Richard Liu’s JD.com Uses Singles Day to Grow Value for Customers, Businesses and the World
China has undergone unprecedented economic changes over the past decade. It has experienced exponential growth, even in the face of the global challenges that have occurred in light of the coronavirus pandemic. One of the clearest examples of this boom has been in Singles Day, an annual shopping event that has quickly become one of the largest in the world, regularly smashing sales records for other popular sales – for the past few years it has usually beat out Black Friday and Cyber Monday combined.
The holiday originated in China as an unofficial response to Valentine’s Day, with the date November 11th representing four “singles” when written out numerically. A day to celebrate people not in romantic relationships, today the date coincides with a massive shopping festival that has reached an international scale, extending to countries across the world including the United States.
As China’s largest online retailer and its biggest overall retailer, JD.com is inevitably one of the largest players in annual Singles Day promotions. Sometimes referred to as “the Amazon of China,” JD.com has separated itself from other ecommerce companies through the building of its own extensive logistics network and supply chain, as well as its investment in and use of advanced technologies to improve efficiencies and customer experience.
JD.com’s founder Richard Liu has long recognized the company’s role as more than just a retailer, and it has historically used Singles Day as a way to create value for all of its stakeholders – its customers, the businesses it partners with, and the world through initiatives in promoting social causes and sustainability. Giving this year’s promotion the theme of “A More Solid Life,” JD.com implemented a number of strategies to achieve record sales while also bringing about further innovation and growth in the sector.
Merchant support
Singles Day, like any other massive promotional period, presents both significant opportunities and challenges for vendors. While on the one hand it provides them with the ability to reach new customers and achieve record sales, the influx of orders and traffic can also create new logistical challenges that impede customer service and brand image. JD.com vowed to increase traffic for its sellers by 20 percent during the Singles Day promotional period, all while also providing assistance in streamlining operational processes and costs. It introduced over 100 new services available for merchants to use that will aid in boosting their sales while improving experience.
Prior to the launch of the Singles Day Grand Promotion, JD.com released a support plan for merchants within 267 “industrial belts” across China. Referring to areas in which a particular product is grown or manufactured, the plan involves working with local governments, business associations, and service providers amongst others to make access to Singles Day customers easier for those merchants. The plan includes ten supportive measures including fee reductions, free proxy to set up a store on JD.com, supply chain support and merchant training amongst other initiatives.
One of the biggest barriers to growth for these industrial belt merchants is often the difficulties that accompany attempting to transition their business model from offline to online. By partnering with JD.com, merchants have access to their infrastructure and can reach a new customer while receiving specialized support from the company. Making JD.com’s services accessible to those residing outside of the more urban areas of China has long been a passion project for Richard Liu, who grew up in rural China himself.
Additionally, since its inception JD.com has sought to solve operational logistical issues for businesses, creating opportunities for local employment across China through their supply chain solutions. This includes a number of different service products that have been implemented to ensure success for every merchant participating in the Singles Day campaign. One such example is the recent upgrade to JD.com’s star rating system which allowed for the store’s rating results to be updated daily. With this update, during the sale customers were able to access the most recent information about products and highly rated stores were able to gain better exposure across more channels while also earning access to participate in more of JD.com’s marketing activities.
JD.com’s omni-channel supermarket business JD Super has also provided dozens of measures that all together reduced fees for setting up a third-party store by up to 80 percent during the Singles Day promotion. In addition to reimbursing service fees if vendors reach certain sales targets each month, they also waived the first month of annual service fees for new merchants of pet products and significantly reduced fees for practically all other categories.
Green initiatives
In addition to its work providing assistance to the vendors who sell on JD.com, the company has also worked to incorporate social and green initiatives in its Singles Day promotional efforts. Through its “Green Impact Initiative” over three million products were labeled environmentally friendly, and those who purchase such products were rewarded with “carbon energy” points that are redeemable for prizes.
The company also saw success in its trade-in program for home appliances, achieving an increase in value seven times over for trade-in orders when compared with 2021. According to JD.com, products with a Grade 1 energy label purchased through this trade-in service are expected to help reduce 80,000 tons of carbon emissions every year, and 20 percent of orders for home appliances were made through the trade-in program. According to China’s National Development and Reform Commission, the country’s household appliance ownership reached over 2 billion items in 2022, and estimates of scrappage volume were at 200 million items. Comparatively, trading in one major household item instead of throwing it away reduces carbon emissions by almost 10,000 grams. Richard Liu has seen to it that JD.com has completed ESG since 2020, signifying the company’s overall commitment to sustainability.
JD.com began its trade-in program for home appliances in 2016, and today covers over 95 percent of the cities, counties, and towns in the country in more than 45 recycling categories. Thanks to its supply chain capabilities, it is able to offer this trade service on the same day of order fulfillment, making it easier for customers to quickly swap products without a hassle. It also offers special discounts for purchases made through the trade-in program, as well as free dismantling services and free transportation of the old appliances and simplifying the process of transitioning to newer appliances that are more energy efficient and better for the environment overall. JD has also collaborated with the China Green Foundation in 2022, pledging to donate 1 yuan for every trade-in order towards new tree growth. According to the company, this year alone it has already funded the planting of over 100,000 trees.
Singles Day this year has proven to remain one of China’s largest promotional extravaganzas, with JD.com’s growth rate exceeding the industry average. However, being based on a responsible supply chain, JD.com treats the promotional holiday not only as a shopping festival for consumers, but also as an opportunity to support both its partners and merchants as well as make moves towards sustainability.
