JD.com (JD) did not start as an e-commerce marketplace. The company was first founded as Jingdong Century Trading Co., Ltd in June 1998 by Richard Liu and was known as a leading seller of magneto-optical products. Soon after, JD began to shift its focus to electronics including mobile phones, laptops, headphones, and flash disks. Its e-commerce platform JD.com didn’t go live until 2004.
JD, like all online retail shops specializing in one or a few
product categories, could have fallen out during the struggle of either remaining focused on electronics and being merged into Tmall or diversifying into a comprehensive shopping platform but risking losing out on the massive marketing support that Tmall is getting from its parent company.
So, how did JD diversify and reach a scale to rival Taobao and Tmall?
JD, in our opinion, has done outstanding work in the following areas:
1) Continued to strengthen its reputation for quality and variety in electronics and household appliances while diversifying its product categories:
Although JD now has over 200,000 merchants covering all shopping scenarios, electronics and home appliances still account for nearly half of its total sales. As a result, JD remains the go-to choice for customers when purchasing electronics and appliances.
2) Partnered with Tencent to drive traffic and acquire new users:
Alibaba-run Tmall and Taobao have a natural advantage in user acquisition as Alibaba supports its own e-commerce market by sharing all resources within its ecosystem. JD, on the other hand, had to seek different ways to expand its user base. JD’s partnership with Tencent began in 2014 and has since extended to include advertising, mini-programs, and joint membership. According to Richard Liu, WeChat accounts for around 25% of JD’s current users.
3) Created its own delivery network that is not reliant on third-party logistics companies:
JD has invested a significant amount of resources in developing its own highly efficient deliverynetwork. JD is also the first to test-run AI-led logistics infrastructure management and robotic delivery solutions to improve its already unparalleled delivery capability.
4) Developed a new business model:
JD Ziying adopted a reseller model where JD bulk-buys high-quality popular items from well-known brands (referred to as JD’s suppliers) and resells them to individual customers. All brands and products have been pre-screened for product quality and industry qualifications. All items are shipped from its own warehouses, ensuring both product quality and delivery speed.
5) Differentiated customer groups:
JD is a popular marketplace for technology-driven niche electronic products, especially for customers between 29 and 35 years old. Aside from young people who regularly spend money on electronics, JD is the go-to shopping destination for customers who need general consumer goods from well-known brands.
|Market Share(Based on annual turnover)||Monthly Active Users(million)|
* This chart includes B2C e-commerce platforms and does not include C2C platforms such as Taobao.
* Data source on market share: analysys.cn
* Data source on MAU as of May 2021: 100ec.cn
If Tmall is the leading e-commerce platform in China, why invest in a store on JD as well?
This is an excellent question, and we believe your efforts will be fruitful for three reasons:
1) Increasing your chances of making a sale
In 2020, Tmall had around 780 million annual active users while JD had about 470 million. This means that one in every two online shoppers uses both Tmall and JD and regularly shops on both platforms. Setting up a store on JD is no longer about competing with Tmall and trying to win over a different consumer group, but about filling in the gaps where JD excels, or Tmall falls short.
2) Leverage the power of JD’s unrivaled logistics system
JD is known for its surprisingly fast delivery, often regarded as “the Amazon Prime experience without the extra charge”.
JD is the only e-commerce platform in China with its own logistic system that is not dependent on third-party delivery services.
Since 2016, 85% of JD’s self-run products can be delivered on the same day of ordering to same-city recipients, and to most sub-provincial cities within two days. Compared to your competitors without a JD store, having one guarantees you a win when it comes to customers with urgent needs.
3) Strengthen your brand
JD, like Tmall, only accepts corporate merchants and imposes harsh penalties for any counterfeits. As JD increases oversight of product quality offered by merchants to protect its loyal customers, being accepted into JD validates and elevates your brand’s credibility among Chinese consumers.
For overseas merchants looking to expand in China, JD’s cross-border e-commerce division JD Worldwide is an ideal place to start since it provides a streamlined process specifically designed to help overseas merchants easily start selling in the Chinese market.
JD Worldwide was launched in 2015 as JD’s cross-border e-commerce platform, helping international brands sell products to Chinese consumers directly from overseas regions. Compared to joining JD China, merchants joining JD Worldwide do not need a physical entity in China, a Chinese business license, or a corporate bank account in China, and will benefit from the following advantages:
1) The products sold through JD Worldwide qualify as cross-border e-commerce products and enjoy a lower tax rate than selling products through traditional import and export trade (which is the case if joining JD China with a Chinese company). The merchant can potentially pay one third less tax as it’s waived for cross-border e-commerce products
2) Joining JD China is likely to take 3 to 6 months or longer, especially if the merchant doesn’t already have a company registered in China, while joining JD Worldwide allows a merchant’s store to go live within a month or two.
3) Selling directly from overseas allows the merchant to monitor and adjust inventory and supply chain to avoid overstocking and other operational risks. Establishing an operation unit managing your office, warehouse, and inventory will undoubtedly add cost and risk to a business that is just starting.
There are two main ways to cooperate with JD Worldwide:
Become a supplier to JD Worldwide and let JD Worldwide sell your products themselves (B2B2C model), or open your own store on JD Worldwide’s platform and sell your products directly to consumers (B2C model).
1) Become a supplier (B2B2C model)
After becoming a supplier, brands and official distributors can sell their inventory to JD Worldwide, and customers will be purchasing directly from JD Worldwide. JD Worldwide will handle all shipments and customer service on behalf of its suppliers.
This is obviously the simplest way to operate with the least amount of human resources and risk. Still, it also comes with many prerequisites in addition to the other qualifications generally required. Nowadays, it’s almost impossible to become a supplier unless you’ve received an invitation from JD.
