JD has upgraded Yihaodian (literally means No.1 Store) to Yihaodian Membership Store, the first online membership-only retail platform in China.
Customers can buy an Yihaodian membership for RMB 198 yuan/year. Existing Yihaodian members or JD PLUS members can enjoy a discounted rate of RMB 148 yuan/year. With the membership, customers can enjoy selected, premium products at highly competitive prices, from groceries to fresh food, digital products, lifestyle products and more. JD Logistics will provide same-or-next day delivery service to Yihaodian customers. Yihaodian’s service currently covers four tier-1 cities, namely Shanghai, Shenzhen, Beijing, Guangzhou, and Jiangsu and Zhejiang provinces. It will be open in more cities in the future.
The new Yihaodian model is targeted at middle-class family customers who demand high quality products with competitive prices. Yihaodian also has a team of professional buyers, most of whom have over five years of experience in their own product categories, to personally select products for customers from JD’s supply chain or the customized products. Selected based on big data, the products are usually with positive reviews and high repurchase rates, such as premium steak, seasonal fruits, environmental friendly cleaning products, novel small home appliances and more. The first-party model can also give customers peace of mind when shopping on Yihaodian.
To save customers’ from comparing prices on different platforms, Yihaodian has a price comparison system to monitor prices on different ecommerce channels 24/7. If the price of a product on other platforms is found to be lower than on Yihaodian, it will either lower the price or remove the product. JD also ensures that all prices for products on Yihaodian are lower than the same product on JD.
Yihaodian provides its members with industry-leading customer service. The platform offers “membership fee insurance”, which means if customers make over 12 orders in one year and the money they saved (compared with JD prices) is lower than the money they paid for the membership fee, Yihaodian will provide a full refund of membership fee. Other premium services include a 24/7 customer service line, refund of orders with broken packages and for products nearing their expiration date. The services can provide customers with an easy, convenient and economical experience.
Yihaodian was founded in 2008 as a B2C ecommerce platform that mainly sell groceries. Walmart first invested in Yihaodian in 2011. In 2016, JD acquired Yihaodian as part of its deepened partnership with Walmart.
JD recently sent a surprising gift to a couple – a computer, to replace one that the wife smashed during a feud with her husband over money.
The story of the couple was originally posted by the wife’s friend on Weibo (a Chinese social media platform similar to Twitter). The husband bought a new TV for his parents living in their hometown without prior discussion with his wife. She found out about it after seeing the order history on JD. The wife was upset and her husband got angry when she questioned him about it. Failing to understand each other’s feelings, the couple started to quarrel and the wife smashed the husband’s computer out of rage.
The incident raised a heated discussion on the Internet. Some think the husband should have informed his wife before placing the order while others say the wife shouldn’t impulsively smash the computer, as they are not a well-off family. Seeing the post, JD decided to send a new computer as a gift to the couple, trying to relieve them from the pressure of buying a new computer and helping repair the couple’s relationship.
“Items have prices, and if an item breaks you can buy a new one; but love is priceless and can never be bought. We would love to provide [the couple] with a new computer for free to encourage them to love their life and their family,” said JD when forwarding the post on Weibo.
JD Q2 2020 Earnings: FMCG and Fresh are Champion Categories, JD Health Shines, Lower-Tier Cities Strategy, and more…
It’s been quite a week here at JD. We reported second quarter 2020 earnings on Monday, followed by the eight year anniversary of JD Logistics and the launch of our Family Doctor program.
First thing’s first – earnings. JD reported net revenue of RMB 201.1 billion (US$ 28.5 billion), an increase of 33.8% YOY. General merchandise revenue was RMB 64.0 billion (US$ 9.1 billion), an increase of 45.4% YOY, the highest growth rate for the past nine quarters. This growth was led by star categories such as supermarket and healthcare. Annual active customers for the past 12 months (TTM) reached 417.4 million, an increase of 29.9% YOY, representing the highest growth rate in the last 11 quarters.
