The E-retailer, JD.com is about to become the third-largest Internet company in China. The efficiency of its distribution network has made it possible to raise the distributor to the same level as the giants of the sector. (Baidu & Weibo)
We will introduce you through the article the universe of online distribution in China, its current development and interest for you, foreign company to make you visible on these platforms.
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A digital system very different from the Western model
25% is the consumption share of e-commerce in China, which generated a total of $ 589 million in 2015. China’s digital environment is one of the most important of the world and on which the development of M-commerce (commerce on smartphones) is experiencing significant progress. Indeed, according to Jack Ma, founder of Alibaba, Internet and e-commerce are, in China, “more than a trend, it is a way of life”.
If you do not know yet, China is a country where censorship is strong. It will be difficult for you to be able to use the different sites or social networks that we usually use. This censorship has allowed Chinese companies to develop their own universe and to offer adequate offers to their consumer.
In this market, three large companies called BATs generate the majority of turnover and can be considered as an equivalence of GAFAs in Western countries. These actors are digital ecosystems and e-commerce involved in distinct and competing markets at a time. Baidu whose main activity is research, Alibaba, an e-commerce platform, and Tencent, a platform for games and instant messaging.
However, the Chinese Internet market still has diverse development opportunities. Indeed, China already has 721 million Internet users, while part of the population does not yet have access to the network. The BATs together, represent 1.8 billion users. These growth opportunities make it a highly competitive market, where a large number of players are trying to attract as many Internet users as possible on their platforms.
This is the case of JD.com which is achieving very good performance in this year 2017 and is about to dethrone Baidu in terms of market value. Baidu, whose main activity is Internet research, is subjected to fierce competition from new entrants to the market and fails to find new sources of revenue to innovate and renew its activities. Moreover, government regulations concerning e-advertising do not help the business of the company.
JD.com is developing to become an ecosystem similar to the one of Amazon, it is a real opportunity for foreign brands to position themselves on this online store to develop its reputation and brand awareness in the Chinese market.
JD.com: Quality assurance for foreign brands
The platform is considered to be the biggest online direct selling website. The company owns and operates seven execution centers and 166 warehouses in 44 cities. It also has about 4,000 delivery stations in China and makes it a company with a strong distribution network.
JD Worldwide is a service open to cross-border brands allowing foreign traders to sell directly to Chinese consumers without benefiting from a Chinese address. The company also highlights its policy of zero tolerance for counterfeit products, which reassures Chinese consumers regularly faced with the problem of counterfeiting in its market. JD dominates some areas such as home appliances and consumer electronics.
How to integrate the platform?
As a foreign brand, you have three entry modes to integrate JD Worldwide:
- Franchising Business Partner that will allow vendors to build a JD store and use their warehouses to store their own products. JD assumes all responsibility for warehousing, delivery, and customer service.
- Business Partner License: The seller can configure the store and the complete packaging in order to ship the order. JD will oversee customer service.
- Self Operation Partner: The seller can sell on the JD platform. However, warehousing and delivery must be managed by the traders themselves.
• An entity registered outside of Mainland China with a capital of more than 500,000 RMB ($ 76,000).
• Qualifications in wholesale and retail sales abroad
• Be the owner of the trademark or the authorized agency
• Possess the necessary stock
However, we recommend that you do not focus on selling on a single platform. In China, the more you are visible to the consumer the more you will be considered as a quality brand with a positive reputation.
Do not hesitate to understand the whole Chinese digital ecosystem and its operation to ensure you a place of choice in the market. Many agencies such as Gentlemen Marketing Agency can also help you integrate into the Chinese market by accompanying you in your endeavors and being your partner in the field.
Our agency specializing in digital marketing is located in Shanghai. We are committed to partnering with organizations to grow their business in this lucrative market of China.
Do not hesitate to contact us for more information.