Xia Ding, the newly installed president of JD.com’s fashion business, is keeping busy at the crossroads of East and West, looking for Western brands to serve up to the giant Chinese market.
JD.com grew its annual user base 46 percent to 227 million last year and is betting that its expansive logistics network, which can reach 600 million people with one-day shipping, as well as some additional brands, will help it continue to grow. (Total revenues for JD.com rose to $37.5 billion last year).
Already the e-commerce giant carries a host of Western brands, including Gap, Tommy Hilfiger, Adidas, New Balance and Calvin Klein, but Ding said the Chinese consumer is keen for more and is avidly courting brands from New York, London, Paris and beyond.
“There are many brands we would like to have, some high-end brands like Gucci, Coach, Michael Kors, those are the brands Chinese consumers like and we have to bring them on board,” Ding told WWD in the first English-language interview in her new role.
Before JD, the former model, who has an M.B.A. from Wake Forest University School of Business, consulted for LVMH Moët Hennessy Louis Vuitton, Nike and Adidas at Nielsen and worked as an executive for Hanes Brands in North Carolina and Shanghai.
Now, she has a team of 1,000, full responsibility for her division’s profits and losses and a mandate to keep expanding. While JD does have a marketplace business that hosts brands, it also acts more like a traditional retailer, buying goods from brands and holding that inventory. That, along with the company’s logistics network to deliver directly to shoppers, differentiates JD from its chief rival, Jack Ma’s Alibaba Group, which is also growing quickly with a primarily marketplace model.
“There are so many counterfeits in the market right now, especially for fashion goods, for us to own that inventory, I would put our name behind it. People trust us,” Ding said. “We have a very strict, very tight inspection process in place to make sure the product’s authentic, good quality and that [there’s a] good trust between JD and the consumer.”
JD relies on its “last mile” shipping capability to cement that connection.
With all the talk in brick-and-mortar retail about the store experience, Ding said the key for a web business “is how they get their goods and, if they don’t like these goods, they want them returned, the experience they have in a return process.”
JD pre-positions inventory for some anticipated hits and once delivered a package three minutes after the order was placed. And when an order doesn’t hit the mark, the JD delivery person comes back and picks up the return.
E-commerce makes up more than 15 percent of the retail market in China — about twice the online penetration seen in the U.S.
There’s no real sense of just how much of the market will ultimately go online, as the digital growth is not abating just yet. While the top luxury names have stores in China’s major cities, consumers in tier three and four cities have to rely more on the web.
Clearly, people are only growing more comfortable buying online, even with concerns about fakes.
“The shopping behavior has changed,” Ding said. “Even if they have a store in the same city, they don’t go out to buy, they shop everything online.”
The Chinese customer did not necessarily grow up with Western brands, but is now awash in them, dipping in and out and trying different names.
Ding said shoppers in China “switch brands very often” and are “more experimental” than Western shoppers.
“They’re more bold, they’re more risk-taking for fashion,” she said. “They get more exposure to brands all around the world, they’re definitely looking for more international brands and U.S. brands are getting very popular in China.”
Ding said streetwear and active styles, even for people who aren’t actually active, remain popular in China.
“Nike is very popular in China,” she said.
JD.com’s largest shareholder, Tencent, the owner of social media powerhouse WeChat, is also helping the e-tailer bring brands together with customers.
Ding pointed to a deal with beauty brand SK-II, where JD dove into WeChat data to get information on who followed the SK-II’s key competitors and who followed a celebrity who was connected with the brand to better target a product launch.
While web sites and stores are fighting like cats and dogs in the U.S., she said JD is working with brands.
“We provide a lot of big data intelligence for them to understand where their target customers are and how to reach them,” Ding said. “So people don’t really see us as, your online is going to grab my off-line store share.”
For now, at least, there would seem to be room for everybody to grow in China, including two e-commerce giants and stores.
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