Active Customers up 30% annually; 80% of New Users Come from Lower Tier Cities
As JD CFO Sandy Xu revealed during the earnings call, over 80% of new users for Q2 came from lower-tier cities, the highest level on record. Xu also explained that JD’s strong topline growth was backed by sustained improvement in user engagement, especially from lower-tier cities users. Put simply, a look at the numbers indicates that JD’s long term commitment to and investment in the lower-tier cities is paying off.
JD started investing in the lower-tier cities with its logistics network several years ago. The commitment to the lower-tier cities does not stop there, however. JD’s social e-commerce platform, Jingxi, as well as the light version of the JD app, are meant to make it easier for lower-tier cities consumers to find appropriate products. Another of the ways JD is seeking to make more suitable products available is by working directly with the hundreds of industrial belts across China. Get the full story.
FMCG and Fresh Are Champion Categories
JD’s position as not only the largest supermarket, but as Chinese consumers’ grocery store of choice was made clear in this earnings report. On the call to discuss results, CFO Sandy Xu explained that the supermarket category, including FMCG and fresh produce, became the single largest product category by revenue in the first half of 2020, surpassing mobile phones, home appliances, and computers – JD’s former “champion categories” (which also performed well).
Behind the strong results is both customers’ and brand partners’ recognition of and trust in JD as a reliable provider of essentials. JD’s own big data found that as of June 30, 2020, over 10,000 brands have achieved YOY turnover growth of over 100%, 7000 brands saw over 200% YOY turnover growth, and 5,000 brands saw 300% growth YOY. Two hundred brands saw transaction volume exceed RMB 100 million yuan, while over 20 brands realized transaction volume of over RMB 10 billion yuan. Get the full story.
JD’s Investment Strategy: Complementary, Long-Term Business Value, Strategic Growth in Key Areas
We’ve announced a handful of important investments recently in several categories across the business. On the earnings call, JD CEO Dr. Jon Liao succinctly summarized the company’s investment strategy. He said, “We are committed to investing in companies which are complementary in terms of scale, scope, capability and long-term business value to build long-term strategic value.” He added, “We will continue our strong investment in lower-tier cities, supply chain and infrastructure.” Here we recap several recent investments, all of which align with Liao’s investment ethos explained on the call: https://jdcorporateblog.com/jd-earnings-cso-jon-liao-on-jds-investment-strategy/
JD Health Sees Online Medical Consultation Volume up 400%
In the second quarter, JD Health, which saw strong topline growth in online pharmacy sales, also realized 400% YOY growth in online medical consultation service volume as more people became aware of and accustomed to the new service. On the call to discuss the results, JD Retail CEO Lei Xu said, “JD Health is the largest pharmaceutical retailer in the healthcare industry in China, and more than that, it’s the front runner and a first mover in the Internet-led healthcare area.” Get the full story.
On August 18th, the day after the earnings call, JD Health announced a new JD Family Doctor initiative. Through the program, up to eight family members can share a package of extremely high quality medical services, bringing the best medical resources to consumers at accessible prices. JD Family Doctor is meant to supplement China’s existing public medical resources, and is part of JD’s commitment to use its resources and technology strength to improve people’s lives. One of the biggest benefits is that it can be used for individuals to manage their own health, as well as to have visibility into and be able to support health management for family members such as parents, from afar. Learn more about our Family Doctor program: https://jdcorporateblog.com/jd-health-launches-family-doctor-telehealth-services
Are We Heading into the “JAT” Era?
We are all likely familiar with the term “BAT” to describe Chinese internet giants Baidu, Alibaba and Tencent. Recently, Fortune magazine has coined a new term, JAT”, referring to the three most prominent Chinese technology companies, JD.com, Alibaba and Tencent, who keep on transforming and growing against all odds and uncertainty arising in the past year. Last week Fortune announced its Global 500 list, on which JD ranked 102nd, jumping up 37 places compared with last year. Get the full story.
