Source: CHEAA-run China Appliance magazine
JD.com opens its first super experience store “JD E-SPACE” in Chongqing, China on November 7 2019. Yan Xiaobing, Vice President of the company, says, JD.com would love to try out the possibilities of breaking down existing retailing landscape and establishing a new one even it might bear the risk of making mistakes in the process. JD E-SPACE is a tentative move to shake up traditional offline retailing pattern.
What does JD E-SPACE look like?
With a parking lot capable of holding more than 2000 cars, the 50,000-square-meter store houses 661 categories, 1,517 brands and more than 80,000 products in 7 areas and 55 experience zones. 3C (computer, communication and consumer) products are a big part of JD E-SPACE where you can find practically all the household names.
Just like Yan Xiaobing, Yang Zisheng, head of Offline Business of JD Home Appliances, also points out emphatically that, JD E-SPACE is totally different from traditional chain stores. After an onsite visit, I find some distinct features of the store.
(1) Scenario-based immersive experience. The round layout allows for an immersive arrangement of brands. At the round display route, you can find almost all brands in the store, which lends credence to Yang Zisheng’s claim of “no dead angle”. From multi-category brands including Haier, Casarte, Midea and Colmo to single-category brands such as Dyson and Puppy, all the brands create a comfortable interactive vibe that shortens the distance between consumers and products.
(2) Cross-brand consumption guidance. At the life experience zone on the second floor, products are organized by theme rather than brand. You could barely see any big logos. For instance, for air conditioners, there are areas for top ten models, for models with dedicated outdoor air system, and for products boasting comfortable breeze. It’s worth noting that, a smart screen is set up at each theme zone to introduce the concept of nearby products, for example, “Why should you choose an air conditioner with dedicated outdoor air system?”
(3) Intense vibe of interconnectivity and entertainment. At JD E-SPACE, there are a number of fun themed zones you do not want to miss, for example, photo zone, robot zone, motion control game zone, e-sport zone, race car themed sofa, and 5G experience zone. Areas like these number up to 55.
(4) The ubiquity of business promotion campaigns. At the experience store, business promotion screens or smart screens are everywhere. They are set up to deliver promotion information as well as consumer education information. It is learned that, JD hopes to target consumers with products they want or need most with the well-targeted promotion information on the screen that come from the company’s super database.
(5) High-end brands. Products on e-commerce platforms are generally believed to be low-end. The online market share that high-end brands take is rather limited though slightly improved in recent years. But JD E-SPACE houses both high-scale international brands such as Miele, AEG and Dyson as well as domestic brands such as Casarte and Colmo. Beyond that, it also brings in Apple’s and Epson’s largest authorized offline experience store. Yang Zisheng unveils that, Miele has sold a 300,000 RMB-worth refrigerator at JD E-SPACE.
JD’s game-changing offline plan
The Chongqing-based JD E-SPACE is called version 1.0 by Yan Xiaobing. He unveils that, the company plans to open more experience stores in first-tier cities of China with updated designs that will be named version 2.0 and 3.0. These stores will embody JD’s concept of boundaryless retailing.
Yan Xiaobing points out that, opening offline experience store is a decision after full consideration.
(1) From the standpoint of consumers, online platforms offer product information, features and reviews, but cannot provide interactive experience for major home appliances, high-tech products and products that need hands-on operations. Traditional offline stores allow consumers to see, touch and feel products, but fail to meet their needs for in-depth interaction.
(2) From the standpoint of industry development, business formats of retailing have changed. Offline stores now mostly depend on festival campaigns to boost sales. A large number of low-end, low-efficiency, high-cost stores are not only a waste of resources, but a burden for manufacturers. They lose consumers to online retailers on standardized products, and beyond that, could hardly meet the needs of consumers when it comes to products that need hands-on experience and interaction. The old offline pattern is on the edge of falling apart and the new models are ready to be born.
(3) From the standpoint of technological progress, new technologies allow for better interactions between consumers and products. With dynamic price tag that is in align with online price, weight sensor shelves, AI-powered big data, full 5G coverage, face recognition and self-checkout, the online-to-offline concept is delivered. By connecting consumers with products and applying high-efficiency online sales experience to offline, technologies could really bring an opportunity to online retailers.
The opportunity is for online retailers to go offline. JD believes that, its strategy of “online empowers offline will be a critical step to shake up the traditional retailing landscape. Yan Xiaobing points out that, as online and offline resources increasingly integrate, the traditional retailing is faced up with a shakeup. At this point, service and experience is the true advantage of offline retailers. JD will further elevate its store design to break down the old landscape and build high-tech powered life scenarios to establish an E-SPACE ecology. “We don’t build JD E-SPACE for short-term profit, but to meet consumers’ needs for better shopping experience. We’d love to be the first of the pack to dip our toes, to try out possibilities, to transform. And we’ll continue to enhance technological innovation and optimize our service to drive China’s offline retailing transformation, and spread our mode nationwide and worldwide.”
Does JD has an advantage over traditional channels?
As JD’s first experience store in first-tier cities, JD E-SPACE is completely different from JD’s previous offline stores including JD Shop in lower-tier cities and JD Home that features 3C products. Strictly speaking, this is the actual start point of JD to take on its offline counterparts.
Does JD really have an edge over them?
Yang Zisheng believes that, JD’s advantages over traditional stores lie in: (1) JD direct sales backed by a strong global purchase and supply chain, (2) smart shopping experience supported by strong digital power, (3) innovative marketing and internet-powered promotion, (4) lower cost (no entry fee), (5) smart parking service supported by JD City.
Top leaders of JD call the store version 1.0 and regard it as a tentative move. I believe this also indicates that the store has something to be improved.
(1) The style and position. Located far from the down town with the closest neighbors IKEA and Outlet Shopping Mall 10 minutes’ drive away, the landmark-to-be is an isolated commercial island by far. As a store featuring home appliances, mobile phones and IT products instead of a full-category shopping mall, attracting consumer flow will be a big challenge.
(2) The cost. JD claims that the store is not aimed at profit in short term and does not charge entry fee and remodeling fee. But how long will this last? With the fast iteration and innovation of mobile phones and home appliances, could the experience-centered store support the remodeling demands of so many brands? Plus, I see many staff in the store. I assume that the operation and maintenance cost won’t be low.
(3) The main entrance. Entering the eye-catching door at road side, I find traditional kitchen appliances are at the most conspicuous place. JD explains that, the actual main entrance is at the sinking corridor part where Apple and Xiaomi are at the two sides respectively.
What does the online-offline-integrated new retailing look like? JD has offered an answer.