Google invests in JD.com to build a strong partnership

JD.com is a Chinese e-commerce platform headquartered in Beijing. This is one of the two largest B2C online retailers in China and a major competitor to Alibaba-run Tmall. In June, JD.com and Google announced that they later will invest $550 million in cash in JD.com in order to build a strategic partnership. The Chinese e-commerce giant and the US tech giant plan to collaborate on strategic initiatives, such as the joint development of retail solutions in a number of regions around the world, including Southeast Asia, the United States, and Europe.

The two companies are establishing an agreement. Indeed, it is forecasted that Google will receive more than 27 million newly issued JD.com class-A ordinary shares. A class-A share refers to a classification of common or preferred stock that typically has weakened voting rights or other benefits compared to class B or class C shares. Each share has an issue price of $20.29 per share, equivalent to $40.58 per American depository share which is based on the volume-weighted average trading price over the prior 10 trading days.

Why does Google want to apply JD.com’s supply chain and logistics expertise with its own technological strength?

Its purpose is simple: it expects to explore the creation of next-generation retail infrastructure solutions. Google aims to offer more helpful, personalized, and frictionless shopping experiences for consumers. Besides, JD.com wants to make a selection of high-quality products from its platform and sell them on Google Shopping which is the shopping search engine created by Google available in many regions in the world.

The chief strategy officer of JD.com, Liao Jianwen said: “This partnership with Google opens up a broad range of possibilities to offer a superior retail experience to consumers throughout the world. This marks an important step in the process of modernizing global retail. As we celebrate our June 18 anniversary sale, this partnership opens a new chapter in our history.”

The Alibaba Group Holding Ltd is the main competitor of JD.com and the two groups are competing aggressively in the massive Chinese e-commerce market. They are both willing to invest a lot of money in automated warehouse technology, retail, and logistics in order to win more consumers.

James Yan, a research director at market research company Counterpoint, said: “The cooperation is highly complementary, and Google could help JD expand its presence in overseas markets.” He also added that Google is aspiring to find a strong partner in China and that building a partnership with JD.com will be a great opportunity to learn from its expertise in logistics and delivery services.

Consumers from Southeast Asia are expected to spend $88.1 billion only by 2025. Indeed, the Asia-Pacific region if one of the largest and fastest-growing e-commerce marketplaces in the world.

What do you need to know before launching your business on JD.com?

China is not only the largest e-commerce market in the world but also undoubtedly the most exciting, innovative, and unique in the world. It is setting the benchmark for present and future global retail across the globe which makes it an important market to study and understand. As of March 2017, JD had 236.5 million active customer accounts and has this year expanded its reach into online grocery shopping, travel, and cosmetics. No longer is JD just associated with electronics and technical products, this is a serious contender to Alibaba’s Tmall.

For international brands, JD.com & Tmall tend to be top of the agenda but in fact these platforms can be fiercely competitive, there is a large user base to tap into but merely appearing on JD is not enough. Your visibility must be supported by a comprehensive marketing campaign to improve both the awareness and reputation of your brand and products.

Create a shop and optimize pages

Creating a shop on JD that is branded is vital, the templates are highly customizable and must be formatted for the JD platform. Page layouts must be clear, product presentation attractive and the whole aesthetic style of the brand. Store pages on JD are well built in terms of the sales funnel and allow for further browsing once a product has been added to the user’s shopping cart.

Ad management

The majority of traffic is driven via ads, both PPC (pay per click) and banner ads. These need to be managed in terms of keyword selection and optimization. What keywords drive the most qualified traffic to your store in terms of sales conversion? What is the bidding price for keywords and how will the ad budget be allocated? It’s also important to create the content of the ad in the right way, memorable and eye-grabbing phrases and visuals are necessary to increase sales performance from ad links. Targeted banner ads would typically be placed on JD itself whilst PPC (pay per click) ad links are focused on Baidu where 75% of online research is conducted.

Chinese social media

JD is a powerful ‘shop front’ for sales but most campaigns in China require a strong social element, particularly as the whole nation is ‘WeChat Centric’. WeChat now has 877 million active daily users. You can develop a customer services-led, communicative approach that engages with users. Traffic can even be driven via QR codes (links) to official accounts and vice versa to a JD store.

We are a specialist e-commerce agency and understand this market deeply. For more information on our services please contact our experts for an in-depth chat.