(Yicai Global) Oct. 11 -- China's second-largest ecommerce company JD.Com has busted a new move in its convenience store business, poaching several management personnel from Seven-Eleven (Beijing) to start a direct-sales mini-mart line.
Beijing-headquartered JD.Com plans to open direct sales stores in addition to its existing JD.Com convenience stores, insiders said. The company has enticed five management personnel to jump ship from the Chinese unit of Tokyo-based Seven-Eleven Japan, insiders from Seven-Eleven Beijing said, Beijing Business Today reported, but without specifying names or positions.
The corner marts are JD.Com's physical retail outlets and share the supply sources as the items its online stores sell. The firm's convenience stores previously developed mainly as a franchise model. The firm will open more than 1 million branded quick marts in China in the next five years, it announced in April last year.
It will have opened 1,000 new locations per day nationwide by the end of this year, Liu Qiangdong, its chief executive said in April.
Asked about the detailed means of achieving this aim, the company replied that no specific data was available for public announcement.
Though the current franchise model has sped expansion of the firm's mini mart line, it has also wrought chaos in management.
Thus, poor storefront appearances, old-fashioned marketing strategies, backward business models and other issues have all cropped up since purchasing and other administration are all up to the store owner.
One proprietor acknowledged that franchising allows him to purchase goods from JD.Com, which ensures product authenticity, but product displays, store management and other system standards are left up to him to determine.
JD.Com boasts obvious advantages in its supply chain, notably its firm grasp of commodity data, but still faces many challenges in rental, labor and commodity development when opening brick-and-mortar stores, said Li Yongjian, director of the National Academy of Economic Strategy of the Chinese Academy of Social Sciences.
Editor: Ben Armour