JD.com: the colossus

7 min readApr 19, 2020

JD.com is China’s largest online retailer and largest Internet company by revenue, offering consumers a vast selection of authentic products at competitive prices and delivering them at an amazingly fast speed and reliable manner.

History

The company was founded in June 1998 as “JD Multimedia”, by Richard Liu who invested part of his savings in a four-square-meter retail unit in a Beijing technology hub. He was firstly engaged in the distribution of magneto-optical products but in 2004 he closed his retail shop and moved his business on the net, launching his first e-commerce platform jdlaser.com. One of the JD’s points of strength was the logistic network which guaranteed to the customer a safe and reliable experience according to a supply chain where every step is managed by the company from the warehouse to the customer’s door.

By 2014, JD formed a strategic partnership with Tencent to obtain exclusive access to WeChat and QQ (both developed by Tencent), the most popular Instant Messaging platforms in China. Through this junction, it was included in the IM apps a shopping function that lets people shop on JD.com with just a few taps, by entering product-related keywords into the search box at the top of the WeChat homepage.

In June 2016, JD.com and Walmart announced a strategic alliance that includes a wide range of business initiatives, covering both online and offline retail. Walmart’s benefit is to have the opportunity to greatly expands its position in Chinese e-commerce due to the significant JD’s base of online customers, whereas JD.com would gain benefits from the American company’s brand and the supply of some key product categories such as high-quality grocery and household goods. Besides, JD.com’s customers will gain access to a wide range of new and imported items from Walmart and Sam’s Club. As part of the agreement JD took control of Yihaodian’s marketplace (a Chinese grocery e-commerce platform owned by Walmart), Walmart acquired a 5% stake in JD.com.

JD’s Fintech arm

In 2013 it was established JD Finance — then upgraded and rebranded in November 2018 as “JD Digits”- the group’s arm dedicated to FinTech, whose purpose was to connect finance and real industry by using digital technology, boosting the influence of the Internet, enhancing the digital and intelligent development of industries to provide to privates and corporates financial services easily and efficiently and to create greater social value.

Due to his expertise in technology, data science and, AI, JD has been involved in many fields, from digital finance, digital city, digital agriculture, and digital marketing. As concerns digital finance, leveraging data resources (held by JD.com), e-commerce proficiencies and risk control systems, JD Digits offers financial solutions with digital asset management, launches crowdfunding platforms, provides financial loans and ensures various payment solutions.

In July 2014 JD Finance launched China’s largest crowdfunding platform for startups, exploiting JD’s “Coufenzi” crowdfunding site, which allows users to contribute funds toward individual projects and products. The platform aims to differentiate from other ones by developing an ecosystem for startups and fit to entrepreneurs who need to find early-stage investors. Indeed, JD provides several resources to them, such as its cloud computing unit, financing tools, marketing support and training from JD’s management. In exchange, JD.com will take a small equity stake in each successfully funded startup.

According to a financial and market accelerator ecosystem known as the “Zhongchuang”, JD Finance provides to early-stage enterprises financing and business development services to institute a better connection between them and let them grow rapidly. JD Finance has set up China’s leading FinTech ecosystem for enterprises and consumers offering a wide range of products, including Jingbaobei, Baitiao, JD Wallet, JD Finance APP, Xiaojinku, JD Microcredit, and Xiaobailicai.

One of its greatest cutting-edges is the smart risk control system in which JD Finance is the industry leader, by using network, knowledge graph, neural network, behavior sequence and biometrics technologies. It has included the “Brain Control Risk Super”, a risk control solution that brought the brand to succeed in assessing the credit risk of more than 500 million users, helping to keep the bad asset rates for consumer finance business at the lowest levels of the industry.

