Why JD.com partnership is great for Shopify?
On Tuesday the Canadian e-commerce provider Shopify and the Chinese e-commerce giant JD.com announced a partnership to help Western retailers to sell more easily in China on the JD platform.
JD.com (sometimes referred to as Amazon of China) is China’s biggest e-commerce retailer and largest retailer overall. China on the other hand is by far the world’s biggest e-commerce market with huge untapped potential.
Shopify is a e-commerce software company providing tools for other companies to sell online. It has approximately 2 million merchants for whom it tries to give as good tools as possible.
Now Shopify is trying to do something that both Amazon and eBay have failed: to succeed in China.
Why would Shopify succeed when Amazon failed?
First and foremost, Shopify is not trying to do this by themselves, but using a local champion in helping to localise everything for the Chinese culture. This has been a challenge for many western companies, which have tried to import to China systems that worked in the West.
JD can provide Shopify merchants with
help in importing products to China (from 12 months to 3-4 weeks)
localisation (translations, price conversions…)
sourcing high quality Chinese suppliers
550 million Chinese customers
most importantly, JD logistics
JD Logistics is a vast network of 1300+ warehouses & over 200 000 delivery personnel. Together these give Shopify merchants great capabilities for accessing Chinese customers throughout the country.
The vast logistical network and speed is a significant add on for the Shopify service offering to its retailers. It provides the merchants with a huge market in their fingertips.
Localisation the key for Shopify
Maybe even more important aspect of the deal is the help JD offers to Shopify merchants in importing and localising the offering to Chinese customers. For Western e-commerce companies China has been a really difficult market to enter. It has been proven by the failures of both Amazon and eBay.
With JD, Shopify gets a local partner who helps to circumvent the biggest bottlenecks. On the other hand, JD could get more volume to its logistics processes enabling more efficient use of the resourves.
This is an interesting move for Shopify, which also highlights the differences vetween Shopify and Amazon. As a consumer faced company, Amazon could never have done such a move.