Not long ago, JD.com Group CEO Liu Qiangdong wrote that in the next 10 to 20 years, driven by big data and artificial intelligence, the retail industry will usher in the fourth retail revolution after department stores, chain stores, and supermarkets. The essence of the fourth retail revolution will be 'boundaryless retail,' breaking the traditional retail organization in space, category, and supply chain, and reconstructing retail costs, efficiency, and user experience. In the past six months, from Amazon Go to unmanned supermarkets and unmanned convenience stores, from Xiaomi Home to JD's million convenience stores, technology and experience innovation have increasingly demonstrated this trend: apps that allow product search and purchase by taking photos, AR and VR technologies that create immersive shopping experiences, support for automatic checkout and face-scanning payment, smart refrigerators that can automatically order fresh food... Everyone is exploring new standards for future retail. So, where will the future of retail go? What will the new standards and paradigms be? What impact will it have on today's retail enterprises? Hu Shengli, Vice President of JD.com Group and President of JD 3C Division, shares the current progress of JD Home and JD Exclusive Stores As an advocate of the fourth retail revolution, JD.com held a retail innovation strategy conference today, announcing that it will take the lead in the 3C field where it has an absolute market share advantage, officially unveiling the JD Home and JD Exclusive Stores that have been in preparation for a year, and announcing that it will open more than 300 retail experience stores focusing on 3C products nationwide by the end of the year, reconstructing the retail landscape through technology-driven integration of online and offline. Group photo of guests at JD 3C Retail Innovation Strategy Conference JD Home: From Managing Categories to Managing Scenes On August 6, JD Home's Beijing Tongzhou Wanda Plaza store opened, and nearly 2,000 people flooded into the 200-square-meter store in one morning. Customers can become members by 'scanning their face' and learn interesting analyses based on their preferences, such as 'aloof Scorpio' or 'night owl.' Vintage Cat King radios, cool full-screen phones, Dingdong smart speakers, XGIMI home projectors... Many carefully displayed products made customers fall in love. The store also has a book corner and children's play area for relaxation, while the elderly can experience the effects of eye or shoulder and back massagers. JD has opened 21 such stores in Beijing, Shanghai, Shenzhen, and other places. JD's 3C retail experience stores are divided into two types: JD Home mainly located in core business districts of first- and second-tier cities, focusing on mobile phones, digital products, computers, and other 3C products, while also covering home appliances, books, and other JD categories. JD Exclusive Stores are mainly located in secondary business districts of cities at all levels, with 71 stores currently opened. All products in JD Home and JD Exclusive Stores come from JD's self-operated quality-assured inventory. Unlike traditional retail that focuses on managing goods or traffic, both types of stores focus on managing scenes. The stores create multiple scenes such as 'Love Travel,' 'Love Health,' and 'Women's Heart.' For example, the Love Travel area has Motorola walkie-talkies, iFlytek translators, JD's e-readers, and even small toiletry bags, all favorites of travel enthusiasts. The stores strive to provide a comfortable shopping environment, exquisite displays of hot products, and fun and informative social leisure, technology experience, and health life services, creating a gathering place for JD fans and brand enthusiasts. Behind the immersive shopping experience is JD's strong technical support. The product selection for each store is based on the shopping habits and interests of local consumers in the business district, achieving 'thousand stores with thousand faces.' After consumers enter the store, the store uses facial recognition to analyze each consumer's interests and scene dwell time, and through behavioral data analysis, accurately conducts secondary product iteration. At the same time, all products are priced in real-time with JD online; scanning the QR code on the price tag can jump to the JD APP page to understand product details and user reviews. Customers can take products immediately or choose JD delivery. Some first-release hot products that are hard to grab online, or products exclusively for online, JD will prioritize supply to JD Home and JD Exclusive Stores. As of the end of June, JD Home and JD Exclusive Stores have sold products covering 14,800 SKUs (stock keeping units). "The previous retail model focused on traffic, and channel costs are getting higher and higher because traffic is not precise. JD uses big data to accurately target consumer groups, jump out of the traffic trap, and create a young, diversified, and social consumption scene, which is warm and understands you better. This is also the inevitable trend of boundaryless retail," said Hu Shengli, Vice President of JD.com Group and President of JD 3C Division. Retail as a Service: From Consumer Internet to Industrial Internet For the many brand owners and partners participating in JD Home, JD 3C's retail experience stores are completely different from traditional offline channel stores. The core essence is that JD is playing the role of retail infrastructure, providing brand owners with a 'retail as a service' solution, covering the comprehensive output of JD's brand, products, marketing, technology, logistics, finance, and other capabilities. JD Home and JD Exclusive Stores both adopt a franchise-direct operation form, with single-store authorization and unified management for cooperative franchisees. JD can not only help franchisees with intelligent product selection, but also achieve intelligent site selection by analyzing the consumption density and consumption capacity of a certain area, and intelligent pricing based on product sales cycles and competitor situations. Behind the stores is JD's smart supply chain. Massive SKUs are an astronomical number for ordinary stores, but JD uses big data to provide inventory recommendations for stores, complete automatic replenishment and returns, and is expected to achieve 'zero inventory,' greatly reducing costs and improving efficiency. So the only thing the store needs to do is provide good customer service; other supply chain services such as warehousing, distribution, and after-sales are handed over to JD. Stores will also receive