I accompanied a group of European students to JD headquarters in Beijing. They were part of the ChinaMed / TOChina program out of the University of Torino, which is a fantastic program connecting China and southern Europe. I will be writing more about that program shortly. It is run by Giovanni Andorino and Francesco Silvestri.
We took a tour and had some interesting talks.
The students also got a copy of The JD.com Story, which is a pretty good book. On my recommended China reading list.
And as is my custom, I took a ton of notes and left with a list of issues I wanted to investigate. But for this article, I will just listthe four coolest things I think JD is working on right now.
#1: JD and Wechat are integrating their data for merchants / brands.
In the past year, both Alibaba and JD have rolled out a more integrated marketing service. Alibaba calls it “uni-marketing” (article here). And JD has a similar program.
The idea, which has real power, is to offer a unified view of consumers to brands and merchants on the platform – and to complement this data with a suite of digital tools they can use to engage more effectively and efficiently. It’s data plus digital tools for greater customer understanding and engagement, in one dashboard.
JD and Wechat increasingly integrating consumer data for brands / merchants could be really powerful. Alibaba has e-commerce, location, entertainment viewing and lots of information on their users. But Wechat dominates social media. It will be interesting to see how this integration plays out over time. I’m going to dig into this.
#2: JD’s Partnership with Walmart is Expanding – Especially in Inventory and Logistics
JD has a strategic partnership with Tencent and they are a primary partner for Tencent’s move into e-commerce (Meituan is another). Walmart is another of JD strategic partner. And JD has just signed a new one with Google, although nobody seems to know what this means yet.
JD is now expanding its partnership with Walmart China. And that’s pretty interesting, given Walmart’s capabilities and what is going on with “new retail”.
Right now, they appear to be increasingly integrating inventory. So consumers buying stuff on JD can have their order fulfilled with the inventory in JD’s warehouses or at Walmart (and its warehouses). That should mean they will have a larger inventory closer to the consumer. And having the inventory closer to the consumer is how you make deliveries faster. It probably also means a bigger selection of items as well (not sure). How “new retail” is playing out in inventory and logistics across China is a fascinating question.
I’m working on a longer piece on the Walmart-JD partnership and where this is going. Keep in mind, Walmart has 5(?) types of stores in China. And they have their own delivery as well. So the integration of JD and Walmart can involve inventory, delivery, lots of stores and other stuff.
It’s also worth keeping in mind that JD’s biggest challenge today is probably managing its growth. Their revenue has increased 10x in the past five years. It’s a huge challenge just to keep expanding delivery, logistics, and customer service and keep up with this. Think of how many delivery drivers and customer service reps they have to hire every year just to service this growth. CEO Richard Liu recently said they had added an additional +40,000 delivery people since like October(?). Projects like AI and autonomous vehicles (below) are a lot about managing this growth.
#3: JD Logistics is dreaming big.
Every now and then, I come across a group that I just really like. Usually because they are really daring. And can execute well.
I really like JD Logistics. Take a look at the below video (link here). It is one of their presentations (filmed on my phone, Sorry for quality) and has some of their vision for how logistics is going to work one day (maybe). I don’t know how much of this will happen or when. But it’s really cool.
#4: “Retail as a service” is a compelling idea. Although, I’m unclear about how much of their operations they are going to open to the ecosystem.
One of the big ideas floating around the digital giants is the idea of inverting and opening your company. Of digitizing and standardizing your core capabilities and then opening them to the market. Instead of building capabilities just for your own use, you try to orchestrate the ecosystem. Amazon famously did this when it took its internal data and software capabilities and turned it into Amazon Web Services.
JD Logistics has been increasingly doing the same thing with its separation into a stand-alone business unit. And it appears another step in this process is JDs new “retail as a service” idea. They say they are going to increasingly open their supply chain, software and logistics capabilities to the market – and let these capabilities empower other companies. Hence the phrase “retail as a service”. It also extends them into the ecosytem.
This is still pretty fuzzy for me. But it’s compelling and I’m trying to learn more.
That’s it for this visit. It was great fun. Thanks for Ella Kidron at JD.
As “new retail” continues to evolve, I’m focusing more and more on the operational and partnership aspects. There is a ton of interesting stuff happening behind the scenes.
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