JD.com Stock Material Center: China’s First Royalty-Free Stock Material Center Advocating for IPR Protection

Posted on by Yuchuan Wang

by Yuchuan Wang

JD.com has released the JD Stock Material Center, which is the first royalty-free platform specifically intended for its merchants to use. The company, which got its start by committing to only sell authentic products, expects to drive copyright protection in the e-commerce industry. JD’s KOLs and merchants can access the center for free to meet all visual needs for the promotion of their products on JD, saving them hundreds of millions of RMB while protecting the IPR.

JD Stock Material Center, available for free for merchants and KOLs on JD’s platform

According to JD, on average, a merchant will use at least hundreds of images and dozens of fonts every year, spending thousands of RMB. In addition to costs, merchants also need to be concerned about copyright violations during the design process. The JD Stock Material Center will offer over 100 million quality royalty-free stock images and a diversified selection of mainstream fonts to meet the needs of online merchants.

Using AI technology, the platform is able to recognize text and images automatically and categorize fonts by style. JD also established an operations team dedicated to helping merchants find the materials most suited to their needs.

Jiandong Pei, vice president at JD Retail said, “We will continue to invest in protecting copyright and build a copyright protection system for the e-commerce industry. JD will also advocate for the continuous improvement and development of the visual materials ecosystem for society at large.”

 

(yuchuan.wang@jd.com)

JD Health Unveils Traditional Chinese Medicine Consultation Center

Posted on by Tracy Yang

by Tracy Yang

On June 7th, JD Health’s Traditional Chinese Medicine (TCM) Consultation Center was officially unveiled. This center brings together experts from TCM hospitals. Based on experts’ areas of focus, consultation desks covering nephropathy, respiration, andrology, oncology, endocrine, gynecology, cardio-cerebrovascular are set up through the initiative.

This center can not only provide patients with online consultation, group consultation and other services, but can also provide tailored services. For example, with the online prescription function, doctors can give patients TCM prescriptions in a variety of dosage forms, slices, granules, powders, water pills, honey pills and paste.

“JD Health’s TCM Center has built an academic + technology-driven online and offline integrated service model through cooperation with national medical masters, veteran Chinese medicine experts, academic teams and national academic institutions of TCM. It will become the backbone of the scientific and technological innovation for TCM on the Internet.” said, Lijun Xin, CEO of JD Health.

While providing high-quality TCM services to patients, JD Health has also launched a series of measures to ensure the safety and experience of users seeking medical treatment. In terms of technical support, JD Health will provide advanced equipment, including wearable devices, to collect patients’ health information. The look, listen and inquiry in the diagnosis and treatment of TCM can be completed online. In order to check the pulse of patients, the current solution is to cooperate with local offline doctors to complete the collection of patient medical information, and to have well-known doctors ultimately make a comprehensive diagnosis online.

In addition, this center will also have live broadcast and other special services. JD Health will partner with experts to share the popular science knowledge of TCM with users on a regular basis and popularize the concept of treating diseases with TCM. Users can also interact with famous medical experts through live broadcast, so as to better carry out health care and disease prevention in their daily life.

 

(tracy.yang@jd.com)

4 New Shopping Trends Revealed in Post-Lockdown China

Posted on by Vivian Yang

This article was first published on the World Economic Forum’s Agenda Blog

by Vivian Yang and Ella Kidron

Are Chinese consumers really indulging in ‘revenge consumption’ – a phrase coined by Chinese social media users to describe an anticipated flood of post-lockdown purchases – in the post-COVID era?

An analysis of data generated by JD.com’s 618 Grand Promotion – the biggest mid-year shopping festival in China – is a good way to find out. Transaction volumes on JD.com on the first day of this event, which kicked off on 1 June, showed an increase of 74% year-on-year, demonstrating a strong recovery of consumer confidence.

JD’s data and analysis of the first half of 2020 has revealed the following lasting trends, as people gradually adapt themselves to a new shopping normal in the post-COVID era:

 

1. A big step forwards in online shopping habits

COVID-19 broke out during Chinese New Year, when most shops were closed, and people immediately turned to online shopping to stockpile essentials. Thanks to the readiness of Chinese e-commerce ecosystems in terms of supply chain and logistics, these shopping needs were largely met during the lockdown period. On JD.com alone, more than 160,000 tons of staple items and daily necessities were delivered to customers’ doorsteps in time – helping to prevent a great toilet paper panic from occurring in offline stores.

