E-Commerce: JD’s Lesson About How to Invest in New Strategies

24/06/2019

JD embraced a new spin on its annual June sales event. Social commerce, omni channel retail and short video app let the online retailer break the record

 

 

Chinese e-commerce is becoming more and more competitive. Great events like 618 and Singles Day, which are JD and Alibaba main shopping event respectively, are very important to understand where consumes are going. Let’s see what JD’s new record sale in June means for companies selling in China.

 

©JD 618,  JD.com’s biggest promotions in June every year. Especially on June 18th, JD.com offers no-profit sales for their customers.

 

JD, after Alibaba, is China’s largest online retailer. The platform is gearing up for 618 Festival, its biggest shopping holiday of the year. Last year, Beijing based e-commerce giant  sold US$23 billion worth of products during the festival, which lasted from June 1 to June 18. This year the company break any record, and JD new business strategies are the perfect case study due to analyze China’s changing ecommerce landscape, and what it all means for Western retailers selling to China.

This year, JD sold US$29 billion worth of products. More young people are splurging on luxury products. The number of consumers under 25-years-old who purchased luxury products was up by 50% compared to last year. And sales weren’t just going to female consumers. sales of male beauty products saw a 522% increase while demand for beauty products also saw strong growth this year.

 

This year’s 618 event  places a particular emphasis on social commerce, video partnerships, and omnichannel retailing. The new e-commerce trends as reported by Cifnews.

 

This year, JD.com held a nationwide city contest and gave out US$72 million in cash to participants across over 300 Chinese cities, between June 1 and June 18. Each city had allocated a certain amount of cash and had a time frame of 2-3 days where participants pooled  their friends to participate.

The chosen provinces changed every 2-3 days, and participants had to get their friends and family to sponsor five cities before being eligible for prizes. Those who did,  retrieved virtual red packets of lucky money, which could be redeemed for JD.com store credit during the 618 festival.

 

Pinduoduo

©Weibo. Although Taobao and JD.com are still the e-commerce market leaders, Pinduoduo is the app that benefits from the highest loyalty rate.

 

This campaign was one of many social commerce campaigns that incentivize customers to pull in their family and friends. Thus, JD ’s city contest social commerce game provided a different avenue to engage customers in an increasingly competitive environment. Morehover, this social commerce campian let JD to found a way to enter in lower tier cities markets, ruled by platforms such as Pinduoduo, which has now surpassed JD  in terms of annual active users.

Today, 343 million buyers use Pinduoduo for their online purchases and 60% of them live in the Dragon’s third-tier cities or below. According to JD data, Shanghai, Beijing, and Guangzhou still snatched most of the 618 sales, the top three cities with the most accelerated sales “performance” in 2019 were Beitun and Tumxuk in Xinjiang, and Qingdao in Shandong province.

 

For its event, this year JD integrated its shopping platform with short-video app such as TikTok (Douyin in China) and Kuaishou, as well as Weibo. How did it work?

 

Video content creators were able to link their short-form videos with JD’s products, ostensibly receiving an affiliate commission for driving traffic and sales. For example, Douyin videos will link to a JD mini-program store, where users can purchase products without leaving the Douyin app. Concerning Kuaishou, the short-video app redirected users to a mini-store on JD’s site due to make a purchase. The goal? By using content to reel in customers first, JD was able to reach a new subset of young users who may not have intended to shop in the first place.

 

©7Fresh. JD’s connected grocery store in China. Offline is the new online for China’s e-commerce giants

 

But JD is investing in New Retail and omnia channel too. Now it runs numerous offline retail store brands, such as JD Home, JD Retail Experience Shops, and its unnamed X-mart convenience stores. JD has also invested in or partnered with the likes of supermarket chains 7Fresh, Walmart, Yonghui, Carrefour, and Vanguard, with its delivery service JD Daojia delivering groceries to customers within a 3 kilometer radius. During last year’s 618 festival, grocery retailers Walmart, Yonghui, and Century Lianhua all held their own promotions and saw sales increase by four, five and seven times, respectively, from the year before.

The JD Daojia delivery service saw orders increase five times that of the previous year. This year, over 100,000 offline retail stores in JD.com’s retail network hold 618 promotions. PRC leads the world in e-commerce. Today, more than 40% of whole online transactions take place in China. One decade ago, PRC’ s e-commerce transactions count only 1%. China e-commerce is much more than simply a means for consumers to secure bargains on everyday purchases. It is an important driver of economic and social development that is powering transformational change across the country.

 

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