Chinese e-commerce giant JD.com plans to build a network of five million physical stores over the next three years through a mix of its own bricks-and-mortar outlets and partnerships with existing players.
Xu Lei, chief executive of JD Retail, revealed the colossal scale of the company’s ambition in an interview with CNBC as part of the broadcaster’s annual East Tech West conference, which is being held this year both remotely and in Guangzhou.
He said JD.com’s online model can service only a “certain number of consumers” and that the company wants to “apply our years of experience, including logistics, merchandising and technology to a much wider context”.
“Therefore, last year, we determined to position JD as an all-channel retail platform,” he added. “In addition to our centralised online app, we also have a lot of de-centralised offline platforms. The offline market is very important to us.”
JD’s move reflects the fierce competition among China’s leading e-commerce players as they vie to attract more consumers from smaller cities, but the company doesn’t intend to expand its physical presence alone.
“What’s more important is to make good use of our partner stores,” Xu explained. “So far, we have linked up with over 2.5 million stores, including our own stores. In three years, our projection is to have a network linking up to five million stores.”
A good example of one of JD’s partnerships that merge the offline and online shopping experience is its $100m investment in Gome Retail Holding, one of the largest appliance chains in China.
Under the terms of the deal, the joint venture enables customers to check out products at Gome’s 2,600 stores and then purchase the items via JD.com.
Xu also confirmed the importance of concentrating on the needs of consumers in smaller cities across the country.
“What happens to consumers from fourth- to sixth-tier cities, when they want to buy some big-branded products, they either find out that the products are not available locally or they are sold at a much higher price than those in the upper-tier cities,” he said.
“JD is providing consumers in lower-tier markets the same kind access to products and pricing through our nation-wide logistics network.”
Sourced from CNBC