In the first four months of this year, China’s total retail sales of consumer goods amounted to RMB10.68 trillion ($1.5 trillion), a decrease of 16.2% compared with the same period last year, while sales of online retail reached RMB2.56 trillion ($360 billion), an increase of 8.6%.

This shift from offline to online is significant and has continued after the lockdown, leading customer’s online shopping habits to leapfrog at least one or two years, especially in the grocery category. On the first day of the 618 Grand Promotion, JD Super, JD’s online supermarket, saw its sales increase by 100% while online sales of fresh groceries rose by 140%, compared with the same promotional day last year.

 

2. More family responsibilities for young consumers

It’s no surprise that young people are the main driver of lockdown shopping, as they are savvier about using online shopping apps. With the extended holiday keeping them at home longer than usual, young people have taken on more responsibilities. Data indicates that since the beginning of this year, more than 70% of consumers born after 1995 have shifted from “buying only for themselves” to “buying necessities for the whole family”.

Furthermore, when many young people returned from major cities to their homes in China’s lower-tier cities, they helped their family members to engage with online shopping – and to some extent they have driven the penetration of brand, quality and authentic products into lower-tier city markets.

These trends became more pronounced during the 618 Grand Promotion period. According to data from JD Super, young people have moved into the kitchen; purchases of kitchen paper towels by young people, for example, has doubled compared with the same period last year. Awareness of the need to protect the family has also strengthened; the data shows a 34-fold increase in transaction volumes of disposable cleaning products and a 340% increase in purchases of sterilization products year-on-year.

 

3. Shopping frenzy led by livestream and community group buying

To manage social distancing, consumers are using digital to connect, entertain and shop, fuelling a surge in livestreaming by retailers and social e-commerce. These innovative ways to shop have helped bolster sales for both international brands and local businesses.

The travel restrictions and closures of brick-and-mortar stores have not dampened Chinese consumers’ passion for big international brands. Interacting with their favourite brands online, combined with celebrities and attractive offers for fear of price rises later on due to production disruption, is the biggest emerging trend in the post-COVID market – and consumers are saving on travel expenses, too. More and more international brands are jumping on this bandwagon. For example, on 19 March, Canadian fashion brand PORTS did a nine-hour livestream on JD Live, featuring young celebrities and the fashion editor of Elle magazine. Over 1.3 million customers visited the livestream and PORTS’ sales surpassed RMB10 million ($1.4 million) on that day.

On the local business side, livestream and social channels are playing an important role in supporting direct sales for farmers and local factories who have been hit hard by the pandemic. Consumers feel inclined to support them, and are also benefited by these new shopping formats. Under a community group-buying initiative on JD platform, consumers bought over 225 tons of agricultural produce from Wuhan – the first epicentre of COVID-19 – in less than two months. Mingzhu Dong, chairwomen of China’s home appliances brand Gree Electric, staged a livestream session on 15 May and made RMB703 million ($99 million) in sales.

 

4. Value for money, comfort and the new normal

As consumers become more cautious in making purchase decisions in the face of ongoing pandemic uncertainty, sales of customized products that are more directly tailored to consumers’ needs are rising. Consumer-to-manufacturer (C2M) products, which are designed based on big data analysis of direct customer feedback, are increasingly popular, satisfying consumer demand and providing good value for money. These products are designed based on insights gleaned from data generated by targeted consumers and are thus able to provide more customized functions at reasonable cost, resulting in better value for money.

Perhaps as a result of COVID-19, customers are looking to invest more in products and services that provide comfort at home. Data shows that besides books and exercise equipment, expensive home furnishings goods – such as latex mattresses, silk quilts, smart bathroom mirrors and electrically heated towel racks – are in high demand. In addition, demand for pet-related products and virtual support services – such as programmes that store pet profiles and preferences, and online pet hospitals – is also growing.

