Despite escalating trade wars between China and the US that will likely inflate shipping costs and place hefty levies on imported goods, JD.com is planning to break into the US market.
JD.com is reportedly launching its first online store using Google’s shopping platform, allowing the Chinese marketplace to sell its good directly to consumers in the US.
Google purchased a $550 million stake in JD.com earlier in the year, but this is the first sign we’ve seen of the two companies working together since the deal closed in June.
When the strategic partnership was announced, onlookers speculated that Google would profit greatly from the deal with Alibaba’s rival, JD.com. It was believed the Silicon-Valley tech giant would gain insight into the company’s supply chain and logistics network, as well as consumer data from a region that’s expected to funnel $88.1 billion into the e-commerce market by 2025.
In return, JD.com would gain access to a global network of consumers through Google’s shopping service. According to Bloomberg, JD.com’s launch on Google’s American shopping network will be the first of many, with the e-commerce company expected to break into other international markets down the track.
According to JD.com, Google will handle payment and order processing, with local warehouses being set-up to ensure fast and efficient delivery.
“When Google Shopping launches, JD will have a flagship store,” JD Logistics’s director of strategy, Bao Yan, told Bloomberg. “We are shipping from U.S. fulfilment centres to U.S. end-customers.”
Presently, JD.com relies on China for the bulk of its revenue, but the company reportedly needs to establish a successful international presence to offset competition from the likes of Alibaba, while also combatting slowing growth in its local market.
The Chinese shopping giant currently sells products in the US through its partner and investor, Walmart, but its deal with Google will give the company a more direct outlet for reaching American consumers. The company reportedly has plans in place to expand its current warehouse in LA, as well as its US delivery operations as part of its global expansion plans.
Speculation has also been circulating since February that JD.com might bring its e-commerce offerings to Australia after the business opened an Australian and New Zealand regional headquarters in Melbourne’s CBD at the start of the year. According to statements at the time, the local headquarters was aimed at servicing businesses from Australia and New Zealand who sell on the Chinese site, as well as finding new products and sellers to meet demand.
“Australian and New Zealand brands are in strong demand on JD.com, especially in the categories of food, agriculture, dairy and cosmetics,” said Winston Cheng, JD.com’s former president of international. “This office will help local products access that demand.”
However, its only natural that the main purpose of its Australian and New Zealand headquarters will evolve as the business’s cross-border strategy does. It wouldn’t be surprising to see another global player break into the local market given the strength of eBay’s local operations and Amazon Australia’s expanding presence.
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