them.

Value-added services such as printing, parcel collection, and housekeeping services are also provided in convenience stores such as Gao’s. This helps a store gain extra traffic.

Di Gao (second from left) and her friends

At JD Wine Shop and JD Material and Baby Shop locations, consumers can enjoy the quality service they get online with JD because goods sourcing, pricing and marketing are all strictly controlled. For example, each bottle of wine has an anti-counterfeit tracing code attached. Customers can scan the code to view the entire supply chain process.

“The COVID-19 pandemic led to the closure of many offline stores earlier this year. But, thanks to JD, our customers increased a lot,” said Pai Peng, a JD Maternal and Baby Shop owner in Xi’an, Shaanxi province.

JD’s supply chain innovation program which connects Peng’s store with JD’s e-commerce traffic helped him thrive at a time when many store operators struggled.

Instead of sourcing online orders from warehouses, and then sending them through distribution centers and delivery stations prior to delivery to the customer, JD leverages offline retail outlets like Peng’s store and sources inventory from there instead.

In addition, the JD Convenience Go mini program on WeChat enables neighborhood customers to order from a brick and mortar store directly and have products delivered by crowd-sourced couriers.

“My shop opened in September in 2019, but we amazingly reached break-even as soon as in February in 2020,” said Peng. “In October, revenue from our offline channel was RMB 120,000 yuan while it was RMB 150,000 yuan through the online channels. I’ve seen accelerated profitability.”

Peng is quite confident in his business, “I hope to open three-to-five more JD Maternal and Baby Shops in the future.”

Pai Peng (left) and his JD Maternal and Baby Shop (right)

 

Technology enables deep understanding of customers

Technology plays an important role in retail, especially in equipping traditional mom-and-pop store owners.

Data from brands to stores and to end customers’ shopping behaviors are aggregated on JD New Market’s smart store management platform, together with the supplementary data analysis from the online FMCG (fast-moving consumer goods) business on the JD.com platform, which has over 400 million Chinese consumers.

“What JD provides to me is not only a store operation plan, but also a business plan based on customer profiles,” said Jianxing Fang, who runs two JD Convenience Stores in Beijing.

JD’s team was involved in the entire set up process for both stores, from location evaluation based on big data, decoration and layout, product selection and the implementation of new technologies such as smart store management, as well as an automated checkout system.

Even though first store is only dozens of square meters, maximum daily sales have reached nearly RMB 40,000 yuan.

Jianxing Fang and his convenience store in Xidan district, Beijing

Retailers’ Helper also gives shop owners a “smart” purchasing experience. By analyzing store location, its neighborhood consumption and the store’s sales, the platform is able to recommend different product portfolios to different shop owners to attract more local traffic from target consumers and increase sales. For example, a 100 ml bottle of shampoo (the maximum amount allowed on most flights) will be found at stores in airports or train stations, rather than a residential community store.

With the help of JD New Markets, millions of shop owners are gaining access to authentic products, services and technology, enabling them to sell at better price by knowing better of customers. And in turn, JD New Markets has been helping JD.com expand its coverage offline especially in lower-tier cities and reach more consumers.

“The value of B2B should not stop at the commodity circulation level. [It should also cover] omnichannel supply and empower brands to stores to end consumers,” said Arthur Zheng, head of JD New Markets. “We will continue to optimize the supply of goods and services provided by JD New Markets, to jointly create better stores and provide consumers with the best possible shopping experience.”

 

(yuchuan.wang@jd.com)

by Ella Kidron

“After entering the [app] store, click on the magnifying glass and type in the name of the app you want in order to download it.” Zilin Chen, 36, a trainer with SEVEN FRESH, JD.com’s omnichannel supermarket, is addressing a class of attentive students, some of whom are nearly twice his age. The class is conducted in collaboration with the Guangzhou Liwan District Retired Civil Servants School. JD will open three SEVEN FRESH LIFE stores (small scale versions of SEVEN FRESH supermarkets located in residential areas) in Guangzhou later this month.

Zilin Chen addressing a class of elderly

The class in session is focused on how to use the Internet on a mobile phone. The course starts out with the basics such as where and how to download apps and the function of each app. Then it will gradually increase in difficulty, covering how to virtually line up for the hospital, shop online, scan QR codes and connect a bank card, among other skills. It relies on a hands-on approach where the elderly pull out their phones and follow along.

For example, when learning about e-commerce, the students browse for specific products and can see real discounts – this gets them excited, according to Chen. They realize firsthand the convenience of technology in their everyday lives. According to the JD Big Data Research Institute, elderly consumers most commonly buy food products online, and their consumption of nutritional and health products has also increased 83% YOY.

A brand new skillset

Auntie* Zhong, 58, leads a rich life of waking up at 6:00 am, practicing yoga, cooking and then going to dance class in the afternoon. After mastering the smart phone, adapting to the “online world” became a new life project for her. With the colorful world of online movies, TV dramas, books and countless products which can be bought through e-commerce, Auntie Zhong’s life and others are no different from the youngsters around her. Sales of history books increased by 77% YOY among elderly shoppers, while sales of cameras and photography-related and other hobby products increased by more than 50%, according to JD data.

A few years ago, Auntie Zhong could only make phone calls and struggled to type on her mobile. With the smart phone her child bought for her in tow, she attended the class and once getting acquainted, became the “fashion icon” of her friend group.

