[Looking for China's innovative role model] Interview with Xin Lijun, vice president of Jingdong Group: How does Jingdong, which sells good home appliances, sell good clothing?

[Looking for China's innovative role model] Interview with Xin Lijun, vice president of Jingdong Group: How does Jingdong, which sells good home appliances, sell good clothing?

Article introduction: 3C home appliances is the advantage of JD.O. The clothing is a weak item. After all, it is the place where competitors started. During the period of June 18th this year, Jingdong Group CEO Liu Qiangdong said that he would vigorously develop the clothing category, with the goal of growing it into the largest category in Jingdong within five years. “Can Jingdong, which sells good home appliances, sell clothing?” This is obviously a question mark related to the future of Jingdong.

China Economic Weekly reporter Sun Bing | Beijing Report

(This article was published in China Economic Weekly, No. 43 of 2016)

3C home appliances is the advantage of JD.O, and clothing is a weakness. After all, it is the home of competitors. During the period of June 18th this year, Jingdong Group CEO Liu Qiangdong said that he would vigorously develop the clothing category, with the goal of growing it into the largest category in Jingdong within five years. “Can Jingdong, which sells good home appliances, sell clothing?” This is obviously a question mark related to the future of Jingdong.

“Jingdong Apparel is the second place in the clothing e-commerce industry, and it is also the highest category of Jingdong Group’s “Lao Xinquan” (attracting new users).” Xin Lijun, vice president of Jingdong Group and president of Jingdong Fashion and Home Furnishing Division, is accepting China Economic Weekly. "The reporter said in an exclusive interview. Jingdong Financial Report data shows that at present, clothing and shoes and hats are the fastest growing business in the Jingdong Mall category, and the first major contribution to the growth of the total mall transaction volume (GMV).

In the view of Xin Lijun, with the rise of China's middle class, their consumption habits and concepts are changing. The high-end consumers' online shopping apparel no longer puts the price first, but more concerned with the quality and style, the pattern of clothing e-commerce. It will also change with it, which will be a huge opportunity for Jingdong.

In 5 years, clothing will become the first category of Jingdong

As one of the earliest and most invasive categories of e-commerce, clothing has always been the “Taobao+Tmall” world. It once occupied more than 90% of online clothing sales, and even spawned many “Amoy brands”. clothing. The Vipshop, which focuses on online sales of “brand tail goods”, also successfully solved the pain points of users in third- and fourth-tier cities to buy branded clothes. The market value once reached nearly 20 billion US dollars.

"It's not that Jingdong sells bad clothes, but we didn't prepare for selling clothes before. That's all." There are some people who are skeptical about whether Jingdong can sell good clothes. For this, Xin Lijun responded.

“There are nearly 200 million people on Jingdong. They don’t buy clothes. It’s impossible. The user’s needs are always there. Don’t guess the user’s choice, as long as you provide good cost performance and good service, save the user’s cost of living and Time cost, reduce the complexity of shopping choices, and slowly there will be word of mouth, users will choose you." Xin Lijun said.

Xin Lijun said, "Taobao began to do in 2003, and Jingdong's clothing department was established in 2009. In 2010, Jingdong began to open the platform. At the end of 2011, the clothing open platform really realized the whole category. Because the open platform and Jingdong self-operated are two kinds. The pattern, the underlying architecture needed is different, so we spent a lot of time renovating all the systems."

Xin Lijun said that Jingdong Garment has maintained a year-on-year growth of more than 100% in the past few years, exceeding the industry average growth rate by more than twice, because it has grasped the rise of China's middle class and the trend of consumption upgrading.

According to data from the “Second Quarterly Monitoring Report of China's Online Retail Market” released by Analysys think tank, in the second quarter of 2016, the scale of apparel transactions in China's B2C market reached 208.9 billion yuan, a year-on-year increase of 44.7%. For the first time in six years, the size of the B2C market in China's apparel e-commerce B2C market jumped from 18.8% to 52.5%.