Bank cooperation

In the last four years, JD Finance has cooperated with 15 banks to issue “Xiaobai Card”, including ICBC, China CITIC Bank and many other large banks. Now, cumulative total applications for “Xiaobai Card” has reached more than 20 million. Through opening technology, risk control, scenario and marketing advantages to financial institutions, JD Finance can help them lower the costs to find target customers and bring better services to their customers.

Furthermore, with the ICBC, the largest bank of China has been instituted cooperation to launch the “ICBC Xiaobai” digital bank, the first bank in the domestic banking industry to showcase its presence on the Internet platform developing a “Smart Bank”. This alliance allowed JD Finance to integrate into its app the “ICBC Xiaobai digital bank”. This service consents to those who need a certificate of deposit, to apply directly and wait until the file is delivered by a JD courier whereas, in the past, who needed a CD had to go physically to the bank branch.

China’s asset management sector is the fastest-growing industry among all financial sub-industries. JD Digits has harnessed big data, blockchain, AI, natural language processing (NLP), and other cutting-edge technologies to launch the financial service industry’s first one-stop smart management technology system, JT². Trough it, users can analyze providers’ asset data to increase efficiency and to monitor the operations. By applying blockchain technology, it builds a multilateral alliance chain so the system can continuously trace issuers’ credit status and asset pool status to lower investors’ post-investment cost. All this service enhances the abilities of financial institutional players, their product design ability, the sales and trading ability and their risk assessment ability.

Intelligent cities

JD Digits is going through a new computing business: intelligent cities. The brand name’s JD iCity and its mission is to provide total intelligent solutions for China’s urban development, including planning, transportation, energy, environmental protection, urban credit public safety and e-government services. The way to do that is by providing big data and AI-tools to local governments and using hi-tech technologies in the public management field to guarantee services that can be used to build social credit databases, AI-powered traffic infrastructure and other smart transport services.

“By gathering, sorting and analyzing a vast pool of data, including that generated by the 300 million active JD.com shoppers, the company’s logistic arm and fintech business, JD iCity will be able to improve the daily lives of urban dwellers and improve the efficiency of city governance”, said Zheng Yu, vice-president of JD.com in a statement.

JD Digits is working closely with its business partners, for example, the company has collaborated with National Electric Nanning Power Generation Co. Ltd. to help establish a thermal combustion simulator that integrates AI technologies in the generation of the thermal power. If this model was applied across more than 2,000 generator sets nationwide, the industry would save an estimated 10 billion RMB every year on the costs of coal combustion and pollution control alone.

Mergers & Acquisitions

Paipai: JD.com after seeing its arch-rival Alibaba’s second-hand e-commerce Xianyu doing well in the sector, made its move acquiring Paipai, a second-hand e-commerce service, dealing with a burgeoning but risky market. JD.com is famous for the quality reliability of its products, particularly in the 3C market (computer, communication, and consumer electronics). However, entering the second-hand market means having to deal with counterfeit products and this would put JD’s identity as a direct-purchase e-commerce player under scrutiny. Paipai has built-in automatic valuation system to help sellers set the price of second-hand goods. Then JD logistics will pick-up the product from the seller and go through the goods identification process.

Hotelvp: JD.com has acquired last-minute hotel booking app Hotelvp and Deng Tianzhuo, CEO of Hotelvp, joined JD as vice president. Hotelvp is an app for iPhone, Android phones and Windows Phone which offers hotel rooms that are available for booking from 6pm every night at discounts. Furthermore, users can book ordinary hotel rooms from a wide range of over three thousand hotels.

The “ratio” of this investment is that JD.com in 2012 had already launched an online travel platform for third-party agencies or services but it hasn’t performed well.

MediaV: JD.com acquired advertising agency MediaV for $700 million, a company that started as an Internet advertising agency and then it entered the demand-side platform sector. About 80 percent of the top 50 Chinese e-commerce websites are reportedly clients of MediaV, though the company does not state if those are exclusive relationships. JD.com started working with MediaV in 2010, and most of its Internet promotion advertisements are placed via MediaV.

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