Chinese E-Commerce Giant JD.Com to Expand Into Tourism Sector
Lu Hanzhi | Le Yan
DATE:  3 hours ago
/ SOURCE:  Yicai
Chinese E-Commerce Giant JD.Com to Expand Into Tourism Sector Chinese E-Commerce Giant JD.Com to Expand Into Tourism Sector

(Yicai) June 19 -- After making a high-profile entrance into the food delivery business with JD Takeaway earlier this year, JD.Com said the Chinese e-commerce giant plans to launch hotel and travel services.

JD.Com will provide supply chain services to the hospitality industry to help optimize supply chain costs, the Beijing-based firm said in an open letter to hoteliers yesterday.

Similar to its approach to food delivery, JD.Com has tried to show sincerity to potential new clients by offering hotel operators up to three years of zero commission if they join its "JD Hotel PLUS Membership Program."

JD.Com aims to reduce operational costs for hotels and restaurants by two-thirds through supply chain services, said founder Liu Qiangdong.

JD.Com's e-commerce users and partners highly overlap with the core customer base of four-star-plus hotels, while their frequent consumption habits can generate additional demand for travel and related services, the company pointed out.

According to JD.Com, the firm serves more than 800 million high-spending users nationwide and has deep alliances with 30,000 large and 8 million small-to-medium-sized suppliers.

JD.Com's expansion into the tourism sector is a strategic upgrade of existing businesses rather than entering a new field from scratch, Chen Liteng, a digital lifestyle analyst at NetEase Economy Society's e-commerce research center, told Yicai.

"JD.Com launched flight booking services in 2011, established a travel channel in 2014, and has accumulated supply chain resources through investments in Chinese online travel agency Tuniu and strategic cooperation with Ctrip," Chen added.

The core advantage of JD.Com in hospitality is its mature supply chain management system, Chen pointed out, adding that it can replicate the industrial supply chain experience to the travel sector, reducing hotel costs via direct procurement and leveraging retail and food delivery clients to drive traffic.

However, the travel market is more intensely competitive than the food delivery sector, with major platforms having deepened their presence for decades, Chen noted. "JD.Com may face fiercer competition, potentially triggering a new round of price wars in local lifestyle services."

Signs of JD.Com's hospitality push had already emerged, with Chinese media outlet The Paper reporting earlier this month that the firm is recruiting for travel-related jobs offering triple salaries for product managers, system architects, aviation operations, and other core roles, explicitly requiring candidates with experience at Ctrip or Meituan.

Shares of JD.Com [HKG: 9618] fell 2.1 percent to HKD126.70 (USD16.14) apiece as of 10.35 a.m. in Hong Kong today. Its New York-listed stock [NASDAQ: JD] ended down 2 percent at USD32.50 yesterday.

Editors: Tang Shihua, Martin Kadiev

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Keywords:   Business Expansion,Hotel,Travel Agency,Supply Chain Service,E-Commerce Giant,JD.com