JD.com Opens Omnichannel Solutions to Luxury Brand Partners

Laveta Brigham

LONDON — The COVID-19 pandemic has encouraged JD.com, China’s largest retailer and second-largest e-commerce player, to be ambitious about selling luxury online in China. Since the pandemic subsided in China, JD.com has seen promising growth in this category. In the first hour of the 618 shopping festival, which began June […]

LONDON — The COVID-19 pandemic has encouraged JD.com, China’s largest retailer and second-largest e-commerce player, to be ambitious about selling luxury online in China.

Since the pandemic subsided in China, JD.com has seen promising growth in this category. In the first hour of the 618 shopping festival, which began June 1, sales of luxury products increased more than 400 percent year-over-year. During that day, sales of 60 brands jumped over 500 percent, and 139 brands grew more than 200 percent compared to the same period last year.

More from WWD

More than 1,000 fashion and luxury brands are selling via JD.com and a small number of them, including Prada and Miu Miu as discovered by WWD, began integrating JD.com’s omnichannel solutions with their internal inventories moments after the pandemic subsided in China to bring a wider range of full-price products to the e-tailer’s 400 million users.

Now the platform is ready to open this service, which was only available to its fast-moving consumer goods clients pre-COVID-19, to all of its luxury brand partners, such as Salvatore Ferragamo, Tod’s, Ermenegildo Zegna and Delvaux, to help them sell more smartly in China even beyond the pandemic, and attract more brands to join the platform in a market where Alibaba’s Luxury Pavillion has had more successful brand acquisitions.

“We want to be the king of luxury, and at JD.com, we have the potential to do that,” said Kevin Jiang, president of international and fashion at the platform, in an exclusive interview with WWD ahead of London Fashion Week.

As a long time supporter of the British Fashion Council, JD.com this season is creating a series of films with BFC’s China ambassador Hu Bing to celebrate and spotlight Anya Hindmarch,  Preen by Thornton Bregazzi, and Church’s, which have flagships on the site. Chinese customers will be able to shop the collections right after the streaming of the films.

“The sales potential of luxury brands on e-commerce platforms could be huge in China in the next two to three years,” he added. “We are very ambitious in terms of our sales target. The market demand is super strong and we’re exploring different models and coming with solutions to help our brands, and we also want more top luxury brands to come to JD.com.”

Here, Jiang talks about why JD.com is in a good position to serve luxury brands’ needs to reach high-spending online customers,  and why the platform should be an essential component to any brand’s retail strategy in China.

WWD: How is JD.com supporting luxury brands to achieve online-offline integration? 

Kevin Jiang: What we noticed from many brands during the COVID-19 pandemic is that their offline inventory is not moving, clearly. When they reopened their stores, they wanted their stores to make the customers happy, which means bringing all the stock to the store, but not many customers showed up.

That’s when the brands started to think about better ways to utilize their inventory. So they started to speak to us. They wanted to integrate their offline store products into their flagship. In a two-month time, we were working very actively to integrate their offline inventory into their online store on JD.com with our omnichannel solutions which were only open to fast-moving consumer goods partners before.

What’s different with this solution is that the packaging and delivery are going to be handled by the brand. The beauty of this model is that we are able to offer consumers a much broader selection and especially as you might know, for some brands, some collections are only available in their offline stores. Now, the consumers are able to access all these broad and amazing collections online.

Second of all, very surprisingly, we found out that many consumers noticed that the products are shipped directly from the physical store, and that actually helps our confidence about the more expensive part of the offering. Consumers are always concerned about authenticity. Now with products being shipped from the flagships offline, we are seeing much more expensive items being sold and the offline sales are accounting for a very significant portion of our overall sales. Moving forward, we are going to use this business model to implement this model with a lot of other brands as well.

WWD: Who has signed up for the solutions? How exactly does it work?

K.J.: A few at the moment. We are still very careful with this model because we need to ensure that the experience is smooth and that brands are happy with it. We are still upgrading this model because there are some technical issues internally, but gradually it will be better and better.

From the brands’ side, we do receive a lot of demands. This model is a wholesale-based business model, but at the same time, for our marketplace stores, we have also developed similar solutions. The brands can integrate their JD.com inventory with their offline inventory and other e-commerce inventory, and they can choose to deliver from different locations, whether it’s their offline stores or centralized warehouse.

Our data service is a national service. It’s available across China, but it’s also dependent on the brands’ own store networks. If they have a very broad store network, they will be able to integrate all their national footprint, or the brands can decide which stores they want to leverage.

Moving forward, we’re also going to leverage what we call the location-based service, so the consumer will also be able to, when they browse certain brands, to see that there is an open store close to you. So, when you place the order, it will be delivered to you in an hour.

