by Tracy Yang

The outbreak of COVID-19 has put online medical consulting, internet hospitals and online doctors under the spotlight. JD Health launched its free online consultation platform to deal with COVID-19 on January 26^th and quickly expanded the scope of its free consultation services to cover all medical departments and diseases. More than 30,000 full-time and part-time doctors provide free online consulting service to the public in China through the platform. From late January to April 12^th, JD Health’s online consultation platform has responded to a total of more than 9 million inquiries, with an average daily consultation volume of more than 120,000.

 

Emerging Advantages

This is not an accidental phenomenon. When COVID-19 broke out, the advantages of online medical consulting gradually revealed themselves. First, providing online medical consulting helped to quickly increase the supply of medical resources and ease the tense situation for hospitals, especially in Wuhan, Hubei province, where the epidemic hit most severely. Secondly, given the high prevalence of influenza in the winter, and confusion from patients as to how to identify whether they are suffering from the common cold, the flu, or COVID-19, online consultation can help determine whether or not a visit to the hospital is necessary.

This also improves efficiency in the medical system, while protecting patients who don’t need to go to the hospital from potential cross-infection of COVID-19 patients. Finally, although there are abundant resources on the Internet, the ability of patients to identify the right information needs to be improved. Online diagnosis and treatment to popularize the knowledge of prevention and control of patients can effectively help reduce panic from inaccurate self-diagnosis based on information online.

Compared with offline face-to-face medical consultation, online consultation requires high professional accuracy from doctors. Bin Zha, the head of full-time doctors at JD Health said, “Online medical consulting not only changes the way doctors work, but more importantly, it is necessary to constantly expand professional knowledge, improve quality of service and provide solutions. Mindset is crucial. My team is also working with other departments of JD Health to develop new solutions aimed at providing more advice and guidance to users.”

Siying Xu is one of the many online doctors with JD Health. She was supposed to celebrate the Spring Festival with her family, but with the outbreak of COVID-19, she chose to provide online services to patients. As a full-time doctor at JD Health, Siying Xu answered cardio and cerebrovascular related questions for patients by means of text, pictures, and phone calls. The number of inquiries received during the epidemic increased by 30-40% as compared to normal.

With over ten years of experience in cardio- and cerebrovascular diseases, Siying Xu had been paying close attention to the development of Internet health services. Last year she got a call from JD Health’s HR team to an interview with the company, and following her intuition, she thought it might be the right time to get involved in the industry. Considering herself is a loyal customer of JD.com, which is China’s largest retailer with rich resources, which might be good for the development of Internet medical services, she joined JD Health as a full-time online doctor in September 2019.

When speaking of her decision to join JD Health, Siying Xu said, “For those who love the medical industry, whether it is online service or offline service is not important. Online medical consulting tests the professionalism and experience of the doctor, and online consultation can provide a good experience for patients, since online consultation creates more opportunities for doctors to communicate with patients, avoid offline hospital registration, waiting and other processes. It can also satisfy the needs of those who are in pursuit of love for medical industry.”

There are around 200 full-time doctors at JD Health, covering 17 medical areas. In Bin Zha’s eyes, there is huge difference for doctors in the hospital and online medical consulting scenarios in terms of work content, work model and requirements. “In offline hospitals, doctors need to focus on patients and try to find out the diagnosis of the disease, and then come up with the treatment solution. But online medical consulting puts an emphasis on breadth of knowledge. Doctors not only need to understand the specific disease, but also need to dabble in a wide range of topics, including sub-health and so on, since online consultation focuses on the patient experience and provides comprehensive solutions for patients.”

 

Redistribution Resources

According to data from the Statistics Information Center of the National Health Commission, 269 Internet hospitals had been built in China as of October 2019. In March 2018, the number was only 96. The major turning point came on April 28, 2018, when the General Office of the State Council issued the opinions on promoting the development of Internet + Healthcare. After that, the National Health Commission, National Healthcare Security Administration and various local government departments issued supporting policies one after another.

It has been nearly ten years since the concept of Internet healthcare services was put forward. The development of Internet healthcare services can be divided into three stages.

Before 2016, Internet healthcare services were mainly based on online medical consulting, and the application scenarios mainly included medical information inquiry, online appointment registration, online drug purchase and prescription. After 2016, Internet hospitals have gradually taken shape, and the scope of the Internet medical practice is no longer limited to simple medical services, such as online consultation. It can also provide medical services that allow online following of some common and chronic diseases, and doctors are permitted to write prescriptions for some common diseases and chronic diseases online. Gradually Internet healthcare services connect the entire medical process prior and after diagnosis.

With the continuous improvement of living standards, people’s health needs are more diversified. The next focus for Internet healthcare services is to meet these new health needs, providing them with closed loop health services covering all aspects of health.

The pain points that need to be solved urgently in the field of medical and health, such as the uneven distribution of medical resources and information islands between different medical institutions, have indicated the direction for the future development of Internet healthcare services. The greatest value of the Internet in the field of healthcare is that it can achieve decentralization, invigorate a variety of medical resources, and match the appropriate medical resources to the right patients. In the new stage of Internet healthcare services, brand, user, big data, supply chain and artificial intelligence will become the core competencies for health enterprises.

