JD Looks to Speed Up Construction of Brick-and-Mortar Stores, Plans for 300 by Year-End

JD Looks to Speed Up Construction of Brick-and-Mortar Stores, Plans for 300 by Year-End

Zhao Chenting

Date: Fri, 08/11/2017 - 11:45 / Keywords: JD.COM, Online-to-Offline
JD Looks to Speed Up Construction of Brick-and-Mortar Stores, Plans for 300 by Year-End
JD Looks to Speed Up Construction of Brick-and-Mortar Stores, Plans for 300 by Year-End

(Yicai Global) Aug. 11 -- One of China’s largest e-commerce platforms, JD.Com Inc. [NASDAQ:JD], isn’t content with its online status and has been actively opening physical stores over recent years. An Yicai Global reporter visited the recently opened JD.Com Home Alliance store at Beijing’s Wanda Plaza on Aug. 9.

The nearly 200-square-meter store is decorated simply and brightly, not dissimilar to most digital product shops. However, the store stands out from typical retailers with its use of technology; when customers enter the store they can become a member just by having their face digitally scanned.

Upon entering the store, a camera recognizes customer faces and tracks the duration of their stay and where they spend most time. Management can then analyze customer behavior data to improve inventory in the store.

All of the goods in the JD.Com store match the prices of those online. A customer can scan the QR code on a product’s electronic price tag to visit the JD.Com app page, learn more about the product and see user reviews. Buyers are able to pick up their purchase on the spot or can arrange for the online retail giant to deliver it to their door.

JD.Com will prioritize popular products that are difficult to buy at the brick-and-mortar Home Alliance and retail experience stores, the reporter discovered.

The Home Alliance stores are mainly located in key business districts and first- and second-tier cities, and there are 21 such stores currently open in major cities. The firm also has 71 retail experience stores located in secondary business districts in cities of all tiers.

The company has opened less than 100 stores over the past year but hopes to raise the figure to 300 by year-end. It says the slow pace of expansion is down to a franchise model with centralized oversight and quality control by JD.Com. All goods at Home Alliance and retail experience stores are sourced from JD.Com and come with quality assurance.

The main difference between the retail experience stores and traditional offline stores is that JD.Com actually provides retail infrastructure, said Hu Shengli, president of the company’s computer, communication and consumer electronics division. JD.Com provides a full range of capabilities including branding, products, marketing, technology, logistics and finance, he added.

“Our supply chain is behind the stores,” Hu said. “We use big data to recommend what goods to stock and use automatic replenishment and returns to achieve ‘zero inventories’ to reduce costs and improve efficiency. The only thing the stores need to do is to provide a good service for customers, JD.Com handles other supply chain services, like warehousing, distribution and after-sales services.”

Stores can also get support from JD.Com’s supply chain finance. The e-commerce giant provides settlement services, commission payments and other solutions, and provides credit for the offline stores’ membership system.

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Keywords: JD.COM, Online-to-Offline