Although in many respects work and life have resumed in China, shopping data shows that people are shopping with the aim of adapting to the new normal. Here are a few examples: with mandatory mask-wearing in public spaces, sales of lipstick and other facial maintenance products have gone down, while sales of eye-related make-up products as a proportion of category sales have risen; mothers are continuing to buy large amounts of milk powder and diapers in June to ensure they have enough imported supplies for the longer term; and bicycles and electric motorcycles have experienced explosive growth in the post-COVID market.

 

（vivian.yang@jd.com and ella@jd.com )

China’s Stimulus Sceptics Need Not Fear Side-Effects This Time

Posted on by Vivian Yang

This article was first published on FT.

by Jianguang Shen, Vice President of JD.com and Chief Economist of JD Digits

At last month’s National People’s Congress, China unveiled a much-anticipated fiscal stimulus package to counter the damage caused by the Covid-19 crisis to the world’s second-biggest economy.

The virus-fighting spend, which amounts to an extra Rmb3.6tn ($500bn), or around 4 per cent of China’s annual economic output, will be paid for by the issue of special Treasury bonds for pandemic relief, as well as infrastructure-bound local government special bonds and a wider fiscal deficit.

For many in China, the intervention is reminiscent of the Rmb4tn stimulus introduced by Beijing after the 2008 financial crisis. Held up as a painful lesson on the risks of ultra-loose fiscal policy, it has since dominated economic debate. But where does this stimulus phobia come from?

Aimed at boosting sagging demand, the financial crisis-era programme involved massive public infrastructure investment, social welfare spending and rural development. True, it left China with a painful legacy that was felt many years later, such as bloated local government debt, a red-hot housing market and hordes of zombie companies. People understandably fear a new debt-fuelled bubble from the latest spending spree.

However, the 2008 stimulus package also proved to be a strong and timely relief from the maladies of the period. The side-effects would have been held in check if the structural flaws in China’s economy had been better addressed.

When the world was reeling from the aftermath of the financial crisis, China’s policymakers were absolutely right to worry about the downturn it would cause. Months later, the country’s exports would drop, unemployment rose and many small businesses collapsed. Stimulus enabled China to quickly restore its economic vigour and the country went on to overtake many of its rivals in the ensuing decade.

The public expenditure did not just prop up aggregate demand; in particular, huge spending on infrastructure has paid off. A high-speed railway network, new airports and logistics — mostly built after the crisis and once deemed as being premature investments — have shaped the country’s urban clusters and made its manufacturing sector more competitive. China’s share of the global manufacturing sector’s value-added rose from 14.4 per cent in 2008 to 28.2 per cent in 2018, according to our analysis of World Bank data.

China now finds itself in a completely different landscape. The current situation calls for even greater urgency than 2008. As the battle against Covid-19 dragged on, China’s GDP shrank 6.8 per cent in the first quarter of 2020, the steepest year-on-year fall ever recorded. By contrast, the country’s economic trough between 2008 and 2010 was a 6.4 per cent year-on-year expansion.

Although April’s data contained some green shoots, domestic demand lagged behind supply. While the added value of industrial production grew 3.9 per cent, retail sales and investment contracted. And as the world braces itself for a sharp technical recession, with the US economy heading for a 38 per cent annualised decline in inflation-adjusted output in the second quarter, a temporary rebound in China’s exports in April disguised the grim reality that more and more foreign orders were being cancelled.

Beijing has vowed to work on what it calls its “six priorities”: employment, basic livelihood, companies, food and energy security, stable supply chains and smooth operation of government. For example, saving jobs and small and medium-sized businesses would call for something similar to the US’s Paycheck Protection Program. A more resilient supply chain suggests increased infrastructure spending.

China has more room for manoeuvre than other big economies. According to IMF’s fiscal tracker, China’s Covid-19 support packages (including spending, loans and guarantees) amounted to only 2.5 per cent of its gross domestic product by April, compared to 34 per cent for Germany, 20.5 per cent for Japan and 11.1 per cent for the US. Even after adding the measures announced at the NPC, China’s fiscal commitment is still a far cry from that of western economies.

