JD.com plans to open more phys­i­cal stores

China Daily (Hong Kong) - - BUSINESS - By FAN FEIFEI fan­feifei@chi­nadaily.com.cn

JD.com Inc, China’s sec­ond­biggest e-com­merce player, plans to open 200 more bricks-and-mor­tar stores — mainly of­fer­ing con­sumer elec­tron­ics prod­ucts — by the end of this year. In do­ing so, it will be in direct com­pe­ti­tion with Sun­ing Com­merce Group and Gome Elec­tri­cal Ap­pli­ances Hold­ing Ltd, two of the big­gest elec­tronic off­line re­tail­ers in China.

Us­ing a fran­chise model, the shops will be pow­ered by the com­pany’s cut­ting-edge tech­nol­ogy. Upon en­ter­ing a JD store, a cam­era rec­og­nizes cus­tomer faces and tracks the du­ra­tion of their stay and where they spend the most time.

JD will make use of big data an­a­lyt­ics tech­nol­ogy to keep off­line stores stocked with rec­om­mended cat­e­gories and sug­gested amounts of prod­ucts, while lo­cal­iz­ing the se­lec­tion depend­ing on con­sumer­buy­ing pref­er­ences in each lo­ca­tion.

“By ex­pand­ing our off­line busi­ness, we be­lieve we can make shop­ping both on­line and off­line bet­ter for ser­vice part­ners and con­sumers,” said Hu Shengli, pres­i­dent of JD Elec­tron­ics.

So far, there are 92 JD re­tail ex­pe­ri­ence shops, and the num­ber will in­crease to 300 by the end of this year, ac­cord­ing to JD. The stores are mainly lo­cated in key busi­ness dis­tricts, shop­ping malls and su­per­mar­kets, such as Walmart and Wanda Plaza.

“At present, off­line sales still make up ... 70 per­cent of the to­tal sales. JD has an up­per hand in sup­ply chain man­age­ment, from pro­cure­ment, trans­porta­tion to qual­ity con­trol, and hopes to ex­pand its off­line reach across the na­tion, depend­ing on its cur­rent ad­van­tages,” said Lu Zhen­wang, CEO of Shang­hai-based Wan­qing Con­sul­tancy.

How­ever, JD doesn’t pose a threat to Sun­ing and Gome as the num­ber of its off­line re­tail shops is lim­ited, Lu said. “The com­pany will face some dif­fi­cul­ties to open stores in fourth- and fifthtier cities.”

China’s on­line shop­ping is see­ing ro­bust growth, with to­tal on­line re­tail sales hit­ting 2.47 tril­lion yuan ($370 bil­lion) in the first five months this year, up 32.5 per­cent yearon-year.

How­ever, phys­i­cal goods sold on­line ac­counted for only 13.2 per­cent of to­tal re­tail sales in the same pe­riod, ac­cord­ing to the Na­tional Bureau of Statis­tics.

WANG GANG / FOR CHINA DAILY

An em­ployee at JD’s first bricks-and-mor­tar shop in Shang­hai.JD will make use of big data an­a­lyt­ics tech­nol­ogy to keep off­line stores stocked with rec­om­mended cat­e­gories.

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