JD LOGISTICS STRATEGY UPGRADE
On August 18th, JD Logistics celebrated its eighth anniversary, following its official registration as a company in 2012. Zhenhui Wang, CEO of JD Logistics, sent a congratulatory letter (in Chinese) to JD Logistics employees, in which he announces the upgrade of JD Logistics’ mission and vision, organizational structure and brand image, to further its goal towards becoming a leading global supply chain and logistics company. A courtesy translation of the letter is available here: https://jdcorporateblog.com/jd-logistics-upgrades-its-brand/
JD held the grand opening ceremony for the Chile National Pavilion at its Beijing Headquarters on August 21st . Chilean ambassador to China Mr. Luis Schmidt Montes, Commercial Counsellor Ms. Natalia Cortés, Director of Asia at Wines of Chile Mr. Nicolai Samsing and General Manager of JD Liquor Jack Chen joined the event.
The JD Chile National Pavilion started to have its trial operation in late July to sell signature wines from the country to over 417 million Chinese consumers. As part of the cooperation, JD Super opened its marketing, data, and omnichannel resources to Chilean wine brands. Since the trial, the JD Chile National Pavilion has garnered 160,000 followers.
“We are very proud that Chile is the first country in Latin America to build a country pavilion on JD,” said ambassador Schmidt:” Chilean products are highly welcomed by Chinese consumers. With the Chile National Pavilion, our products can be brought together under one brand, the ‘Chile’ brand, which reinforces the image of our country. JD’s zero tolerance policy towards counterfeits will also help us better introduce the top quality imported products to China.”
“China is Chile’s No.1 trading partner, and Chile is the No.1 supplier of products such as fresh fruits, pork, Atlantic salmon to China. Chilean wine accounts for 13% of the domestic market in China. We can say that wine is our best ambassador around the world,” said , Commercial Counsellor Cortés. “We are glad to work with JD to provide more opportunities for Chilean brands to make their mark on the most reputable ecommerce platform in China. We hope to expand the store to more categories such as fresh fruits, meat and sea food.”
“The opening of Chile National Pavilion at JD is a new milestone of JD’s cooperation with the Chilean Embassy to China and Chilean wine brands,” said Jack Chen, General Manager of JD Liquors. “Chile has become the third largest wine importing country for China in 2019, after France and Australia. With the opening of Chile National Pavilion, we will better integrate the resources from all categories, and focus on introducing better products, improving brand recognition and cultivating customers for Chilean brands. We hope the JD ecosystem can serve our brand partners and customers in the best way.”
In 2018, JD established an alliance of global wine producing areas, building the first online platform for direct sales of international wine brands in China. Strategic cooperation agreements with wine producing countries including New Zealand, Argentina, and France have been signed. There are currently twelve national wine pavilions on JD.
“If you want to succeed in retail finance, you have to apply big data to real-life scenarios.”
When Ling Xu, president of fintech at JD Digits (JDD), was asked why he joined the company in 2013, which was when internet finance took off, the young vice president at JD Digits said with confidence and a smile on his face, “I had been thinking of joining a non-banking institution since 2012 because I wanted to bring innovation to the consumer finance industry.”
JDD’s Three Development Phases
Phase 1:Becoming an innovative Competitor in the Financial Industry
In his office on the 16th floor at JD’s headquarters, Xu shared the three development phases for JDD. In Phase 1, which was from 2013 to 2015, JDD established itself as an innovative competitor in the financial industry. JDD sought to leverage big data when entering the market in order to solve challenges that traditional banks face, such as low efficiency when dealing with payment and credit service for merchants. During this period, JDD launched a series of consumer finance products, such as JD Wallet and JD IOU(京东白条).
In February 2014, Xu and his team launched China’s first internet consumer finance product: JD IOU, similar to a credit card but in virtual form. JD IOU has played an important role in customer growth, especially enhancing young customers’ purchasing power on JD. Data shows that customers’ purchasing power has increased 50%-60% after using JD IOU, which aims to solve the pain points that come from traditional banking, including tedious application processes and lack of credit access, particularly for young people with limited or no credit history.
Xu wondered if consumer finance services could be offered entirely online. After all, the business model would be similar to buying or selling a cell phone. Before, people would shop for cell phones at an offline store. But the rent and inventory costs made this model less cost-effective for the business compared to an online shopping experience. JD IOU’s model follows this principle. At the click of a button, users can apply for an IOU credit line in just one minute.
The logic behind JD’s criteria is sensible and straightforward. Using JD’s retail business data and obtaining a user’s consent, JD can analyze a user’s profile to judge two key factors: whether the person has a willingness of repaying and whether the person has the ability to repay. These criteria are especially beneficial for younger consumers who earn less but have a stronger demand for financial credit.