The country also boasts a fresh and promising pool of projects. Of course, much of the fiscal spending will be earmarked for the six priorities, but the spotlight should also be turned on those “new infrastructure” investments such as data centres, industrial facilities powered by artificial intelligence and cold-chain logistics for products such as frozen goods, all of which could unleash China’s potential as an economic powerhouse over the next decade.

A healthy dose of fiscal action serves both shorter-term stability and longer-term prosperity. Of course, stimulus alone is no panacea. The best way to overcome the sceptics is to build on a well-structured and carefully targeted spending plan. Further efforts to rejuvenate the post-pandemic economy — through measures such as rural land reform and a further opening-up of the financial sector — remain key to China’s sustained growth in an increasingly uncertain world.

 

JD Logistics Upgrades Lower-tier Markets Program This Year

Posted on by Ling Cao

by Ling Cao

On June 8th, JD Logistics announced the upgrade of its lower-tier markets program to provide 24-hour delivery service in over a thousand counties and ten thousands of townships in China.

JD Logistics will either expand or newly construct 13 local warehouses and transfer centers. The new infrastructure will focus on second-to-fifth tier cities. In addition, JD will operate 12 Asia No.1 highly automated logistics parks, which traditionally have mainly focused on first and second tier cities, in lower tier cities. JD’s cloud warehouse, integrated “factory as warehouse”, and “shop as warehouse” models will all be coordinated, in order to put products closest to customers. JD’s logistics service already covers over 550,000 administrative villages.

A JD Logistics representative said, “With the new initiative, we are bringing Asia No. 1 to lower-tier provincial capitals, such as Harbin, Shenyang, Changchun, Taiyuan, Zhengzhou, as well as logistics hubs like Langfang, Guanghan and Chuzhou. Leveraging our technology experience in lower-tier markets is an important future development direction for JD.”

The 13 additional local warehouses and transfer centers aim to increase local fill rate. The new projects are located in lower-tier cities like Datong, Fuyang, Jieyang, Hengyang, Yinchuan, Xining, Aksu and Fuzhou. Each is connected to an affiliated Asia No.1 logistics park to form an integrated network to serve customers. Data shows that proportion of orders from fourth-to-sixth tier cities in these facilities can reach 90%.

Data also shows that the counties and villages covered by JD’s 24-hour delivery service also saw a higher order growth rate than the nation’s average. For example, in Shuangta district in Chaoyang, Liaoning province, orders in 2019 increased over ten times compared with that of 2018.

JD also leverages its supply chain to help local specialties sell to more cities. The company provides tailored solutions in 22 key industrial regions, covering specialties like Yantai cherries, Lingnan lychees, Qianjiang crawfish, Lanxi bayberry, as well as hairy crabs, Pinggu peaches, Inner Mongolia beef and lamb, and navel oranges from south of Jiangxi province. In Korla, Xinjiang Uygur Autonomous Region, building a local transfer center enables JD to provide 24-hour delivery, and to help transport local pears to other cities in China. In Huichuan district, Zunyi, Guizhou province, there will be one designated courier covering each town to help deliver the area’s local liquor to customers nationwide.

 

(ling.cao@jd.com)

When All Things Considered– Sales of Durian Increased 17x in the First Hour of JD 618

Posted on by Yuchuan Wang

by Yuchuan Wang

On June 1st, the first day of JD’s 618 Grand Promotion, transaction volume of fresh food increased over 8 times year-on-year. Among the many best-selling products is durian, a seasonal fruit that is increasingly welcomed by Chinese consumers. In the first hour of 618, transaction volume of durian on JD increased over 17 times compared with the same period last year.

In Asia, durian is known as the “king of fruits.” As early as in April this year, JD imported multiple durian varieties from Thailand including the popular Golden Pillow, rare Puangmanee and Chanee. The total volume filled thirty 40ft containers.

In Asia, durian is known as the “king of fruits.”

Every durian imported by JD goes through a comprehensive screening process. In the early stages of picking, JD.com’s fresh food business team will cooperate with growers directly to ensure quality.

“During the epidemic, we specifically worked on a stricter quality control plan. To put it simply, every durian from Thailand needs to go through at least six testing procedures and meet over 10 specifications before it can be delivered to our customers,” said Wen Li from JD Fresh’s quality control team.

