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China's JD.com mulling US flagship online store in bid to expand global footprint

The logo of JD.com Photo: AP

China's leading retailer JD.com has found a direct way to connect its products with US consumers with plans to open a flagship online store on Google's shopping platform by the end of this year, doubling down on efforts to expand its global footprint as momentum of its sales growth at home is losing ground.

The partnership with Google is expected to give JD.com wider access to the US retail market as the Chinese retailer will handle order shipping from its US fulfillment centers as planned while Google will be responsible for behind-the-scenes order processing and payment.

Currently, JD.com depends on the platform of Walmart to sell products in the United States. It also runs basic facilities including warehouse and delivery center there.

"Our model is that we are going to operate several fulfillment centers there. But we will work closely with partners to build a full network," said Bao Yan, director of strategy at JD Logistics, during an interview with Bloomberg.

The launch date for the flagship online store has not yet been set.

International expansion

The cooperation with Google comes five months after the US technology giant bought a $550 million stake in JD.com in a landmark deal that would allow the two companies to jointly develop personalized retail solutions for the US, European and Southeast Asian markets and to launch cooperation in areas of product sales on Google Shopping.

The Google investment sets a tone for JD.com's steadfast attempt to tap into the US retail market, where the two partners face strong competition from Amazon. Eric Schmidt, former Google chairman, has labeled Amazon as Google's biggest competitor, saying that nearly one third of US buyers would directly purchase Amazon's products after searching items on the Amazon's search engine. Amazon is also reaching out to other fields including hardware, cloud computing, offline supermarkets and medical insurance.

In June, when the Google investment agreement was inked, Richard Liu, founder and CEO of JD.com, charted the blueprint for his company's global expansion in the next decade, saying that the partnership with Google would provide global consumers with a shopping experience that is more valuable, personalized and convenient. 

Previously, during an interview with the Financial Times, Liu revealed that JD.com would launch e-commerce platforms and delivery service in France in the next two years.

JD.com's global expansion started in 2016 when it launched a self-developed online shopping platform in Indonesia, which is powered by a full set of delivery and logistics infrastructure. At present, the products sold on the Indonesian shopping platform can be classified into 10 categories ranging from clothing to home appliances.

Domestic slowdown

JD.com's push for the global markets is partly due to its slower growth in revenue at home.

A majority of its revenue is contributed by domestic consumption. But after the past three years' high growth, the revenue growth slowed down this year. According to JD.com's second-quarter fiscal report, the growth rate of net revenue decreased to 31 percent from the 61 percent in 2015. The slowdown could be attributed to the sustained popularity of Alibaba's online marketplaces and the sudden rise of newcomer Pinduoduo. The return of Jack Ma to the top of Forbes' 2018 China Rich List and the inclusion of Colin Huang, founder of e-commerce site Pinduoduo, into the list sheds light on the great success of Alibaba and Pinduoduo.

Under the circumstances, global expansion can provide a new revenue stream for JD.com.

However, JD.com's US business might not be a plain sailing. Amid the trade tensions between China and the United States, it might not be a good timing for JD.com to crack the code in the US market as the trade war could lead to higher shipping costs or higher tariffs on imported goods.


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