JD.com to open first office in Australia

Jd.com-fulfillment-centre-truckChinese e-commerce giant JD.com has been ramping 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 and retailers to sell through the site. 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.

The announcement comes less than 10 months after JD.com’s rival, Alibaba, officially opened its Australian headquarters in Melbourne.

Alibaba, which operates a portfolio of e-commerce sites in China, including Tmall and Tmall Global, recently hosted its first large-scale event in Melbourne, aimed at recruiting Australian sellers to its platforms. Almost all the businesses in attendance were from a few key categories, including supplements, infant formula and other baby products, cosmetics and wine.

According to Gartner, JD.com currently works with thousands of Australian brands in many of these same categories.

“We’ve been doing quite a lot of business with Australia over the last two years,” he said.

The company has 258 million active users who shop on its two platforms, a larger and more established platform for multinationals and companies with Chinese subsidiaries, as well as a newer, cross-border platform intended for smaller sellers.

Both platforms are a mix of traditional retail and marketplace models. The way an item is sold depends on the platform – the larger platform is more retail, while the cross-border platform is more marketplace – as well as the category, according to Gartner.

The counterfeit problem

This mix of retail and marketplace is one thing that sets JD.com apart from Alibaba, which until recently operated a pure marketplace model. Gartner said JD.com also attracts a different type of customer in China.

“I think there’s a fair amount of overlap in the consumer base, but one thing we see [is that] as consumers have more disposable income and focus on quality and service and over price, they tend to migrate to JD.com because of our strict policies against counterfeiting and our attention to quality and service,” he said.

Alibaba has previously come under fire from major brands, including Gucci, Balenciaga and other brands owned by Kering Group, which sued the company in 2015 over sales of counterfeit goods.

Kering has since dropped the lawsuit and announced a partnership with Alibaba to fight counterfeiters. This is in addition to an alliance Alibaba formed with 20 international brands earlier this year to use big data and technology to keep fake goods off its platforms.

Gartner said JD.com is better equipped to fight counterfeiters, since it only needs to monitor around 140,000 sellers, rather than Alibaba’s millions.

“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,” he said, adding that managers and supervisors are held accountable for any counterfeit products sold in their categories. Sellers are also fined.

The WeChat advantage

But Sylvia Wei, deputy managing director of Australia at Azoya, told IRW that JD.com can’t entirely avoid the problem of counterfeiters, though “it may be less chaotic because they have a smaller pool [of sellers]”.

Wei said JD.com does have an advantage over Alibaba in its relationship with Tencent, the company’s largest shareholder and owner of WeChat, a popular messaging app used by around 963 million Chinese speakers monthly. The app also lets users buy products and pay for services from a variety of partners.

According to Gartner, about 25 per cent of first-time customers come to JD.com through WeChat, which features a mobile version of the site under its ‘shopping button’.

“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.

JD.com last week announced its latest initiative with Tencent. Alongside Walmart, which also has a stake in JD.com, the company will offer personalised shopping suggestions based on customers’ purchase history and WeChat data.

It will also extend online discounts to bricks-and-mortar stores when customers use Tencent’s mobile payments app, WeChat Pay, at checkout. The initiative comes ahead of China’s biggest shopping event, Singles Day, on 11 November.

This article first appeared in Inside Retail Weekly.

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