full support from JD Supply Chain Finance. JD provides complete solutions for settlement, payment, commission distribution, and provides credit for the store's offline membership system. In the past e-commerce operation logic, improving experience often meant increasing costs. JD's retail innovation this time will build an online-offline integrated intelligent retail system by providing the above-mentioned new retail infrastructure covering information, goods, and capital, helping franchise partners reduce costs while improving operational efficiency and user experience. It is precisely because of this complete service system that JD Home and JD Exclusive Stores, without large-scale advertising investment at the beginning, have achieved far higher efficiency than traditional offline stores through precise scene management and user management. Hu Shengli revealed that on June 18, the opening day of JD Home in Baoding, Hebei, the queue of consumers exceeded 200 meters, with daily sales of 1.18 million yuan. Beijing Changping Yongwang store even set a rare record in the offline market with 1,096 orders in a single day and a transaction amount of 1.23 million yuan. Although they have been open for a short time, currently, most of the nearly 100 stores that have been opened are already profitable or break-even, and the operating conditions are generally good, confirming the advanced nature of JD's retail as a service strategy. "In the past, e-commerce only focused on the consumer side and had limited help for the supply side. Our retail innovation strategy is by no means a simple expansion from online to offline, but a transformation from providing retail products to providing retail infrastructure, serving both end consumers and upstream partners," Hu Shengli said. "In the future, the entire industry will inevitably move from consumer internet to industrial internet, truly driving the healthy development of the industry." Ecological Value: From Zero-Sum Game to Mutual Growth and Regeneration As the saying goes, competitors are enemies. Traditional sales channels often involve a lot of game-playing with similar channels and brand owners, either/or. But in JD's view, this is a traffic economy mindset, while JD Home and JD Exclusive Stores, driven by data and technology, pay more attention to the individual user experience itself. An interesting phenomenon is that JD Home and JD Exclusive Stores are mostly located in commercial complexes or business districts such as Walmart, Yonghui Superstores, and Wanda Plaza, which strongly complement the existing business formats in these areas. After a JD Home opened on the first floor of a shopping mall in Beijing, the audio store on the second floor, which was originally cold and about to close, came back to life due to increased foot traffic. For the many brand owners, JD Home and JD Exclusive Stores also mean massive exposure of brand image and increased product sales, and smaller emerging internet brands have the opportunity to lay out offline channels. When JD Home opened in Changsha, a consumer who bought a Smartisan phone excitedly said that mobile phone stores in Changsha don't sell Smartisan phones, and thanked JD for allowing him to experience and purchase it up close. JD and Dayang Department Store Strategic Cooperation Signing On the same day, Hu Shengli, Vice President of JD.com Group and President of JD 3C Division, signed a cooperation agreement with Dayang Department Store. According to the cooperation agreement, the two parties will carry out detailed and in-depth cooperation involving offline stores, online flagship stores, finance, logistics, big data, and other fields. The two parties agreed that by the end of September 2017, the first JD Home in Dayang Department Store will officially open and operate, and by the end of this year, several subsequent JD Homes will also open in Dayang Department Store. Dayang Department Store will expand online channels, open a 'Dayang Department Store JD Mall Flagship Store' on JD.com, and cooperate with JD Finance in consumer finance and supply chain finance; Dayang stores and JD Logistics will also join forces to bring a leap in distribution efficiency. JD and Lenovo Reach Retail Innovation Strategic Cooperation In addition, JD also reached comprehensive strategic cooperation with Lenovo to jointly promote the retail innovation strategy and practice the fourth retail revolution. The signing of the two agreements proves the recognition and confidence of brand owners and partners in JD's retail innovation strategy. Hu Shengli believes that past retail and production activities targeted the mass market and provided batch products, which could not meet everyone's unique needs. Future sensing technology will give us the ability to gain insight into each consumer's personalized needs, and we can flexibly realize personalized needs by connecting external resources, and also make interaction and delivery more efficient through intelligent algorithms. That is to say, we will use digital and intelligent retail infrastructure to achieve boundaryless + precise retail. Liu Qiangdong pointed out that intelligent technology will drive the continuous optimization of capital, goods, and information flow in the entire retail system, improve efficiency and reduce costs on the supply side, and achieve experience upgrades on the demand side such as 'knows you better than you,' 'anywhere, anytime,' and 'see and get.' In the future, retail infrastructure will become extremely plastic, intelligent, and collaborative. JD's layout of intelligent retail is not to eliminate any link in the industry chain, but to use the technology and supply chain advantages accumulated over 12 years to help all partners achieve transformation, build a symbiotic, mutual growth, and regeneration relationship where various business formats depend on each other and prosper together, and create and share value with the entire industry chain and consumers. About JD.com JD.com (JD.COM) is China's largest e-commerce company by revenue and the largest retailer by revenue. JD.com is committed to providing consumers with the best online shopping experience. Through its rich, user-friendly website (www.jd.com) and mobile apps, WeChat and mobile QQ entry points, JD.com provides consumers with an excellent user experience. JD.com has the largest logistics infrastructure and network in the national e-commerce industry. As of March 31, 2017, JD.com had 7 logistics centers nationwide, operated 263 large warehouses, covering 2,672 districts and counties nationwide. JD.com is a member of the NASDAQ-100 Index and a Fortune Global 500 company. -END-