JD IOU model is sometimes compared to a model used by Grameen Bank in Bangladesh established by Muhammad Yunus(1940-) who won Nobel Peace Prize in 2006 by introducing small amount of loans to the poor, in which loan borrowers need to form a small group to monitor each other’s payment behavior. However, Xu says this may not be a good way to determine an individual’s credit limit. IOU model leverages technological innovation to bring benefits to individuals, and by utilizing big data insights, the model can determine an individual’s ability to repay.
JD Digits has built an application system that is convenient for users and leverages JDD’s innovative technology and complex work on the back end. For example, by analyzing an address, the system may identify whether the person is employed, owns a home, or has additional family members.
“JD IOU is a successful product in its first phase regarding innovation. The next step involves finding ways to utilize the technology beyond JD.” said Xu when discussing the future of JD IOU.
Phase 2: The First Company to Introduce Technology to the Financial Industry
Phase 1 proved to be successful. In the second half of 2015, the management team considered a few important questions: Who is JDD and what does JDD want to be? Does JDD want to be the next big bank or investment fund? Or does JDD want to be a technology platform that introduces cutting edge innovation to the financial industry?
Xu said, “We spent half a year discussing our strategy. If we continued our Phase 1 strategy, we’d be another competitor. But if we considered ourselves a technology platform, we’d be a service provider. Ultimately, we chose to define ourselves as the latter. JDD is the first in the industry to introduce the concept of financial technology, or fintech. Our clients are the financial institutions, and we are no longer competitors.”
Phase 2 lasted for two years until 2018. During that time, JDD has provided services for a variety of financial institutions, including banks, investment funds, and insurance companies.
Phase 3: How JDD Became a Digital Technology Provider？
Phase 3 began in the second half of 2018. By this time, JDD had spent several years building and enhancing its technological capabilities, including big data, blockchain, IoT, and AI. The company started to think about how to utilize these capabilities beyond the financial services industry.
Xu explained, “The financial services industry has higher levels of digitization and technology than other industries, such as agriculture and energy. We knew that if our technology was being utilized in the financial sector, it could easily be applied to other industries. We’d only need to promote it.” The financial industry typically requires a higher level of accuracy and efficiency. According to Xu, three key factors determine whether JDD will quickly jump into a new industry. First, is the industry is big enough? Second, is the current digitization level low? And third, will JDD’s core advantages match the digital demand?
One domestic private bank has worked with JDD since August 2019. This partnership is an example of how JDD has leveraged technology to help traditional financial institutions go digital, especially middle- and lower-class financial institutions. JDD’s technology services, which include private cloud solutions, retail loan solutions, online asset management, and supply chain financing solutions, can provide clients with integrated financial solutions and non-financial solutions, such as AI, ads, and digital marketing. To date, JD Digits has served hundreds of millions of customers, over 700 financial institutions, and over 30 public institutions.
JDD’s services have also expanded to more regions. Recently, JDD worked with Wangfujing, one of the oldest and busiest commercial areas in Beijing, to launch a “digital commercial street” with WeChat’s mini program, powered by JDD’s technology.
Concentration Led to Success
Xu is in his 30s and is the kind of young talent who always trusts his instincts.
“In my opinion, undergraduate students who take basic courses such as mathematics, physics, economics, or even chemistry will build up their logic and structure, which will be beneficial for their future work.” Said Xu.
He advises those hesitating to select courses after taking the National College Entrance Examination, commonly known as the “Gaokao” (高考) in China. “Concentrating on one thing is very important.” Xu lives by his advice. From 2016 to 2018, at a time when he wanted to make adjustments to his work-life balance, Xu trained for marathons. In Xu’s opinion, training for marathons wasn’t necessarily fun, but it allowed Xu to train his mind in the meantime. Looking around his office, he’s received numerous marathon medals.
“JDD will always remain hungry and curious for new ways to be technologically innovative. And digital technology is at the core of our focus.” Xu concluded.