The training also helped Auntie Huang, who is in her 70s, up her game, adding flash sales, group buying and even competing for red envelopes to her online skills repertoire. During the Singles Day Grand Promotion period (Nov. 1-11), Auntie Huang discovered a game where she could “adopt” a virtual dog and play games to accumulate points and cash prizes. She recently used the points to buy herself a suitcase worth a few hundred yuan.

Auntie Huang finds that she is not much different from the “younger girls”, and spends most of her money on clothes and cosmetics such as Lancôme powder, Estée Lauder eye cream and more. According to JD’s data, beauty product sales from elderly consumers have increased by 87% YOY, while jewelry and hair accessories saw an increase of 50%.

Savvy, she even browses social media e-commerce platform Xiaohongshu (小红书) and popular video short video platform Douyin (抖音). “Now I can receive packages every day. I’m very happy,” she said. Having worked hard all her life, the smartphone has opened up a new world for her in retirement.

Classmates Auntie Huang and Auntie Zhong

Grandpa Luo, who goes by “Sir Luo”, previously used his phone for WeChat and sporadically browsing the news. He now relies on the internet for practical purchases – electrical appliances, exercise equipment for elderly and food items unavailable in the supermarket. JD’s big data finds that sales of fitness training products by elderly consumers has increased 100% YOY.

The “trophy” in Sir Luo’s online shopping collection is a portable charger he bought for his wife for around RMB 100 yuan. A shopping maven herself, his wife receives express deliveries almost every day. She is also keen on taking selfies and has all sorts of “beautifying apps” on her phone, which she relies on instead of having Sir Luo, who picked up photography as a hobby, take photos for her. Her phone is always running out of battery. “I gave her a portable charger so she can think of me when she is using her phone. This is my little trick,” said Sir Luo. His proud moment of mobile phone mastery comes when the taxi he has ordered via an app arrives and the driver is impressed with his ”skill” to call the car. “Right now my biggest problem is that the phone’s storage is not sufficient. I hope to switch to one with a bit more storage next.”

Sir Luo surfing the Internet on his mobile phone

There are many functions of mobile phones that younger users take for granted. Sir Luo recalls that the first time he bought something through e-commerce – a mobile phone stand, he waited anxiously for three days to receive it, only to find that it was broken. “At that time, I didn’t understand how to do returns or communicate with customer service. All I could do was sulk about it.” A few years ago, Auntie Zhong found herself stuck with clothes that didn’t match and spoiled fruit. In the course, the elderly learn how to compare goods, contact customer service and return and exchange products.

The enthusiasm to participate in the course is extremely high – more than 100 people signed up within two days, and the classroom was packed when classes are given. “Without this class, even with smart phones, it would still be difficult for these elderly to access apps.”

A global phenomenon

The world is getting more and more digitalized by the day, but elderly people without a grasp of the latest knowledge are left behind. Statistics from China Internet Network Information Center show that among 940 million internet users in China, the share of those aged 60 and above rose from 4% at the end of 2016 to 10.3% in June 2020. Since 2020, the growth rate of new users on JD has been highest among the middle-aged and elderly (46+). However, JD also finds that loneliness among this population is one of the biggest problems. Seventy percent of elderly consumers believe children are indispensable in their care process and 68% want to spend more time with their children, while their children tend to replace filial piety with material purchases. Among related categories, the proportion of remote orders (orders go to the recipient and sender are different) is as high as 27.2%.

This is a global phenomenon and one that is exacerbated with the outbreak of COVID-19. Under lockdowns, many elderly around the world have to rely on technology much more than before – for health management, connection and companionship. In China, more elderly consumers started shopping at the height out the virus outbreak, and kept up the habit afterwards. Elderly in the U.S. and other places find themselves in a similar board. Mrs. Alexander, 88, in Monroe, New Jersey eagerly learned how to text a few years ago, but it was COVID-19 that pushed her onto Zoom. Today, a typical day for her might include a physical therapy session via her trainer online, followed by a catch up with family or friends. Last month, Mrs. Alexander celebrated her 88^th birthday surrounded by over 20 relatives “Zoom-ing” in from around the world.

Easing the transition

The training program is one of JD’s many efforts to help elderly embrace and enjoy the possibilities the Internet offers. Beyond e-commerce, elderly are also able to use the internet to manage their health. Since 2020, purchase of online medical consultations by elderly customers has increased 233 times YOY.

Earlier this month, JD worked with several mobile phone brands to launch smart phones for elderly people through its Consumer-to-Manufacturer (C2M) initiative. The 5G smart phone that JD Mobile and JD Health (which listed on Hong Kong Stock Exchange on Dec. 8) launched with ZTE is equipped with services such as remote assistance, detailed instructions, fast medical consultancy and more. For example, customers can download the app called “family time” developed by JD, and connect to their parents’ smart phones. Then customers can remind their parents remotely to take medicine or share family photos with them. Parents can easily make emergency calls and share their locations with their children.

In the face of an ever-changing internet, many elderly have a deep-seated fear of being left behind. This is not lost on Chen. When class ended, he immediately went home and asked his parents if they wanted his help downloading an app. Surprised, they uttered the rough equivalent of “when pigs fly.” This saddened Chen. “In the past, when they asked for help, I was always too busy or make a flippant attempt to help. Perhaps I neglected their feelings.”

To narrow the digital gap for the aging population, the Chinese government has recently issued specified plans to help elderly people overcome barriers to using smart technology. JD has set up exclusive service zones to ease the shopping experience for the elderly in its nationwide offline stores including JD Home Appliance stores, JD Computer and Digital stores, JD Pharmacy, Seven Fresh, JD Convenience stores and more.

 

 

(ella@jd.com)