JD will typically pick the durian to be exported to China when it is about 75% ripe, so that the durian is tastiest 7 days later when it arrives. Once at JD’s warehouse in China, the fruit will need to pass several evaluations, ensuring, for example, that the fruit cracks at the standard diameter, ripeness, weight, shape and sweetness meet the standard, and more. Durian that does not pass the evaluation screening will not go for sale on JD. Even after being accepted to JD’s warehouse, JD’s quality control team will do regular checks to make sure every durian sold to its customers is of high quality.

Every durian imported by JD goes through a comprehensive screening process
JD Fresh includes a note with every box of durian about how to enjoy durian

Durians are most popular in first and second-tier Chinese cities like Beijing and Guangzhou, but demand is growing in lower-tier regions where previously the fruit was not easily accessible.

As China’s largest fresh food retail platform, JD now offers 320,000 SKUs (stock-keeping-units) covering seafood, fruit, vegetables, meat and poultry and more from over 50 countries and regions. JD offers various fresh food, including durians from Thailand and Malaysia, through its online channel JD Fresh and offline supermarket chain 7FRESH.

 

(yuchuan.wang@jd.com)

A Portrait of Lijun Xin, CEO of JD Health

Posted on by Tracy Yang

by Tracy Yang

JD Health has been the focus of the internet industry since it was spun off from JD.com last year. According to Crunchbase, the world’s leading platform for business information of private and public companies, it is the second largest unicorn after Uber in 2019. The outbreak of COVID-19 has made more Chinese people aware of JD Health. Many people  might be curious about Lijun Xin, CEO of JD Health. Let’s look at Lijun Xin’s personal experience and healthy world closely.

 

From IT business to Internet health services

Lijun Xin is full of curiosity and a quick learner. After graduating from Shanghai Jiaotong University in 1995, Xin worked as a teacher for four years and then entered the IT industry for seven years. After that, he started his own business for eight years until he joined JD.com in 2012. At that time, JD.com only had its retail business, and the burden of developing a third-party platform business fell to Xin.

Eight years later, he successfully developed the business logic of JD.com’s third-party platform business, and constantly expanded its business categories, from apparel to cars, real estate, art, health, and so on. Xin has served as the person in charge of these businesses. In July 2019, he officially became CEO of JD Health.

 

Taking over the role to lead JD Health

Before becoming CEO of JD Health, Lijun Xin was invited by Richard Liu, Chairman and CEO of JD.com, to the suburbs of Beijing for a chat. Liu had two requests. The first was to provide healthcare services for JD’s staff, and the other is to focus on necessary investment of health industry at the initial stage, rather than on profits. Liu’s requirement for JD Health’s KPIs was not performance figures, but rather the level of customer satisfaction. For Internet services and products, it has always been difficult to objectively quantify user satisfaction, so this presented a great challenge for Xin.

In the more than eight years he has worked at JD.com, Xin has remained relatively low profile.  But after taking over the business of JD Health, both he and the business have come into the spotlight. JD Health has achieved the most complete Internet + medical and health layout in the industry, and its products and services cover not only the entire pharmaceutical industry chain, but the entire user life cycle for health management. JD Health’s retail business currently accounts for more than 15% of China’s national pharmaceutical retail market. Coupled with the previously disclosed A-round financing of more than US$1 billion, JD Health has become JD’s third unicorn after JD Digits and JD Logistics.

 

Internet hospital

JD.com first tried non-pharmaceutical health e-commerce in 2013, and began to expand its pharmaceutical business in 2015. The company later discovered that when consumers buy drugs, there is a need to consult with doctors for guidance. So in 2017, JD began to focus on Internet hospitals, which is a closed-loop and relatively complete business, and continued to further expand its business categories.

Xin explains that just as the Internet experienced explosive growth in 2000, and the outbreak of COVID-19 this year is likely to promote the development of the entire Internet medical industry. The development of Internet medical consulting and treatment in China has been full of twists and turns in terms of policy and promotion in the past decade. For example, it may not easy for most public hospitals to build their Internet hospitals on their own, nor do they have the operations capability to provide services directly to patients.