One of the highlights of JD.com’s second quarter 2020 earnings, reported on August 17th, was that annual active customers in the past 12 months (for the quarter ended June 30, 2020), increased to over 417 million, up 30% from a year ago.
In fact, as JD CFO Sandy Xu revealed during the earnings call, over 80% of new users for Q2 came from lower-tier cities, the highest level on record. Net revenue grew by 33.8% in the second quarter to RMB 201.1 billion yuan (US$ 28.5 billion). Xu explained that the strong topline growth was backed by sustained improvement in user engagement, especially from lower-tier cities users. Put simply, a look at the numbers indicates that JD’s long term commitment to and investment in the lower-tier cities is paying off.
JD started investing in the lower-tier cities with its logistics network several years ago. In the beginning of June, during the 618 Grand Promotion, JD Logistics announced the upgrade of its lower-tier markets program to provide 24-hour delivery in over a thousand counties and tens of thousands of townships in China. Under the plan, JD will either expand or newly construct 13 local warehouses and transfer centers, focused on third-to-fifth tier cities. JD will also operate 12 Asia No. 1 highly automated logistics parks, which have traditionally mainly focused on first and second tier cities, in lower-tier cities.
The commitment to the lower-tier cities does not stop there, however. JD’s social e-commerce platform, Jingxi, as well as the light version of the JD app, are meant to make it easier for lower-tier cities consumers to find appropriate products. Some users start on the Jingxi app and then migrate over to the main app as they get accustomed to making e-commerce purchases with JD. An important element of providing suitable products is working directly with the hundreds of industrial belts across China. JD Retail CEO Lei Xu explained on the earnings call, “There are over 200 industrial belts across the country and we’re identifying some suitable partners in these industrial belts to help them with their digital transformation with the empowerment of our supply chain, and to design more suitable and better value for money products together.”
Xu reiterated the fact that the lower-tier market has been an important contributor to JD’s new customer acquisitions, and that certain categories where JD is very strong, such as consumer goods, fresh produce and essentials, are highly favored by users in lower-tier cities and helpful in attracting customers.
Cao Peng is vice president and head of AI technology and robotics at JD Digits. His team is committed to promoting the full integration of a range of cutting-edge technologies including AI, big data, and blockchain with finance, retail and other businesses.
With the effects of demographic and data dividends gradually waning, internet giants are rushing to the “2B” service battlefield, also known as the “Industrial Internet.”. Internet companies have sought to increase their market share by providing business-to-business technology solutions. At the same time, under the influence of COVID-19, companies in traditional industries have increased urgency for digitized solutions.
JD Digits has been at the forefront of this trend toward digitization for almost a decade. Established under JD.com in 2013, JD Digits has moved from focusing exclusively on consumer services to delivering business solutions—allowing it to become one of the world’s leading digital technology providers. Currently, the company is focused on core businesses, including AI technology, intelligent robotics, intelligent cities, digital marketing, and Fintech solutions.
Cao Peng, vice president and head of AI technology and robotics at JD Digits
From multinational corporation to Richard’s little shop
Cao Peng met Richard Liu, Founder and CEO of JD.com in the early 2000s. At the time, Liu ran an offline store in Zhongguancun (known as the “Silicon Valley of China”) that sold authentic-only laser technology products such as compact discs and CD burners. He happened to meet Richard on an internet forum when he was browsing information regarding how to identify fake CDs.
“Twenty years ago, there was significant fraudulent business activity in Zhongguancun. It was quite rare that Richard chose to sell only authentic ones.” Said Cao.
After graduating from college with a degree in computer science, Cao went to work for a leading multinational consulting firm. Not long after, Liu sought Cao’s help to build website for his Zhongguancun store. In January 2004, Cao successfully helped launch the website “jdlaser.com”, the predecessor of JD.com, in his spare time. Liu gave him two CD burners as a reward for his effort. “I still have one of them under my bed,” said Cao.
Website: jdlaser.com
Pioneering a new journey
In 2007, JD received over $10 million in its first round of funding. The fast-growing e-commerce company urgently needed professional managers. Again, Liu went to Cao—this time to recruit him for technology research.
There is a Chinese saying: “A man should be independent by the age of 30.” That year, Cao was 29.