In the second quarter of 2016, the largest category of online retailing was 3C appliances, with a transaction volume of more than 100 billion yuan; clothing transactions amounted to nearly 90 billion, ranking second. Jingdong ranked first in the 3C market, while the clothing category was Tmall's 70% share. Jingdong surpassed Vipshop, ranking second and third respectively.

Liu Qiangdong said on many occasions that last year, Jingdong’s “charged” products accounted for more than half of the transactions; but this year, Jingdong’s “non-electric” products will have a much larger platform transaction volume than “charged” products. Among them, clothing is expected to become the first category of Jingdong within five years.

"Jingdong clothing has a certain gap with Tmall, but the gap is getting smaller and smaller. For example, women's clothing has been reduced from the infinity of the past to five times. And we are almost twice as close as Vipshop. The Jingdong crowd is too big. As long as you do the service well, there is no problem, it is possible to turn it several times." Xin Lijun said. At present, Jingdong Garment City has more than 50,000 merchants.

Gradually open logistics to third parties

Clothing physical retail is still a cold winter. According to the data, in the first half of 2016, the number of closed stores of 15 listed apparel companies exceeded 2,000. “The garment industry is a very bitter industry. It seems that the profit rate is very high, but in fact there are a lot of pain points.” Xin Lijun said, “The industry law of the apparel industry itself determines that the long inventory turnover and low after-sales rate are two very difficult industries. The threshold of crossing. But the Internet is definitely something to do."

According to the reporter, the inventory turnover cycle of the apparel industry is 3 to 6 months; the sales rate of the entire industry does not exceed 40%. Although the new model has a high profit, it is only for the sake of clearing the inventory after the season. The industry as a whole has only a gross profit margin of 20%, and the customer price is not high.

"Although we can't say that we will soon subvert this industry, but using Jingdong's logistics system, artificial intelligence technology, through the combination of the Internet, e-commerce and logistics to optimize the traditional process, is able to solve some of the original pain points of the apparel industry." Xin Lijun It is said that the level of intelligence in the apparel industry is very low, many brands do not even have ERP, and the information is seriously asymmetrical. In many cases, the low sales rate is caused by poor inventory turnover. For example, a shop in Tianjin likes a piece of clothing, but there is no suitable number in the store, and quite a few people will choose to give up buying other goods.

Jingdong can open its e-commerce and logistics capabilities to its partners. For example, Jingdong cooperated with Qizhi Fashion (which owns more than a dozen brands including VERO MODA, ONLY, JACK & JONES), and opened more than 2,000 stores under its online store. These stores are also associated with JD's distribution stations, so 2,000 The store's inventory can be integrated to speed up the turnover and increase the after-sales rate.

The user places an order in Jingdong in the morning, and the order will be automatically pushed to the store. The store will automatically send the package to the Jingdong distribution station. The delivery station will deliver it to him in the afternoon and can be delivered in as little as two hours. If the consumer has a return, they can not return to the general warehouse, but the system will automatically analyze the return to the store with the lower inventory.

Xin Lijun revealed that Jingdong will gradually open up its own logistics capabilities to third parties. The ultimate goal is to hope that all third parties in Jingdong will use Jingdong's own express delivery. Orders in the morning, can be delivered in the afternoon; orders placed in the afternoon, can be delivered the next day, which is a subversive experience in the apparel industry.

Power clothing custom corner overtaking?

At the just-concluded London Fashion Week, JD.com launched the “Beijing-based” strategy to meet the dual needs of consumers for personalized design and experiential consumption in the two dimensions of “clothing customization” and “personal customization”. Through the Jingdong apparel custom channel, consumers can not only choose their own styles including clothing style, fabric, style, size, decoration, etc., but also enjoy the Jingdong-based O2O and LBS model based on the store or the door-to-door volume. service.

At present, the customized channel has been launched for men's wear, women's wear, jewelry, glasses and other categories, and will continue to expand footwear, luggage and so on. In the future, Jingdong Apparel will also promote its customized business to all areas related to fashion life.

