JD.com to open first office in Australia
Chinese e-commerce giant JD.com has ramped up its presence in Australia in recent months, sending more executives to local events and hiring a new team to focus specifically on recruiting Australian brands to sell through its platforms.
Soon, the company will open its first office Down Under.
“It’s just a matter of timing. I think we will do it in the not-too-distant future,” said Josh Gartner, vice president of international corporate affairs at JD.com.
New phase of growth
JD.com started out as a consumer electronics retailer, but has evolved to become China’s second-largest e-commerce company after Alibaba Group, with 258 million active users.
Today, the company operates two main websites and stocks a wide range of products, from clothing to appliances. A larger, more established site is geared towards multinational brands, while a newer cross-border platform targets overseas sellers.
The business combines a traditional retail and marketplace model, with some items coming from JD.com and others coming from third-party sellers.
This strategy is in line with e-commerce juggernauts like Amazon and Alibaba, which, conversely to JD.com, started out as a pure marketplace and has added retail over time.
According to Gartner, JD.com already works with thousands of Australian brands selling products in high demand in China, such as long-life and fresh milk, supplements and wine.
“We’ve been doing quite a lot of business with Australia over the last two years,” he said.
The opening of a local office signals a new phase of growth for JD.com in Australia. It also sees the e-commerce company going head-to-head with rival Alibaba, which officially opened its Australian headquarters in February of this year.
Alibaba recently hosted its first large-scale event in Melbourne aimed at recruiting small and medium Australian sellers onto its platforms.
Notably, almost all the businesses in attendance at the Alibaba event were in the same categories that JD.com is targeting in Australia. Indeed, many brands – such as A2 Milk – already sell through both sites.
The WeChat advantage
One point of difference with JD.com is its relationship with Tencent Holdings, the parent company of WeChat as well as JD.com’s largest shareholder.
WeChat is a hugely popular messaging app, with around 963 million active monthly users around the world.
Chinese speakers use WeChat not only to communicate with friends and family, but also to buy products and services from a variety of partners that integrate directly into the app.
Under the ‘shopping button’, users can access a replica of JD.com’s mobile app, and Gartner said 25 per cent of first-time visitors to the site come from WeChat.
“There are certain things other companies can do in terms of retail, but in terms of access and scale of what we can do, that’s an exclusive relationship,” Gartner said.
Most recently, the company announced an initiative with Tencent and Walmart, another major shareholder of JD.com, to offer personalised shopping suggestions based on customers’ purchase history and WeChat data.
Gartner said JD.com differentiates itself in another way too. According to him, the company doesn’t face the same problem with counterfeiters that Alibaba does, because it only has to monitor around 140,000 sellers as opposed to millions.
(Alibaba has previously come under fire from luxury brands over sales of counterfeit goods, although this year it formed an alliance with 20 international brands to use big data and technology to keep fake goods off its platforms.)
“We monitor [sellers] carefully. We have the capacity to look at feedback and find any red flags. We also do mystery buying, where we buy and test products to make sure everything’s right,” Gartner said, adding that managers and supervisors are held accountable for any counterfeit products sold in their categories. Sellers are also fined.
But Sylvia Wei, deputy managing director of Australia at Azoya, said JD.com can’t entirely avoid the problem of counterfeiters, though “it may be less chaotic because they have a smaller pool [of sellers]”.
A version of this story first appeared in issue 2164 of Inside Retail Weekly. To subscribe, click here.