2) Open an online store (B2C model)
Most merchants can simply apply to set up a virtual store hosted on JD Worldwide’s platform. They will be able to present their products to Chinese consumers and accept orders by paying a security deposit, platform usage fee, and a per-sale commission to JD Worldwide.
Depending on the merchant’s qualifications, there are four types of stores available for application:
– Brand Flagship Store: this is only for brand owners or distributors with tier 1 exclusive authorization in China.
– Outlet-Type Flagship Store: only retailers or distributors with both class-35 Chinese trademark and brand authorization letters.
– Franchised store: A merchant selling products authorized by one or more brands. All brands should be owned by the same entity/individual.
– Exclusive store: A merchant selling two or more self-owned or authorized brand products without a class-35 Chinese trademark can open an exclusive store.
If you are unsure about the type of store you can open with the trademark and authorization letter your company currently holds, don’t hesitate to contact us. AppInChina’s experienced operation professionals will gladly assist you in analyzing your business scenario and confirming which type of store you are eligible for.
What are the documents/qualifications generally required for registration?
1) General documents all merchants are required to provide:
– Business License stamped with the company seal or signed by the legal representative / an authorized representative
– ID of the legal representative
– Corporate bank account opened overseas or in HongKong, Macao, or Taiwan that can settle in US dollars
– Trademark of the brand(s) you want to sell, registered overseas or in HongKong, Macao, or Taiwan
– ID of the store contact person: this must be a Chinese citizen located in China and holding a Chinese mobile phone number.
– A Chinese partner company that shares joint legal liability (required by the Chinese Customs Office). If you would like AppInChina to act as your Chinese partner company then click here to contact us.
2) Other possibly applicable requirements:
– Brand Authorization documents proving the complete authorization chain. If the merchant is not the trademark holder then JD provides a template for specific tier 1 exclusive authorization.
– Class-35 Chinese Trademark (if the merchant is a retailer store)
– Passport / ID of the trademark owner (if the trademark owner is an individual)
– Bank statements of the past three months (not applicable if the trademark owner gives you direct authorization)
– English or Chinese translation of non-English and non-Chinese qualification documents issued by a qualified third-party translation agency
Please note that JD may require additional qualifications for specific products.
The following entities have a better chance of getting a fast-track pass for joining JD Worldwide:
Large overseas, HK, Taiwan, or Macao retail corporations, chain stores, famous brands, brand distributors, well-known retailers, and well-known brands that haven’t yet launched in China.
The online application system supports Mandarin, English, Korean and Spanish but platform rules about pricing, registration requirements, etc., are presented in Chinese only.
A Chinese BD manager will be assigned to each merchant to assist throughout the application process.
The cost of creating and maintaining a JD store will include:
– A security deposit of USD 10,000, 15,000, or 30,000 per store per year, depending on your product category.
– A platform usage fee of USD 1,000 per store per year
– Design fee for customized web pages of the store (around USD 4,000 to 8,000)
– JD’s Fee: 2% to 8% of each sale
Note that the security deposit and platform usage fee are determined by your product type. For a catalog of pricing on all product types, please visit JD’s platform rules page.
– The products must be authentic and manufactured or sold overseas or in Hong Kong, Macao, or Taiwan. They must be shipped out from overseas or bonded areas.
– Each product description page must provide all relevant information in Chinese, and the product dimensions must be shown using the international metric system.
– Merchants selling counterfeits and products not listed in the store’s registered product types will be penalized once discovered.
– All merchants must provide Chinese customer support. Customer support staff shall download JD DongDong, a chat software developed by JD to better serve its online shoppers, and answer customers’ questions via online chats.
– The merchant needs to finish dispatching within 72 hours of an order being placed and enter the tracking number in the JD logistics system.
– The merchant must provide a product return address and contact person in China.
Once you have acquired approval from JD and paid the security deposit and the platform usage fee for your store, there are a few final steps you should have in place before going live:
– Figuring out a suitable logistics plan for your store
JD has its own international logistics network and is expanding to cover more countries. There are two main ways for your goods to reach a Chinese customer:
|Description||Pre-export the goods and stock them in JD’s domestic bonded warehouse and dispatch from Mainland China||Stock the goods in JD’s overseas warehouse, export and deliver each order from overseas|
|Advantage||Short delivery time and low logistics cost||Low storage service costs and low risk for goods that expire quickly|
|Disadvantage||Risk of overstocking and high storage service cost||Long delivery time and high logistics cost|
If you are unsure which option is most suitable for your company, contact AppInChina to help you determine the most cost-effective option.
– Onboard a management and customer service team
A professional customer service team is critical to your store’s success on any e-commerce platform. The service that each customer receives during a customer service session before placing their order can either make or break a sale. In addition, customer feedback on post-sale support can also significantly improve or damage a store’s ranking. It’s therefor essential to ensure that you have trained staff to handle customer support. If you are interested in using AppInChina’s customer support service then click here to contact us.
– Create a tailor-made marketing plan for your store
The range of marketing strategies available to drive traffic to JD stores is becoming increasingly complex. WeChat marketing, WeChat mini-programs, search engine marketing, influencer marketing, and many other channels can potentially be incorporated into your marketing plan. We advise that you hire a seasoned marketing professional who has extensive knowledge of the Chinese e-commerce space, or contact AppInChina for advice from our staff.
There will no doubt be hurdles as you start your journey at JD.com. Still, with long-term commitment and professional knowledge, your effort can result in success in a market with an annual spend of CNY 11.76 trillion in online shopping.
Achieving success for your products on JD.com is a major challenge but with long-term commitment and professional knowledge you can achieve success.
AppInChina provides a range of services to help you set up and manage your presence on JD. Click here to contact us for a detailed proposal.