On May 25, 2020, Coresight Research joined a livestreaming event held by JD.com, one of the biggest (by transaction volume and revenue) business-to-consumer online retail platforms in China—with the other leader being Alibaba’s Tmall. The event launched the 2020 iteration of JD.com’s annual 6.18 Shopping Festival, which will be the first major shopping festival to take place in China since the outbreak of Covid-19. The 6.18 presale started on May 25 and the 6.18 festival proper will run from June 1 to June 18, with June 16–18 being a “72-hour shopping spree.” The 6.18 Shopping Festival: From 2004 to Now This year’s 6.18 is the 17th for JD.com and is themed, “Living up to every passion.” This year, the company is emphasizing the upgraded service and experience it is providing consumers, driving shopping through both e-commerce and physical retail. During the 6.18 launch event, Han Duan, Vice President of JD.com, highlighted how the shopping festival is improving in 2020 over previous years, through the following key factors:

• Greatest promotional value—with over ¥10 billion ($1.4 billion) subsidies for promotions, ¥100 billion (around $14.1 billion) in discounts and ¥10 billion ($1.4 billion) worth of vouchers being offered to consumers to spend offline
• Best shopping experience—including services such as “try first, pay later,” “refund without returning products” and JD Pharmacy speedy delivery
• Greatest number of new products launched—around 200 million
• Most growth opportunity for brands—with a dedicated subsidy for small and medium-sized brands to help them reduce costs by 50% and achieve revenue growth of over 100%

JD.com will host over 300,000 livestreaming sessions during this year’s 6.18, according to its corporate blog. In addition to using its own livestreaming channel, JD Live, the company is partnering with other short-video and livestreaming apps, including Bilibili, Douyin, Kuaishou and Weishi. JD.com is also working with singers and bands to bring concerts online, and the company plans to host over 100 celebrities on JD Live to offer benefits to consumers. Originally launched in 2004 as an event to mark the anniversary of JD.com, 6.18 has since transformed into a nationwide shopping season across different e-commerce platforms, including JD.com’s rivals. We outline some of the key events in the festival’s history in Figure 1. Figure 1. JD.com’s 6.18 Shopping Festival: A Timeline of Key Events [wpdatatable id=233] Note: Currency conversions from RMB to USD are at exchange rates as of June 8, 2020 Source: Baidu.com/Coresight Research   Upgraded Services for 2020’s Event Consumers are typically hesitant to shop online for goods in certain product categories for which the physical experience is a purchase driver, such as furniture, large electrical appliances, electrical bicycles or motorcycles and cars—even if they are offered at significant discounts. JD.com is therefore working to bring a worry-free, frictionless shopping experience to shoppers during the 6.18 festival through the following initiatives:

• Price guarantee: 30-day lowest-price guarantee, with a refund offered if the product is purchased at higher price than available through another channel or store
• Returns guarantee: 180-day exchange for new products available; fast refund services; “refund without returning products”
• Quality guarantee: “try first, pay later” service; quality assurance claims
• Service guarantee: air conditioner installation within 24 hours; integrated delivery and installation for televisions; “furniture five-zero” service (zero-cost delivery, installation, measurement, dismantling and design)

This year, JD.com is also selling housing during 6.18 through its partnership with a real-estate developer. On May 22, 2020, JD Real Estate and Zhongjun Group signed a strategic agreement, with Zhongjun Group becoming the first real-estate developer to open a flagship store operated by JD.com. This marked the launch of JD.com’s “self-operated real estate” business model. The coronavirus pandemic paused the normal operations of offline housing agencies, increasing consumer acceptance of purchasing housing through the online channel. Previously, the real-estate sector experienced many pain points in e-commerce. For example, consumers could only view certain information such as property details and pricing—removing the physical experience of viewing a property. Furthermore, online housing platforms do not have the advantage of price negotiation with developers, so cannot help consumers to lock in property sales at favorable prices. Finally, required deposits on real-estate purchases were nonrefundable. In response to these pain points, JD.com established its new model for online property selling with the following features:

• Exclusive housing resource— working directly with developers such as Zhongjun Group
• “No reason” deposit refunds
• Half-year lowest-price guarantee
• Strict review and evaluation of housing information and quality

The first 1,000 suites of “Zhongjun Yunjingtai,” a brand owned by Zhongjun Group, are being exclusively sold on JD.com from May 22 and through the 6.18 presale period. Xu Lei, CEO of JD Retail, held a livestreaming session on May 22, which drew 1 million viewers within the first 10 minutes and reached a peak of 4 million viewers. These 6.18 dedicated properties are worth ¥2.6 billion ($367.7 million) in total.   [caption id="attachment_111012" align="aligncenter" width="700"] 6.18 JD Property presale
Source: JD App [/caption]   JD.com also upgraded its fast logistics and delivery service. The “JD on-time delivery” service now has more options for customers:

• On-minute delivery for seafood and fresh food—the platform will calculate exactly how many minutes the products will take to arrive
• JD Daojia—one-hour arrival for daily necessities
• JD flowers—two-hour delivery
• Half-day arrival—products are delivered to customers within half a day if ordered before a certain time in some areas
• 24-hour arrival to 10,000 towns and villages

Offering Benefits through Strong Brand Alliances and Driving C2M JD.com has partnered with brands to offer ¥100 billion ($14.1 billion) in discounts during the 6.18 Shopping Festival 2020. Special offers include a 55-inch 4K smart TV for ¥1,399 ($197; 33% discount), a Panasonic dishwasher for ¥1,899 ($268; 26% discount) and a Midea air circulator for ¥459 ($65; 25% discount). JD.com reported at the launch event that more than 40 brands have prepared exclusive factory production lines, with over 1,000 exclusive products to be offered during 6.18. Anticipating demand, Dyson is dedicating 70% of its Airwrap hair styler production and inventory to 6.18 sales. JD.com has announced that it is building more extensive partnerships with a larger number of brands, retailers and manufacturers to offer its PLUS loyalty program members a Super Lifestyle Card for 6.18. The card gives consumers access to a number of benefits:

• Long-term 5% discounts on brands such as Haagen-Dazs, Montblanc, ReFa, Siemens and Yili Dairy
• Exclusive “¥1.5 billion subsidy” for select products including Anessa sunscreen, Apple iPad mini 5 Speed ​​Edition and DJI drones.

