The summer solstice on June 21st serves as the marker for a number of events besides the first official day of summer. It is a reminder that the year is now almost halfway over, a wake up call for many who may feel that they just celebrated the new year. It also marks the end of another 618 shopping event, the 19th to occur since it was first started by the ecommerce giant JD.com nearly two decades ago.
With presale events starting as early as May 23rd and the official promotion lasting from May 31st to June 20th, consumers in China and across the globe were able to take advantage of almost a month of deals from practically every retail category imaginable. According to JD.com, by June 19th the company had a total transaction volume of RMB 379.3 billion yuan, already exceeding the RMB 343.8 billion yuan total from the year prior.
Founder Liu Qiangdong started the internet company on June 18th, 2003, transitioning his chain of brick-and-mortar electronics stores online and expanding it to the point that today it carries everything from large appliances to groceries and luxury goods. Over the past two decades JD.com has evolved to become the largest retailer in China both online and offline, and the 618 Grand Promotion began as a celebration of the day the company was founded.
The festival’s theme for this year was “Responsible Supply Chain.” JD.com is known for its expansive supply chain infrastructure and commitment to utilizing intelligent technologies such as artificial intelligence and machine learning. As the coronavirus pandemic and other global factors have highlighted the importance of a strong supply chain, the organization has acknowledged the responsibility they hold for the livelihood of millions of people.
Today, the 618 shopping festival has grown out of its founding platform and become a promotional event participated in across all major Chinese ecommerce platforms, and its prevalence has seen it become a barometer for consumer spending capacity and new shopping trends in China. Below are some of the most relevant insights derived from the promotional event.
The importance of Long-term Value and Quality
From the humble beginnings when JD.com was nothing more than a small booth in a bazaar run by Liu Qiangdong, its commitment has always been to quality. Rather than sell knockoffs or cheap products like many others in the competing stalls were doing, Liu committed to guaranteeing every item he put in his stall was of the highest quality and authentic.
Today, JD.com offers over 180 premier customer services that are available to add on to retail products, and during this year’s 618 promotion consumers indicated that the guarantee of a quality product and services to ensure that are a growing factor in their shopping choices.
Robot vacuums and air purifiers that were offered with a 30-day free trial and “replacement over repair within 180 days” saw sales jump by 200 percent. Cracked phone screen insurance increased more than 300 percent year-over-year, with over three-quarters of those who purchased the insurance also selecting an unlimited repair guarantee. JD Auto’s transaction volume of tire products grew by 300 percent year-over-year, a growth that was certainly influenced by the company’s offering of a three-year quality guarantee and free tire-change service. Furniture products in JD.com’s omni-channel fashion and home store J Shop that offered a prepaid insurance settlement saw an increase of over 160 percent.
Supply chain difficulties experienced globally are highlighting for consumers the importance of taking care of what you purchase and ensuring it will last.
Shifting Viewpoints Create new Sales
Similarly, consumers also displayed their interest in upgrading items they likely already had for new ones with novel technologies, designs and functions, an indication to manufacturers that higher quality products are taking precedent for many. According to JD.com, on the “Super Day” of the consumer electronics category during the JD618 promotion, the transaction volume of gaming laptops priced over RMB 10,000 grew by 120 percent compared with the same period last year, indicating both the growth of the esports world and the interest in higher quality over quantity.
Emerging home appliances such as gaming TVs, fresh-air conditioners and smart vacuum cleaners all also saw their average growth rate increase over fivefold year-over-year. People are looking for new solutions to old problems, and are willing to put their spending money toward it.
Additionally, as the pandemic saw people looking for new ways to travel and socialize, transaction volume of new outdoor and camping products rose by 300 percent, and sun protection clothing also increased six-fold year-over-year as people become more aware of the importance of preventing damage to the skin through UV rays.
