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Posted by Gene Cao on June 15, 2014
Contributed by Bryan Wang, Di Jin, and Vanessa Zeng
JD.com, the second largest online retailer in China, went public on May 22, listing itself on Nasdaq after merely 11 years of existence. At the time of IPO, JD had a market value of nearly $30 billion. Despite its size however, JD still managed to increase its customer base by 62% in 2013. How did JD manage to continually achieve business growth? I believe this is due to three key factors that differentiate JD:
■ Comprehensive logistics network for online retail in China. JD.com invested heavily in a last-mile strategy to ensure that customers receive products as quickly as possible, establishing 82 local warehouses with 1,620 delivery and 214 pickup stations across nearly 500 cities in China. This has made same-day delivery available in 43 cities — far ahead of the capabilities of Google Shopping Express in San Francisco. To better reach customers in lower-tier cities, JD is also collaborating with local convenience store chains in provinces like Shanxi and Guangdong to further strengthen its last-mile delivery capability.
■ Real-time customer service with open cloud and big data platforms. These platforms enable truly real-time decision-making. JD.com launched theJOS (JingDong Open Service) cloud service to its partners, including supply chain partners, warehouse providers, and online payment ISVs; it aims to collect data on the customer journey from various sources through its open API. This has had several effects: JD can aggregate inventory, logistics, and final delivery data throughout a customer’s shopping experience; better predict inventory needs and arrival times; ensure service levels; enhance business visibility; and improve overall customer satisfaction.
■ Significant investment in customer care. Over the past couple of years, JD.com has built the largest customer care center in the world, with more than 5,000 customer service representatives. This is where JD’s two biggest differentiators lie: First, JD offers one-year onsite service for products like home appliances by partnering with brands or leveraging its own support engineers. Second, it has made a “100-minute service promise,” which guarantees that customers will get a solution to their problem within 100 minutes of contacting JD.
JD.com’s success clearly shows the value of investing in the customer experience, improving customer satisfaction in the “discover”, “access”, and “get support” stages of Forrester’s definition of the customer journey. Online retailers in China, including JD, should further explore how they can better compete and engage with customers through other customer touchpoints, taking into consideration the “evaluate”, “buy”, and “use” stages. China is the largest online retail market, and the competition will only get more intense! Speaking of “intense,” JD.com will launch a “618 Shopping Festival” promotion on June 18 — and we expect it to set yet another sales record.
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