“I wanted to be a programmer who impresses others.” Cao remembered. Although enjoying a successful and stable career, he was tired of the same routine. A doorstep away from 30, he wanted to challenge himself.
“Richard is a reliable man. He keeps his promises and never disappoints his customers.” Cao said. What surprised him the most was that he had never seen a company that could survive in Zhongguancun for five years—most go bankrupt in just one year. Even former employees who handled Cao’s disc orders continued to follow Liu. “‘He must treat his employees very well,’ I thought.”
Since then, JD.com has gradually become China’s largest retailer by revenue, while Cao has fulfilled his dream of becoming a leading technology professional. From transactions and supply chain to accounting and human resources, Cao has been heavily involved in all phases of JD’s technical infrastructure. He has spearheaded countless technological innovations to help build the company into a giant up from the ground.
When JD.com was preparing for its initial public offering on Nasdaq in 2013, Shengqiang Chen, the company’s former CFO, established JD Finance, the predecessor of JD Digits.
Cao, who had planned to retire, soon decided to join Chen to establish the new financial empire.
“I really enjoy starting new businesses from scratch. The process is a lot of fun, and seeing something built through my own efforts is deeply fulfilling.” Leveraging his expertise in technology, Cao first helped Chen build the JD Finance website and then helped JD Digits build the fundamental technology system.
From financial to digital
“We decided to move towards fintech in 2015 because we realized that focusing exclusively on financial products wouldn’t maximize our market share considering the number of players from both traditional and internet industries,” Cao said, “By expanding into fintech, we discovered that not only can we empower the financial sector, but our AI and big data capabilities were advanced enough to be replicated in other industries. That’s why we further adjusted our strategy in 2018 to become a digital technology company.”
JD Digits is determined to become the partner of industrial digitization.
Companies that focus exclusively on technology typically invest a significant amount when entering new spaces, not to mention the high cognitive barriers traditional sectors face with new technologies. Compared to tech-only providers who have no application scenarios, JD Digits has its clear strengths. “Take computer vision technology as an example, in both JD’s retail and payment businesses, there is a great demand to ensure the technology can be verified through reliable applications.”
By opening up its technologies, JD Digits hopes to help traditional sectors become digitized and intelligent, ultimately reducing costs and improving efficiency.
This vision has been repeatedly verified in Cao Peng’s business lines.
Taking his blockchain business as an example. As of June this year, it has collaborated with over 1,000 brand owners and helped track more than 90,000 SKUs (stock-keeping units) on JD ranging from fresh produce, baby and maternal products, liquors, beauty products, medicine, and luxury and cross-border products. The system has had more than 7 million inquiries by consumers.
The blockchain technology, which was originally designed to ensure a transparent supply chain of authentic products to online consumers, now also serves clients for purposes well beyond retail, such as guaranteeing e-contract signing and trade secret protection.
Robotics
Unlike other departments, intelligent robotics is the only first-level department of Cao’s team. He and his team believe the development of IoT, cloud computing, and AI technology will accelerate the application of robotics in various scenarios and help upgrade traditional industries.
The robotics family of JD Digits
Starting from serving the financial industry, Cao’s team spent nearly a year researching their first robot, the “Intelligent Inspection Robot,” for bank data centers (IDCs). Powered by AI technology and multiple sensors, the robot is designed for environment and equipment checks in IDC. It has the ability to check a single server’s status in 30 seconds and help banks reduce IDC operating costs by up to 50%.
Cao’s robotics business has expanded beyond the banking industry to other industries such as medical and railways.
To help medical staff on the frontlines fighting COVID-19, Cao and his team helped launch the “Indoor Delivery Robot” earlier this year in a Shanghai hospital treating coronavirus patients. The robot helps transport medical supplies to contaminated areas, thereby reducing the risk for medical personnel from being exposed to the highly contagious virus.
Indoor Delivery Robot in a Shanghai hospital
Inspection robots are also used to inspect railways. According to JD Digits, the technology has helped reduce the human resource and time costs by 50%. Data collected by the robot may also be useful for future railway planning.