WWD: What are the challenges with this model? For brands that don’t have a physical presence in China, how will JD.com provide supports?

K.J.: That might be more difficult because theoretically speaking, the inventory, for example, Christopher Kane, this brand is selling its inventory to JD.com and they don’t own their inventory in their offline stores. It won’t be too manageable for the brand. For emerging brands, directly shipping from JD.com, I think that’s sufficient. When they start to open up their stores in China, they will be able to integrate.

WWD: With these solutions, how is selling luxury on JD.com different from selling via other players in the market?

K.J.: All the brands are very much focused on the Chinese e-commerce market at the moment, and that’s where we are. Brands have full control over their own web sites, Weibo, Xiaohongshu and WeChat mini programs. The challenges they’re facing with these platforms it’s that they are social platforms. Consumers’ behaviors are different.

With e-commerce platforms in China, they also have very different positions and customer bases. Brands increasingly realize that to enter the Chinese e-commerce market, they need to enter the two dominating platforms in a very close time. Like with this top British brand, which was one of the first brands to open on our competitor’s luxury platform, from their perspective, JD.com is also a key component of its digital strategy, and this sentiment is echoed by many other brands.

We want to be the king of luxury and we have the potential to do that. We have 400 million active users with higher educations and higher spending powers than our competitors. And JD.com is a place to make a purchase and to save time, while our competitor is more a place to browse around for entertainment. We want to offer something you are looking for and you are able to find it very quickly to make the purchase.

One very important metric to look at is the return rate. For luxury e-commerce, return and exchange is a huge issue. If there’s a return, especially a luxury product, how do you know it’s been used or not? Or been swapped with a fake?

At JD.com, our return and exchange rate is very low. We may have half of our competitors’ return rate. This is because when our consumers come to JD.com, they want to buy something. When you’re just browsing around then you make a purchase, you might want to return it more.

We are also doing a much better job of protecting brand partners. If you go to JD.com and search Prada, only Prada items from the flagship are going to be displayed. But, fake ones are still being sold on other platforms.

We know who our customers are and we want to find the right brands and the right products to provide to our consumers and we want our consumers to be able to find these products very efficiently. We don’t need to have too many sku’s or too many brands, especially the low-quality brands and the counterfeit brands, those are not our target at all and those are not the brands our consumers are looking for.

WWD: What category is doing better than the rest? What’s the best-performing price point and people from what areas are the biggest spenders?

K.J.: Apparel and shoes are the fastest-growing categories under luxury. Previously, our consumers bought more standardized products like bags. Now, consumers are more used to shopping online and they know that even if the size is wrong or the fit is not right, they don’t need to worry about not being able to return it.

Our consumers are becoming more sophisticated as well. We noticed that the full-price collections are doing better. For example, Delvaux, which is priced from 10,000 renminbi to 80,000 renminbi, is doing very well with us, and I believe we’re one of its biggest channels in China.

Looking at the consumers, the interesting thing is that a lot of lower-tier-cities consumers who have not been able to go to Beijing or Shanghai due to the pandemic are now shopping with us. JD.com has become an ideal place for them to make a reliable purchase.

WWD: Who is joining JD.com this fall?

K.J.: In August, Coach opened its flagship on JD.com and it’s doing very well. They are selling much more expensive collections than before. Online shoppers are no longer looking for discount products, and many of them are looking for very broad products. JW Anderson, Ami and many more are opening flagships this fall on JD.com.

WWD: Anything you want to add? 

K.J.: We are planning to work with JD logistics to better improve our luxury brand partners’ customer experience. We are coming up with customized packaging for different shopping seasons. Over 90 percent of the Chinese population is covered by JD logistics, with same-day or next-day delivery service.

Our white-glove service is very popular especially during the holiday season, such as the Chinese Valentine’s Day Qixi Festival. They love this service because our delivery team is dressed in a suit, wearing white gloves and they’re able to deliver the gifts in person to whomever you want to give it to and it’s something very liked by Chinese consumers.

The interview has been edited and condensed for clarity.


JD.com Touts Luxury Strategy Ahead of 618 Shopping Festival

JD.com, BFC Form a Three-Year Strategic Partnership

London Fashion Week Designers Plan a Return to Physical Show Formats

Source Article

Next Post

Out of drug and alcohol addiction, Raiders TE Darren Waller also finds purpose

Darren Waller could sense his star beginning to rise last August, when his journey from drug and alcohol addiction to sobriety, and ultimately the NFL’s Raiders, was chronicled on HBO’s “Hard Knocks.” Selected by Baltimore in the sixth round of the 2015 draft, Waller was suspended from the Ravens due […]