JD.com to Expand Offline Presence in Rural Appliance Market
(Beijing) – JD.com, which accounts for 62% of China’s online home appliance sales, plans to expand its offline presence by opening 10,000 brick-and-mortar stores this year, according to Vice President Yan Xiaobing.
JD.com, China's second-largest e-commerce platform after Alibaba Group, is counting on the new physical stores to expand into the home appliance market in rural areas, targeting populous counties and townships, Yan said Tuesday. Yan is also the head of JD.com’s home appliance division. Yan said JD.com is also launching home remodeling services in an effort to further grow beyond home appliances.
JD.com started setting up physical stores last year to reach more rural consumers who rely less on online shopping and have less access to delivery and after-sale services.
As of the end of 2016, JD.com had opened more than 1,700 service stores, mainly in small township and villages. The company said these stores contribute about 30% of its total appliance sales.
JD.com said this year it would switch the focus of its physical stores from small towns and villages to larger counties to better meet consumer demand. Yan said there is great potential in China’s vast rural market where big appliance malls are still scarce and brand product sales networks have yet to penetrate.
But the expansion of physical outlets doesn’t mean JD.com is shifting strategic focus to offline stores, Yan said. “If we just change ourselves to a traditional brick-and-mortar retailer, it would be a regression,” he said.
A third-party retailer could apply to become a JD.com franchise store simply by installing a computer through which walk-in customers could place online orders. JD.com would then pay commissions to these retailers.
Yan said each physical store has an annual sales target of 1.5 million yuan ($218,380). JD.com will also seek partnerships with shopping malls, home furnishings stores and other physical retailers to expand its sales network in rural areas, Yan said.
Contact reporter Han Wei (firstname.lastname@example.org)
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