Xin Lijun believes that the customization model will undoubtedly become the next hot spot in the online clothing field. “With the improvement of people's lifestyle, clothing customization will no longer be the choice of niche people, especially under the influence of Internet technology, online clothing customization has become increasingly mature, whether it is combined with O2O services, or combined with VR/ AR's technology, personalized customization has become increasingly low-cost, standardized and standardized, which will lead to a large market of 100 billion or even trillion," he said.

Customization seems to be a niche category, but it is a strategic business for Jingdong clothing. Speaking of the meaning of the custom channel, as a "military fan", the Xinli military "military engine" made an analogy. “It is very important to invest a lot of high-tech technology as a strategic focus. For example, China spends tens of billions to research aero engines. Although the production of fighters is very small, this technology can drive the upgrade of the entire industry chain. Value will be radiated to many industries such as automobiles and materials," he said.

Xin Lijun revealed that Jingdong has been testing the volume radar. The courier can “scan” you through the device, and you can directly generate a 3D model for you. The merchant can fit these sizes to customize the clothing for you. In addition, Jingdong's designer channel has two or three hundred independent designers. These designers can not rely on any brand in the future. As long as the design is done, other things can be completed by Jingdong.

“We make customized markets and incubate designers, which can drive the development of a new category. That is to say, consumers can customize clothing and purchase clothing designed by independent designers in addition to brand clothing. Jingdong hopes to do the future, not just The current transaction amount." Xin Lijun said.

Dialogue with Xin Lijun:

“Jingdong’s clothing users are net inflows”

China Economic Weekly: Jingdong clothing started a little later, which means that there is a need to compete with competitors in some innovative ways, or to make a better route to overtake. What is the difference in Jingdong’s style of play?

Xin Lijun: There is a clear difference between Jingdong’s user base and Ali’s user base. Jingdong’s user base is mostly white-collar, middle-class and relatively high-income people. Most of our population is concentrated between 25 and 40 years old. Most of them are confident and have ideas; while Ali's crowd concentration is mostly young people under the age of 25, they like to go shopping on Taobao and buy some relatively cheap things.

Therefore, I don't think that Jingdong's clothing has direct competition with Ali. We only need to serve our own users well. This is why we do customization, because the custom crowd is more in line with Jingdong. Jingdong's users are mostly professional women and professional men. When a person's achievement reaches a stage, he is a brand, no longer need the brand of the clothing itself to reflect his own value, but they hope that the clothing can reflect their own taste. And uniqueness, this is a very important feature of the middle class in the process of China's economic transformation.

"China Economic Weekly": Some people think that Jingdong's model is too heavy, there will be a bottleneck, Jingdong sells clothing seems to be a very heavy model, and the Internet is more popular light mode, what do you think?

Xin Lijun: Some people think that Jingdong is a company with heavy assets, and the development space will be limited. In fact, this completely ignores the future technological progress and Jingdong's ability to innovate. Jingdong is gradually making more important things in a lighter way through continuous innovation, such as artificial intelligence and deep learning. For example, as China's largest retailer, in theory, we should have China's largest customer service team, but in fact, half of Jingdong's customer service problems are answered by robots. Therefore, Jingdong's business is growing rapidly. But the number of customer service staff has not changed much. For example, we are testing unmanned distribution stations. In fact, in remote rural areas, we are already using drones for distribution.

China Economic Weekly: Are buyers and home appliance buyers of Jingdong clothing highly coincident?

Xin Lijun: There are more than 50% overlap. Jingdong’s clothing has developed, but in the past it really relied entirely on Jingdong’s original users. Jingdong users are very sticky because they highly recognize Jingdong's services. Users do flow on different e-commerce platforms, but Jingdong's clothing users are net inflows. Moreover, Jingdong clothing is the highest category of Jingdong “Laxin”, and many users know Jingdong through Jingdong clothing.

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