In Xin’s view, it works better for hospitals to embrace cooperation with internet companies with an open mind. Take the Internet hospital jointly built with JD.com as an example. Doctors in the hospital can do medical consulting online. JD’s 387 million active users can consult with the doctors online, thus directly expanding the “doctor’s office” from one region to the whole country.

Due to the epidemic, national policies towards Internet medical consulting and treatment, Internet hospital, and medical insurance payment are becoming more and more open. This means that for many things that would have taken another three to five years to realize are now possible in three months. From a historical point of view, this is great progress.

On January 26th, JD Health launched a free online consultation platform to prevent COVID-19 and took the lead in expanding the scope of free consultation to all disease areas in all departments in the Internet field, with more than 30, 000 doctors to provide free professional online-consultation to all users throughout the country.

From the beginning of the epidemic to  early May, JD Health online consultation platform served a total of more than 11 million users, with an average daily consultation volume of more than 120,000. Before the epidemic, the average daily consultation volume reached about 60, 000, even if the epidemic has been basically under control now, the average daily consultation volume remained close to 100,000.

To support chronic disease patients, JD launched the “Chronic Disease Care Program,” which allows chronic patients to renew prescriptions through the company’s online consultation platform. It has also partnered with 70 Chinese and foreign pharmaceutical companies to jointly ensure the supply of drugs for chronic disease groups. Drugs can be delivered by JD Logistics directly to users.

In addition, JD Health launched a “Global Free Health consultation platform” at the end of March, providing free online consultation services to people all over the world. Hundreds of doctors, including 38 doctors who participated in the treatment of the epidemic in Hubei, and more than 30 Chinese medicine experts, share anti-epidemic experience and prevention knowledge for overseas people on this platform. As of April 12th, the platform has received a total of more than 170,000 inquiries from overseas, including more than 10, 000 English inquiries and more than 6.7 million visits.

 

The tip of the iceberg

JD Health’s current business can be divided into four parts: online pharmacy, online healthcare, health services and intelligent healthcare solutions, of which the most matured one is the online pharmacy business. However, Xin believes that the future development direction of JD Health will put health management as the core. “I hope that in about three years, my team will build JD Health into the most reliable platform for chronic disease management and healthcare services for users.”

“In the past, the business model of JD Health was more like a pharmaceutical e-commerce business, but if we can’t guide and manage the whole life cycle of users, we can’t become a real healthcare-service company,” Xin explains.  In his eyes, JD Health will open up the whole industry chain, integrate medical resources of all parties, and provide users with products and services that run through the whole life cycle and cover all health scenarios.

Xin plans to take two steps to achieve that objective. First, JD Health will try to make the connection between users and JD Health with high frequency, enable the users to have the awareness of JD Health’s services, trust JD Health and rely on JD Health’s services eventually. Secondly, JD Health will provide full-process services, whether it is pharmaceutical services in the supply chain or long-term management of chronic diseases. JD Health will combine the advantageous specialties of major public hospitals across the country to carry out specialized disease management for chronic diseases, such as cardio-cerebrovascular, diabetes, and mental diseases.

On the whole, the health management status of most Chinese people is still in its infancy. Xin is also aware of this reality. “The health sector is worth more than RMB 10 trillion in China, and now we have touched only the tip of the iceberg.” He hopes to work with competitors to make this market bigger and better, so that Chinese consumers can develop the new format and habit of health management.

As CEO of JD Health, Xin is mindful of the relationship between his busy work schedule and his physical health. He loves sports and takes part in the football activities of JD.com’s football club every Wednesday. When organizing a team building event, he will often propose athletic activities such as skiing. According to his team members, Xin calmly and confidently tackles double black diamonds on the ski slopes.

Talking about JD Health’s mission for users, Xin said, “In fact, it is very simple. When users download the JD Health app, they will give their lives to us. Normally users will not think of us, they will only think of us when they are sick. But we are worthy of users’ trust and can solve their pain points. At that time, I think we will succeed.”

 

(tracy.yang@jd.com)

In-depth Report: How JD Dominates the Home Appliances Sales in China?