Furthermore, JD.com is waiving the PLUS membership fee for consumers that buy certain premium or luxury products, such as Moutai high-end liquor and SK-II skin care. JD.com is also extending the benefits of PLUS membership to a network of offline retailers and catering, such as cafés, restaurants, car maintenance, etc. These exclusive offline benefits include the following:

• 50% discounts at Costa Coffee
• ¥19.90 ($2.80) movie theatre ticket (normally ¥70–80, $9.90–11.30)
• ¥1 Burger King burger
• 12% discounts for Disneyland Shanghai
• 12% discount coupon for Rujia Hotel bookings within 12 months
• Free access to train station VIP lounges
• Free Chengniu car-maintenance package worth ¥300 ($42.40)

[caption id="attachment_111013" align="aligncenter" width="700"] 6.18 JD Super Lifestyle Card
Source: JD App [/caption]   For all JD.com shoppers, the company is continuing to drive the C2M model, which leverages consumer data to produce tailored products at a low price point; manufacturers are increasingly recognizing the importance of being consumer-centric to meet changing demand in the period of recovery following Covid-19. JD.com has seen success with C2M products in the past: During 6.18 in 2019, for example, JD.com’s C2M “gaming phone” category saw sales growth of 300% year over year, with Nubia’s “Red Devils 3” gaming phone, a C2M product developed with JD.com, winning in terms of sales revenue during the shopping festival. [caption id="attachment_111014" align="aligncenter" width="700"] “Red Devils 3” game phone by Nubia
Source: JD.com [/caption]   JD.com’s C2M model is a five-step method, which the company outlined at the “C2M Reverse Customization: The Era of Retail As King” seminar held by the China Council for the Promotion of International Trade on May 17, 2019:

1. Demand Report—JD.com or another company identifies a market white space or opportunity area. JD.com provides big-data insights for companies to generate innovative ideas.
2. Simulation Trial Test—JD.com provides a platform for testing simulated new products among real consumers. In the past, it would take rounds of market research tests before the final product is finalized and moved to production, but the simulation trial ensures fast and direct optimization of a new product concept.
3. Manufacturer R&D (Research and Development) and Production—Based on the insights from step two, manufacturers move on to design and produce the products.
4. JD.com First Launch—The product is launched on JD.com first, before it is launched on other platforms or offline.
5. Precision Marketing—JD.com helps companies to target consumers from the platform’s user base, according to big data insights.

Through this method, more C2M products were launched on JD platform during 6.18 this year, such as Xiaomi’s Redmi K30 5G phone and Midea’s smart freshness-preservation refrigerator “Fruit Nourishment Vitamin C” series. [caption id="attachment_111015" align="aligncenter" width="700"] Midea’s smart freshness-preservation refrigerator “Fruit Nourishment Vitamin C” series
Source: JD.com [/caption]   The Integration of E-Commerce with Physical Retail For the 2020 iteration of the 6.18 Shopping Festival, JD.com is hoping to create a “boundaryless” retail experience for consumers that bridges the gap between offline and online shopping. This builds on the company’s recent developments in brick-and-mortar retail: It opened JD E-Space, a 538,200-square-foot electronics store in Chongqing, China, on November 11, 2019. The store provides customers with an immersive experience, and products are sold at the same price points and promotions as offered on JD.com’s online platform—representing a key competitive advantage for the company. During the 6.18 Shopping Festival, JD.com’s 12,000-plus home-appliance experience stores in China will leverage livestreaming to promote products, covering Guangdong, Hubei, Henan and Hunan provinces. Unlike many traditional stores, JD.com’s physical stores do not charge rental fees for brand to host their own events, such as new product launches or hosting livestreaming sessions with celebrities or key opinion leaders. JD is also working with local governments during 6.18 to provide discount vouchers that consumers can use in offline stores and food-service businesses. Other modules integrated into the festival this year include JD Health, which is offering free online health consultations with over 100 doctors across different departments and is providing offline services and promotions too:

• ¥6.18 for a health checkup (normally costing around ¥500–1,000, $140–280)
• Fast delivery of medicine through JD.com partnerships with 20,000 pharmacies
• Hearing aid to-door service—checkup and installation at home
• TCM (traditional Chinese medicine) decocting service and delivery service

Key Insights Following the coronavirus crisis, we expect e-commerce platform-led shopping festivals to play a key role to spurring shopping momentum—not only online but also through omnichannel experiences. JD.com’s emphasis on upgraded service features will open up more opportunities for brands and retailers in industries that are typically offline, such as furniture, appliances, automotive and real estate. Meeting consumer expectations of brick-and-mortar retail in the e-commerce channel could prove a significant purchase driver for brands during the 6.18 Shopping Festival. JD.com is also forming more partnerships and driving the C2M model to allow brands and manufacturers to better target and engage with consumers. Furthermore, JD.com is encouraging consumers to shop in the offline channel by offering specific benefits, such as through its loyalty program. This should boost sales for brands and retailers in brick-and-mortar retail, thus supporting their recovery from the Covid-19 lockdowns.