China’s JD.com reprograms retail with new tech
JD.COM ENTERS THAILAND IN A MAJOR RETAIL JOINT VENTURE WITH CENTRAL GROUP, ONLY SECOND FORAY OUTSIDE CHINA FOR GIANT E-COMMERCE PLAYER
THOUGH JD.com Inc is already a large e-commerce player in China, it has another big goal in mind – to become known as the provider of technologies and innovations that enhance the business capabilities of all retail-industry stakeholders.
Chen Zhang, chief technology officer for JD.com, said that e-commerce is the latest revolution to transform the retail industry at all three essential retail factors – cost, efficiency and experience – in order to keep up with massive technologydriven changes in consumer behaviour.
Reconciling the two will be the role of JD.com from its position as a retail service provider.
“The revolution is just starting and it is continuously progressing,” said Zhang.
He said revolution in retail infrastructure is the most important change in customer- facing retail outlets, whether chain stores, supermarkets, or e-commerce sites.
To serve e-commerce businesses successfully, the China-based giant has researched and developed innovations focused on the concept of “smart” retail, which includes the smart supply chain, smart logistics, and smart marketing.
JD. com has already drawn on new technologies – including artificial intelligence ( AI), big data, block chain, robots and drones – to enhance the capability of its e-commerce business and platform, as well as merchants and business partners it works with.
Zhang points to the company’s JD Exclusive Privileges, a smart marketing solution based on AI and big data. It helps identify and aid demanding customers of certain products, providing them with personalised exclusive privileges from merchants and the JD procurement and sales team. The result – customers have a more enjoyable shopping experience.
Another example is using big data to help retailers with “dynamic pricing”. It can recommend different pricing strategies across retail categories, promoting transactions with the best pricing efficiencies.
JD. com has also worked with four Chinese governmental agencies and merchants to launch block chain applications to track Kerchin beef around the world.
JD. com has also implemented smart logistics applications, including smart robots for warehouse in Wuhan; implemented unmanned delivery vehicles for the daily operations at four universities in China; and set up a drone command-and-control centre for the Suqian Daily newspaper operations in Suqian and Xi’an.
They can draw on more than 9,000 engineers between China and Silicon Valley to research areas including data science, AI, virtual and augmented reality, automation, robotics, unmanned vehicle system, and more. The breakthroughs are adapted for use in everything from intelligent pricing to inventory management and fraud detection – and more.
In China, JD.com’s logistic network covers 99 per cent of the nation’s population with over 65,000 delivery employees, 335 warehouses (including large “fulfilment” centres, small warehouses and “clod-chain” facilities for temperature sensitive products) and almost 7,000 delivery stations.
“We have 13 years of experience doing e- commerce and finance services in China and 18 months in Indonesia,” said Zhang.
Recently, JD.com announced its expansion in the Thai market through an investment of up to $ 500 million ( Bt16.5 billion) to establish two joint ventures covering e-commerce and fintech services.
Thailand is the second country in Southeast Asia, after Indonesia, to draw the attention of JD.com.
Zhang said that Thailand’s Central Group is one of the largest offline retail players, while JD.com is the largest online retail player in China. Their combined JV platform will leverage the best of each.
“E-commerce and finance technology go closely together. And fintec is to help with risk management, which involves all stakeholders in the supply chain as well as merchants and buyers,” said Zhang.
Under the terms of the agreement, half of the investment will come from Central Group, with the remainder coming from JD.com, JD Finance and Provident Capital, which is also JD. com’s strategic partner for its Indonesian e-commerce business.
JD.com will provide its extensive expertise in technology, e- commerce and logistics to the e-commerce joint venture.
However, it has two separate ecommerce platforms. One is its own JD.com, which would source products from Thailand to sell to people in China, while another one is a joint venture platform, JV, which would source products from both China and Thailand to sell to Thai people.
“There are many rooms to grow in e-commerce in Thailand and in SEA,” said Zhang. “Currently, only 2 per cent of the whole of Thailand’s retail industry value is online retail or e-commerce, and it is only 1 per cent in Indonesia. But it is 15 per cent in China’s retail industry and 10 per cent in the United State’s retail industry.”
In China, JD.com could boast 153 per cent growth last year, with 136.1 billion gross merchant values and has 250 million active users.