“We don’t plan on manufacturing robots. Our strategy is to establish the technology infrastructure and platform so third parties can build their own robots as quickly as possible.” Cao explains, “An IT company looking for robotics solutions for bank clients should be able to quickly create robots on our platform that fully meet the demand.”
The versatility of technology allows JD Digits to expand its offerings in everything from financial technology to digital technology, just like computer vision technology can be used to identify tea and also inspect data centers.
“Like most people who explore in the dark, we have encountered numerous challenges. Our ideals convince us to persevere, and the results are proving strong. AI is indeed helping people in their work and personal lives.”
It was around 2012 when Liu Yilong, a furniture designer, decided to develop his own brand and sell it on JD.com.
Liu’s family owns a furniture factory in Shenzhen and used to produce furniture for major brands.
“My family business was a contract manufacturer for other brands for around 30 years, but I realized we had to develop our own brand to seek continued growth. And I chose promote it via online platform because I believed this would become a trend,” Liu recalled.
Zuomufang design
Liu’s brand Zuomufang was one of the first brands to join JD’s e-commerce platform. Now 80% of his sales come from online. The brand’s products feature innovative Chinese style designs, targeting young people.
Zuomufang is one of the best-selling brands on JD and is one of the seven brands present at JD’s pavilion at the ongoing Shenzhen International Furniture Exhibition, which kicked off on Aug. 20th.
Liu not only uses the online platform as a sales channel, but also uses online data as a reference to design new products and choose locations of offline stores.
“When we come up with some new designs, we post them online as virtual products or products for presale. Based on potential buyers’ feedback online, we decide on whether to produce the designs…this can help us better learn consumers’ needs and reduce inventory,” said Liu.
In addition, the online traffic data also helps Liu choose where to locate his offline stores.
“Online traffic data tells us where our consumers are concentrated, then we open offline stores close to them. They can conveniently visit the stores to experience our products,” he added.
Liu’s offline stores are located in first- and second-tier cities including Beijing, Shanghai, Guangzhou and Zhengzhou.
JD’s pavilion at the Shenzhen International Furniture Exhibition
Liu’s brand is one of around 7,000 furniture and household products brands on JD, according to Mao Yuchen, director of merchandising and innovative business of JD’s furniture business unit.
“Experience and service are two key factors in the furniture industry. Ten years ago, people didn’t have an awareness of buying furniture online because there was not developed e-commerce services like professional logistics for large products like furniture…people didn’t think it was convenient to buy furniture online. However, JD has developed logistics for large products and can delivery furniture from the factory directly to consumers’ homes within a short period of time,“ said Mao.
JD now provides furniture brands on its platform with services including transportation and installation.
In an effort to improve consumers’ experience, JD makes use of technologies like AR and VR to give people an immersive experience of furniture online.
Mao said that, online platforms won’t replace offline channels, but it will help improve consumers’ experience.
Gao Yaodong, director of the original and international brand business of JD’s furniture business unit, said that, previously, offline stores were the first gateway for consumers to experience furniture products. Now online has increasingly become the first channel for people to first encounter the products with the help of technologies.
Gao Yaodong speaks at the exhibition on Aug. 20th
“Once people have their first experience online, they can continue to seek a deeper experience at offline stores and enjoy related services,” said Gao.
In addition to improving people’s experience and providing related services with the help of JD’s strength in technology, supply and logistics, JD has been actively promoting original furniture design on its e-commerce platform and matching it with people who need it.
“We select quality furniture products of original design and in our online community match these products with people who pursue originality and quality…original designers can share their newest designs and interact with consumers online. Meanwhile, consumers can also share their products in the community,” said Gao.
“There are three stages of furniture e-commerce. In the first stage, people cared most about price. In the second stage, people start pursuing quality and brands are able to provide related services. In the third stage, people’s needs are fragmented. Young people who grow up with Internet use it as a key source of information. They care about quality, originality and personality. Currently, furniture e-commerce is moving from the second to the third stage.
On Aug. 20th, JD signed a strategic cooperation agreement with Shenzhen Furniture Association. Under the agreement, the association will introduce its highly-rated furniture brands to JD’s e-commerce platform.
Plus, JD and the association launched a program to support original furniture designers and provide them with e-commerce services.