 

A Promising Career

JD Health has built a comprehensive “Internet + Healthcare” ecosystem over the past several years, providing pharmaceutical and healthcare products, internet healthcare, health management and intelligent healthcare solutions to the customers. In November 2019, JD Health successfully completed its series A preferred share financing. One month later, Crunchbase, the world’s leading platform for business information of private and public companies, published its New Unicorns of 2019 list, ranking JD Health as the second highest valued new unicorn globally in 2019.

Doctors are indispensable resources for Internet hospitals. How to dispel doctors’ worries about the future and uncertainties of Internet healthcare services and let them quickly adapt to join Internet hospitals is also the focus of JD Health’s future talent recruitment plans. At present, part-time doctors at JD Health Internet Hospital come from over 6,000 public hospitals in 32 provinces, municipalities and autonomous regions. Over 80% are of or beyond attending doctor’s level and 62% from AAA class hospitals, which have rich medical resources, good hardware, large numbers of beds and high quality doctors in China.

JD Health recently launched the Cardiology Center and Diabetes Center, which is the starting point for JD Health to explore a new stage of Internet healthcare services. The vision is to focus on major problems faced by chronic disease patients in China, promote the integrated development of prevention, treatment and rehabilitation, and explore chronic disease prevention and control methods, so as to provide full-life cycle health management services.

Doctors who are willing to accept new things will embrace online consultation more quickly, and of course many doctors are skeptical and take a wait-and-see approach towards this emerging industry. They are unclear about their future career path as well as promotion opportunities.

In this regard, JD Health has formulated a series of measures to support doctors, including regular training, covering areas such as standardized communication skills in the consultation process, so as to avoid misunderstandings in the consultation process. There is also a quality control department, focusing on supervising doctors’ medical behavior and evaluating the quality of consultations regularly. If there is potential risk, the quality control department will step in.

Being an online doctor, they can be promoted according to the hierarchy of the company. But if they want a title promotion that will be recognized across the medical industry, it may not be as convenient to achieve as they were working at a brick and mortar hospital. They need to attend classes separately and apply for the examination by themselves.

A very important breakthrough in this medical reform is how to lead a large number of medical institutions and a large number of doctors in the prevention and control of chronic diseases. Internet hospitals have built a better platform for more doctors, and JD Health will expand to health management and more chronic diseases, including respiratory, endocrine, and urinary diseases, among others. JD Health’s business is very meaningful and it cannot contribute to society without the participation of doctors. Internet hospitals are destined to be a sunrise industry.

 

(tracy.yang@jd.com)

by Yuchuan Wang

“The key factors driving global retail transformation are quite simple: channel reformation, store format innovation and supply chain management. China is already leading the global retail industry in channel reformation and digitizing the supply chain, but is still lagging behind the leading players, such as the US and Japan in terms of store innovation.” said Jonathan Wang (王敬), head of 7FRESH, JD’s innovative omnichannel fresh food supermarket business.

Jonathan Wang, Head of 7FRESH, JD.com

China’s retail industry is developing at breakneck speed and is destined to overtake the US as the largest retail market in the world. The size of China’s e-commerce market is larger than that of the US, UK and Japan combined. China’s growing middle class and rich technology application scenarios have acted as attractive catalyst to draw global retail giants like Walmart and Costco as well as local disrupters, including JD.com’s 7FRESH.

Prior to joining JD.com in August 2018, Wang was a senior vice president at WuMart(物美), a leading retailer in China; a global partner in Roland Berger consulting retail clients; and, acted as the COO of CR Vanguard at CRC(华润) Group, where he helped turn the retailer from loss-making to profitability, ultimately becoming the top retailer in China at that time.

Over two decades ago, Wang was one of just a small handful of Asian faces in Price Club, the offline supermarket chain headquartered in the United States.

He returned to China in late 1990s. It was the perfect time to cut his teeth on the fast growing retail industry, bringing some of the expertise and innovative thinking acquired from abroad to apply in the fertile and welcome soil back home.

In 1997, Wang helped open China’s first Price Smart store in Beijing and acted as the senior commodity director. Stroking his considerable goatee, he reminisces of his time in the US “At that time, most Asian employees were working in stores as clerks, only me and another Korean guy were working in the office since the company was assessing the Asian market.”

 

Channel reformation

Omnichannel retail is a business model that integrates multiple sales channels to provide a seamless shopping experience. For customers, it means they can get unified services across any channel, at any time and in any circumstances. Wang and his team at 7FRESH are on the very cusp of JD’s omnichannel strategy.

“In China, some omnichannel supermarkets are far more advanced than those of leading Western supermarkets. Many Chinese shoppers today are accustomed to ordering online and getting live and fresh seafood, fruits and vegetables, and other produce delivered to their doorsteps within 30 minutes. This is still far from the norm in most major U.S. cities,” said Wang.

At 7FRESH supermarkets, online orders typically account for 40% to 45% while the proportion reached nearly 70% in February when COVID-19 was peaking in China. The company’s advanced supply chain technology was clearly the lynchpin to provide the superior omnichannel retail experience.