Posted on by Ling Cao

by Ling Cao

JD kicked off its 17th 618 Grand Promotion on June 1st. Home appliances, including air conditioners, refrigerators and washing machines saw sales surge. Customers are pursuing health-centered products after the COVID-19 outbreak. Data shows that purification and sterilization air conditioner sales increased 10 times YOY during June 1-2, sterilization refrigerator and washing machine sales increased 550% YOY. Each of 30 brand of air conditioner products hit RMB 10 million in just 10 minutes on June 1st. In just one hour, sales of high-end refrigerators and washing machines from brands like Casarte, Siemens and LG increased nearly 8 times y-o-y. During June 1-2, outbound orders for hot-selling air conditioners from JD’s warehouse increased nearly 270% compared with daily average during the last week in May.

The coronavirus also changed the way people purchase home appliances. Industry data shows that in Q1 2020, online home appliance sales accounted for 55.8% of total home appliance retail sales, which was the first time this percentage had surpassed 50% benchmark, while JD’s home appliances accounted for 29.1% of total sales nationwide, making JD the top home appliance retailer online or offline in China.

JD will continue to offer discounts and benefits for home appliances customers during 618 and ensure a smooth shopping experience even during the peak sales period. JD can do this because it focuses on how to build long-term sustainable advantage. One key factor is JD’s supply chain. For bulky items like home appliances, in addition to high-quality products, guaranteed service covering fulfillment, installation and post-sale is also essential to attract customers.

 

An integrated and leading bulky supply chain as a Guardian

JD has built an integrated bulky supply chain infrastructure, which is one of core differentiators for the company to be able to dominate the industry. Due to factors such as the large size of products, high value and non-standardization of SKUs, it is common that the inventory might be stored in various warehouses and transfer of goods is necessary. Those issues lead to increased difficulties in fulfilment and higher door-to-door transportation costs. Consequently, the customer experience tends to be negatively impacted. With the large quantity of bulky orders made during 618, it is a significant challenge to the reliability of JD’s bulky supply chain system.

With the large quantity of bulky orders made during 618, it is a significant challenge to the reliability of JD’s bulky supply chain system.

JD leveraged its integrated warehousing and logistics network to put some of the bulky products from the brands’ factories in JD’s warehouses nationwide ahead of time, and leveraged its big data for inventory replenishment, and accurately predicted the shopping habits and preferences of customers. Haier, the domestic leading home appliances brand is one of the key cooperation examples. Both parties have cooperated on the forward warehouse since last Singles Day (November 11th), and now JD has opened nearly all of its forward warehouse resources to them, allocating about 300,000 square meters of space to Haier. This allowed JD to prepare the proper amount of each SKU in each warehouse in its seven regional areas, which made it possible to deliver the orders from warehouses closest to customers, hence greatly improving fulfilment efficiency.

Due to the uncertainty of the virus situation, many merchants didn’t prepare enough inventory for 618 before April. When the situation gradually stabilized in China, customer demand increased, forcing many merchants to adjust their inventory strategy to add more products for 618. The factories also rapidly ramped up production. This resulted in a large amount of inventory added to JD warehouses within a short time period. Thanks to JD’s technology expertise, the company was able to do sales forecasting and prepare additional fulfillment resources in advance. For the first time, JD implemented “batching” for its AI-powered pre-order technology to help improve book delivery. The system is able to complete 50,000 intelligent voice interactions per hour and increase efficiency throughout the whole bulky supply chain.

JD has also introduced the very first automated storage and retrieval system (AS/RS) for bulky items in Asia’s e-commerce industry in one of JD’s Asia No.1 logistics parks, which can highly increase the efficiency and reduce labor intensity.

JD leveraged its integrated warehousing and logistics network to put some of the bulky products from the brands’

 

Building strength and innovation based on customer experience

JD’s home appliances team has focused heavily on customer experience since the beginning. “Smart, high-end, tailored and healthy are the key trends for the air conditioner industry.” said Kening Wu, head of the air conditioner sales department at JD. “To some degree, the epidemic has made customers care more about health. Our data shows that keywords searching for sterilization air conditioner in March is over 26 times than that of February. Sales of all the health related home appliances from late January to now are three times that of the same period last year.” He added.