Omni-channel is the Future
Although known for its internet commerce, JD.com has been paying attention to evolving consumer demands and has sought to expand its omni-channel offerings. On-demand retail services such as the Shop Now program and JDDJ create a seamless customer experience, and JD.com has connected with over 150,000 offline stores across over 1,700 cities and counties across China to further empower other businesses to bridge the gap between online and offline. JD.com opened its physical home appliance flagship stores in 12 cities such as Nanjing, Yangzhou, Wuhu, Liuzho during the 618 period, a category in which it is often desired to have a tangible experience before making a purchase.
Additionally, The transaction volume increased by nearly 50 percent for JD Health’s medicine procurement for small and medium-sized drug stores and clinics, and over 90 percent of those procuring were from the county or lower-level regions. This indicates the importance of offering such services and the role they play in the betterment of society when it comes to access to care.
SMEs and Merchants see Uptick in Sales
SMEs (small and medium-sized enterprises) were hit hard by the coronavirus pandemic, something JD.com has worked to alleviate for the businesses that partner with it. During the 618 promotion it introduced 30 measures to increase support for SMEs and merchants, and as a result saw their ROI increase by over 20 percent during the shopping festival this year. Stores that partnered with the company’s omni-channel supermarket JD Super saw a transaction volume increase of five times year-over-year. JD.com’s data also showed that over 4,000 merchants of consumer electronics doubled their sales year-over-year on the category’s “Super Day.”
Sustainability at the Forefront of People’s Minds
JD.com is committed to sustainability, having released two consecutive ESG reports that included its environmental efforts, and in preparation for the 618 Grand Promotion it executed its “Green Impact Initiative” green-labeling one million products that conformed to a set of environmentally friendly standards to guide people’s responsible consumption. The company reported that by June 5th over 11.57 million products related to green consumption were sold on JD.com. Electric cars continue to grow in popularity, with sales up 200 percent year-over-year, and water conservation also made an appearance with toilets with a water efficiency rating seeing sales increase eight times over the year prior.
Rural Revitalization Initiatives have been Effective
As someone who grew up in a rural area himself, Liu Qiangdong has placed a strong emphasis on utilizing his company’s strengths for the revitalization of these areas which make up a large but often overlooked portion of the makeup of China. Initiatives to promote quality produce and boost farmers’ income have been ongoing for years, and JD.com’s logistics infrastructure has worked to consolidate in rural areas, providing supply chain services all across China and promoting the sale of agricultural specialties.
The kiwi fruit, native to the Sichuan province, increased by over 10 times compared with the month prior during the promotion, and sales of Yangshan peach from the Jiangsu province and Dongkui waxberry from the Zhejiang province grew over six times month-over-month. A vast country, JD.com’s logistical network ensures that the transportation of agricultural products can occur swiftly and smoothly. According to the company, 51 percent of Inner Mongolia’s lamb was transported to Beijing and 41 percent of the seafood deriving from the Zhejiang province on the coast traveled over 1,800 kilometers to the central city of Sichuan.
Supply Chain Achievement
JD.com’s 43 “Asia No. 1” intelligent logistics parks and 1,400 warehouses across the country have built a highly integrated logistics infrastructure, as well as a network of warehousing and delivery with multiple tiers. This has led them to ensure that 90 percent of its orders are delivered the same or next day, including to rural China, and reaches 93 percent of counties and 84 percent of townships nationwide.
JD.com’s smart supply chain system utilizes artificial intelligence and other information technologies to sync with over 80 percent of the suppliers for its self-operated stores. Its intelligent manufacturing platform JC2M has seen the new product launch cycle shorten by 67 percent. When compared with the same period as last year, JD Cloud saw a 154.5 percent growth in peak user visits per second.
Ultimately, JD.com’s 618 theme of “Responsible Supply Chain” was highlighted effectively throughout the promotional period. According to JD.com, a responsible supply chain is a combination of two capabilities: its infrastructure of warehouses and other modernized logistics facilities across the country, and its ability to integrate its vast resources with efficiency.