Wang continues, “But if you look at the overall industry in China which is still dominated by traditional offline retailers, their online channel only account for less than 5% overall. That doesn’t mean traditional players do not have omnichannel advantages. Their decades of operational experience in offline retail have provided them with extensive knowledge of their customers, categories, management and operations. What they lack is the technological experience over time. And they don’t know much about online operations. This is where JD’s 7FRESH steps in.”

A customer picks up her online order in a Tianfu convenience store in Guangdong province.

Under Wang’s leadership, 7FRESH introduced what he calls the Operation Field Counsel (OFC) partnership model, which enables JD to leverage its considerable strength in retail innovation, supply chain and online operations to provide omnichannel services to regional partners. For example, in a partnership with Tianfu (天福) convenience store chain, a leading Chinese convenience store brand, JD covers nearly 180 Tianfu stores that serve 200 residential compounds in the city of Dongguan, Guangdong province. This enables consumers to place orders through JD’s Friends Shop WeChat mini program and get their orders delivered to the dedicated Tianfu convenience stores in their related residential communities the next day.

 

Store format innovation

If the online retail arena is about navigating the variety and diversity of opportunity, offline retail is more about store formats.

As China’s middle class continues to expand and consumers subsequently have more disposable income, there is greater hunger for quality. The habits, tastes, expectations and buying patterns of this cohort are also evolving more rapidly than at any other time in recent history.

McKinsey: The share of Chinese households in each income level will shift dramatically by 2020

For example, demographic research indicates that busy residents in China’s large cities – including young urban professional singles, couples, and extended families – have both less kitchen space and less time to spend preparing meals. Meanwhile, wholesome options on food choices continue to become available. Last year, Wang promoted his idea of providing meal solutions to address this consumer need. Since then, 7FRESH has been expanding the restaurant areas within stores, allowing more people to sit down and enjoy fresh and delicious meals cooked for them onsite.

Wang attests: “Significantly, we are finding that by offering more everyday meal choices to customers alongside the more traditional grocery and produce items that have helped make 7FRESH a destination for smart shoppers, we are seeing greater traffic, more return customers, higher customer satisfaction and faster paths to profitability.”

“It may be that the retail industry used to be relatively low-key, but since the industry has drawn much greater attention nowadays, people started to become aware of the “sexy” aspect of retail. As a matter of fact, I feel that many of the things happening now have existed in the retail industry for many years. For example, multiple store formats were discussed as early as 18 years ago when I was doing strategic consulting at Roland Berger. ”

Wang and his team have already introduced three advanced store formats, or business models, to the existing 7FRESH brand. These include 7FRESH supermarkets, with an area of several thousand square meters mainly providing fresh food and an in-store restaurant area; 7FRESH LIFE, which is hundreds of square meters in size providing 24/7operations and meal solutions; and SEVEN FUN, targeting working professionals in large cities. It has opened over 20 stores across China in regions including Beijing, Hebei, Shaanxi, Guangdong, Sichuan, etc. It even launched a group buying service for community residents.

SEVEN FUN and 7FRESH Life in Beijing

 

Supply chain management

JD most recently announced that the company has positioned itself as a technology and service company with supply chain at its core. This capability which requires long-term investment and development has also become JD’s most competitive strength in the rapidly changing market.

Surely, the key undertaking for Wang is to shape the fresh food supply chain. “The length and depth of supply chain determines cost, efficiency and experience, which are the essence of retail,” he shares.  “Making the upstream and downstream smooth and shortening the supply chain are particularly important for 7FRESH to drive continuous optimization and development.”

Leveraging JD’s supply chain, 7FRESH is offering extensive and effective supply chain capabilities and methods for fresh food, such as its global direct sourcing program, worldwide buyer network, private labels, consumer-to-manufacturer program, plant factory (hydroponic vegetables) and block chain tracing platform, and others which are of great significance and value for the retail industry.

In addition, Wang and his team believe that the key to the future of retail is to consolidate best practices with IT. The system will help with standardization and technology will help with personalization.

He adds: “Most of 7FRESH’s systems are designed as SaaS systems so that they can be adapted easily and quickly. Thanks to digitization, JD’s 7FRESH supermarket is able to break even within one year and a half. It’s sales efficiency is three times that of a regular supermarket. Establishing 7FRESH is about exploring retail’s best practices, and we wish to share this excellence with the industry to make a positive impact and improve its capacity overall.”

 

Appendix: Wang’s perspective on retail

• Customer-oriented retail format optimization and innovation are the sources of a retailer’s growth.
• With professional management, establishing and focusing core competitiveness to meet the core values of target customers is an effective means to generate differentiation.
• Only by adhering to simple and standard retail principles can one expand the business rapidly, so as to give full play to the effectiveness of scale.
• Cost-efficiency is the key factor for retailers to win in the long run.
• Only by pursuing supply chain breakthroughs can one become the winner in the retail industry.
• Being good at leveraging core technologies (including management, hardware technologies, etc.) is a precondition for success.
• Successfully bringing about value transfer is the only way to become a leading retailer.

 

(yuchuan.wang@jd.com)