Lei Xu: JD Has A Significant Role to Stabilize the Market

by Rachel Liu and Tracy Yang

During the company's earnings conference call on March 2^nd, Lei Xu, CEO of JD Retail, pointed out that JD has played a significant role in stabilizing the market, especially in the supply of fresh produce and health-related products.

Rapid increase of new customers

According to JD's latest financial results, since September 2019, the company saw 28 million net additional customers. This is the company's biggest quarterly net addition for the past three years. Impressively, 70% of new customers in Q4 came from lower-tier markets. JD has been providing premium products and service to customers all over the country, and as more and more lower-tier cities customers are experiencing online shopping, many of them tend to go to JD for the products they want. Some lower-tier market customers have more disposable income than customers in 1^st and 2^nd tier cities, and they demand high quality products. For other customers, JD has also been working with quality manufacturers to provide them with affordable products.

A key to attracting new customers is providing them with products that meet their specific demands. JD's C2M (Consumer-to-Manufacturer) initiative that helps brands tailor their products also made further progress in Q4. During the Singles Day Shopping Festival in 2019, sales of tailored personal computers increased by over 490%.

Growth of social e-commerce platform orders

Social e-commerce is playing an increasingly important role in customers' daily shopping behaviors, and JD's social e-commerce also grew rapidly in Q4 2019. For example, the Jingxi platform that mainly targets lower-tier markets saw orders exceed one million per day before the epidemic outbreak. On the customer profile of social e-commerce platform consumers, Xu said, their shopping habits tend towards more social interactions. They are more impulsive in shopping decisions and have a very high conversion rate. The attraction of new customers to social e-commerce and a focus on their entire consumer lifecycle will be a key focus of JD from now on.

JD has also collaborated with manufacturers from over 100 industrial belts to expand its products base. The industrial belts will be mainly supply suitable products for social e-commerce customers, and JD Logistics will be closely involved to fulfill the whole supply chain.

Competitive advantage

The breakout of COVID-19 in China in the beginning of 2020 has largely impacted Chinese people's daily lives and the development of many industries. During the epidemic, JD's self-built supply chain and logistics infrastructure have supported the successful delivery of donations and daily necessities to people in Wuhan and all over the country. As a result, more customers are turning to JD for their demands. More new users are being more active and making repeated purchases on JD. 'We see more old customers returning to JD and some inactive users on our platform are becoming more and more active. We are waking them up,' said Xu. 'In the future, we will leverage our operation abilities with these existing and new users to improve their experience and increase their stickiness.'

Brand partners and merchants recognize the advantages of JD's business model and looking for deeper collaboration. JD has been actively working with them to stock their products in its warehouses and develop omnichannel solutions to get their products into customers' hands more easily. Deepening of cooperation with first party partners also extends to advertising. 'As we leverage the advantages of our self-operated model, we have seen strong advertising demand from our first-party partners too,' said Xu. The company has also worked closely with merchants to support their warehousing and stocking, which has enabled the first-party business to perform strongly during the epidemic.

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