Jingdong Independent Luxury Business Supply Chain Run into Deep Water District

E-Commerce companies are striving to extend to the industry when they expand the luxury brand matrix. On October 25, the Beijing Business Daily reporter was informed that Jingdong has split the luxury goods business from the men’s luxury department and established it as a separate secondary department luxury department. At the same time, after TOPLIFE, a luxury platform of JD.com, has recruited a number of luxury brands, it plans to control the number of brands to be within 100 stores during the year to break the supply chain and industry side of both parties. The E-Commerce platform believes that the cooperation with luxury brands should not be limited to the “surface” business of entering the store, but can fall into the integrated supply chain, so that brand owners can reach the precise customer base through the E-Commerce channel.

With the changes in the global fashion retail landscape, the E-Commerce sector has become a new force for luxury brands. Jingdong‘s layout of the luxury goods sector continues to accelerate. Regarding the change in the operation of the luxury department as a secondary department within the fashion business department, Jiang Ke, vice president of strategic planning for Jingdong Mall’s fashion business department, explained that there are differences in the way luxury brands operate with other fashion brands. The brand resources of luxury goods are deposited in JD.

When luxury goods set off in the wave of E-Commerce in China, E-Commerce giants continued to win over the former, while luxury brands sought a platform that matched their own tonality and customer base. Not only limited to Jingdong, Ali, which also has a luxury space, has signed cooperation with dozens of luxury brands such as Burberry, Hugo Boss, Tiffany and Moschino, and established the Luxury Pavilion, a platform for Tmall luxury products.

In fact, the precipitation of luxury brand resources is becoming the fall of Jingdong‘s current layout of the luxury goods industry. In September this year, Jingdong announced that it has signed a strategic cooperation agreement with Shandong Ruyi Group (hereinafter referred to as “Ruyi Group”). The sub-brands of Ruyi Group will be launched in Jingdong and will extend the cooperation to the offline. As early as March of this year, Jingdong and Kaiyun glasses had a strategic cooperation. Many sub-brands under the Kaiyun Group have successively settled in Jingdong Mall and TOPLIFE. Jiang Ke said that Jingdong will strengthen cooperation with luxury goods groups in the next step, stimulating brand resources in the form of group cooperation, and preserving resources while ensuring the quality of goods from the source.

The ability of E-Commerce to precipitate luxury brand resources tests the effectiveness of the supply chain integration. After starting from the luxury goods field with the identity of the manufacturer, Ruyi Group has already grasped many brand resources and has resource advantages in terms of designers and store channels.

However, as domestic consumers’ demand for luxury goods has increased, it is difficult for luxury goods groups to gain timely insight into consumer demand trends and lack of supply chain management. However, the fashion industry needs to more accurately predict changes in the consumer side. When E-Commerce accumulates a large amount of brand resources, it will provide more consumption data for the latter.

In order to enter the deep water area with the luxury brand in the supply chain, TOPLIFE began to control the number of brands in the platform. Ding Xia, vice president of Jingdong Group and head of TOPLIFE business, told the Beijing Business Daily that the number of brands that have settled in TOPLIFE has exceeded 80, but the number of platforms will be controlled within 100 within one year, so that both sides can “deeply polish”.

It is worth noting that the appeal of E-Commerce and brand owners to cooperate with each other to the industry is to find a precise consumer group. Ding Xia explained that the age range of overseas consumers and Chinese consumers using luxury goods is quite different. Compared with overseas consumers, Chinese consumers who purchase luxury goods are nearly 10 years old and 35 years old. “Currently, the number of luxury goods purchased in China accounts for 32% of the global market. The purchase of luxury goods by domestic consumers is becoming more normal. Brands are often trapped in user differences after entering the Chinese market.”

In order to identify a precise user base, TOPLIFE began to open a flash shop in the mall shopping center in the customer cluster. It is understood that from October 18th to 24th, TOPLIFE and ELLE teamed up with a limited-time flash shop to land at Shanghai Shopping Mall K11.

At the same time, although the cooperation between luxury brands and E-Commerce has become more frequent, the integration of the two sides in the industry is still in its infancy. In an interview with the Beijing Business Daily, Jiang Ke said frankly that the integration of the industry requires long-term integration between the two sides. When the user portrait is more accurate, the cycle of the industrial chain can be shortened rapidly, thereby improving the efficiency of the industry. “If E-Commerce can shorten the cycle of luxury goods in the industrial chain by one third, the industry efficiency will increase by 50%.”

Zhao Zhenying, a researcher at the National Engineering Laboratory of E-Commerce transaction technology, told the Beijing Business Daily that various categories of luxury E-Commerce and luxury platforms have formed a relatively fixed customer base, initially completing the segmentation of the market, and the brand should conform to diversity. Younger consumption trends can have a chance to compete for a blank market.