As more and more customers have individualized demands, JD also leverages big data to forecast the most suitable product for them. For example, JD saw many customers’ comments which showed interest in aesthetically pleasing air conditioners. One innovative idea was born immediately: Why not cooperate with a certain IP (such as a movie) or designer to decorate the exterior on an air conditioner so that it’s not just pure white? Why not design a gaming-themed exterior to make the product more appealing to millennials? “These types of C2M products are currently in the works. You always need to think one step ahead to stable your position in industry,” Wu commented. One industry data shows that apart from cooling capabilities, appearance is the second priority criterion for customers, accounting for 33.7% of concerns.

JD has cooperated with 63 home appliance brands covering 200 kinds of products for C2M home appliances, including leading brands such as TCL, Midea and Little Swan. Late last year, JD cooperated with Little Swan on tailored baby and maternal wall-mounted type washing machine and sold on JD exclusively online. Both companies started to develop this project since late 2018. During the process, JD has done extensive customer research and big data analysis, which found that there was huge demand for this feature. The product, launched in 2019, remains popular and received good review from customers. One customer commented, “The small wall-mounted washing machine with disinfection and drying functions looks very cute, I bought it for soon-to-be born baby.” C2M will certainly be one of the key trends to promote stable development for the home appliances industry.

JD has cooperated with 63 home appliance brands covering 200 kinds of products for C2M home appliances

“The capability to utilize feedback from our user profiles and help them design requirement-based products is one of our key advantages, thus C2M will be our core strategy going forward. Besides, we have different measures to target different customers. For example, we recommend smaller washing machines for those who live alone.” added Shuangxi Wu, head of refrigerators and washing machines sales department at JD.com.

Another challenge is how to maintain sales volume as home appliances have an 8-10-year lifecycle. Wu shared, “We also found there are opportunities for a second home appliance need, such as baby and maternal small washing machine to separate washing tasks, as well as new emerging categories, such as an ice bar to stock several bottles of beverages. These are also two of the fastest growth categories in my business. The other one is dryers.”

Replacing an old product for a new one is also a trend.  According to industry data, in 2019, there were 430 million air conditioners at Chinese households (which is equivalent to one AC per family if China’s entire population were divided into families of three). The huge number also means that there is great potential for consumers to make replacements. Industry data also shows that in 2020, over 52 million air conditioners exceed their recommended safe usage period. JD data also showed customer awareness of this demand – over 43% of customers who buy home appliances are replacing old ones.

Although home appliances is a traditional category, it has embraced new marketing tools like live streaming, which has grown fast during COVID-19. Brands also cooperate with JD for joint events. For example, on May 15th, Mingzhu Dong, chairwoman of Gree Electric joined a livestream for Gree products on JD. From 8:00 pm to 11:20 pm, the livestream generated RMB 703 million yuan (nearly US$100 million) in sales. On May 20th, Haier joined JD’s home appliances livestreaming and added 470,000 followers to its JD store on the day. For 618, there will be more livestreaming to help boost home appliances sales.

 

Omichannel: a new strategy especially in lower tier markets

JD has over 12,000 home appliances experience stores around China. They play an important role in ensuring customer experience, especially in lower-tier markets where consumers may not be as accustomed to buying them online. The function of these stores is not just to sell products, but also to serve as an offline experience and after-sales service center. “E-commerce penetration in lower tier markets still needs to be cultivated. The experience stores help JD provide our rich home appliances products to these customers, and is the best way to combine our products with an omnichannel sales strategy,” said Wu.

Customers also prefer this way of shopping. One JD home appliances experience store in Chaoyang, Liaoning province, a fourth tier city, reached RMB 1 million yuan in sales on June 1st through WeChat promotion, live streaming, offline events, and more.

In addition, JD’s largest immersive experience store E-Space in Chongqing will also participate in 618, providing customers with subsidies and discounts. From May 30th to June 1st, E-Space visitors increased 300% compared with same period last month. Sales hit RMB 20 million, resuming to the level before the virus.

JD has over 12,000 home appliances experience stores around China.

 

(ling.cao@jd.com)