Retailers, brace yourselves: the Chinese retail giant JD has arrived. On 11 November, Dutch online hypermarket Ochama went live with food and non-food products. Who is this newcomer, and why can we expect a lot from it – also in other countries?
Sharp pricing and same-day delivery
A new supermarket formula has started in the Netherlands: Ochama opened its doors near The Hague. With a head office close to the Belgian and German borders, foreign expansion is also already on the horizon…
The new formula is Chinese in origin, but it is not an Oriental shop. According to Distrifood, the range consists of food and non-food articles, including anything from fresh food to furniture and games. The newcomer has already managed to secure major brand producers, such as Unilever, Procter & Gamble and Douwe Egberts. The e-commerce player promises everything at “extremely low prices”. Ochama works with a membership model that is currently very on-trend: members receive a 10 % discount and get access to exclusive deals.
Most striking, however, is the ‘same-day delivery’ guarantee: Ochama promises same-day delivery (or pick-up). For food, this is a first in the Netherlands. Still, it should come as no surprise, since logistics is the major strength of JD.com (Jendong in full), the Chinese group behind Ochama that changed its name in Europe to avoid confusion with sports chain JD Sports.
Artificial intelligence at its best
After Alibaba, JD is China’s second-largest e-commerce player. Even in its vast Chinese home market, the company is able to deliver across the country within a day, thanks to impressive data analysis with artificial intelligence and local physical stores as anchor points. Food and fast-moving consumer goods are delivered within half an hour in China, albeit not to the consumer’s homes but a local store, just around the corner, or the downstairs area in a block of flats.
JD.com can predict local demand like no other. Even before an order is placed, the company sends products to warehouses or physical stores as closely as possible to meet the anticipated demand. The AI system of the country’s second-largest e-commerce player not only predicts what people will buy but also sends products in advance to regional distribution hubs in the area. That way, the products are already nearby when a customer places an order. Millions of products get distributed daily to more than 550 warehouses and thousands of delivery hubs across the country.
Meanwhile, JD is such a champion at listening to consumers, forecasting demand and managing inventory levels that it is now telling manufacturers what to do: the next step for the Chinese company is manufacturer-to-consumer (M2C), guiding brand manufacturers on what, how much and for whom to produce, which new products to develop and subsequently launching those new products for them.
Robot warehouses and high-tech stores
It is clear that JD will also use this online-to-offline system in the Netherlands – and, at a later stage, in Europe. The first of four collection points will open immediately in Leiden, occupying a 900 sqm retail unit. There are also plans to open its own supermarkets in Amsterdam, Rotterdam and Utrecht. A former Jumbo store manager has already been made responsible for those physical stores.
The pick-up point in Leiden will be high-tech, another area at which the Chinese company excels: JD claimed to be the first to have a fully automated robot warehouse, automated trucks and drones that actually carry out deliveries. The term robotisation has also been used in the Netherlands, for example, to describe JD’s brand new central warehouse in Venray, in the southern part of the Netherlands. The Chinese company will occupy no less than 18,000 sqm, including offices, just a stone’s throw from Belgium and Germany.
However, they will not keep all that space to themselves: in China, JD specialises in logistics services for other retailers and brands, and that cooperation model is coming to Europe. A first partner has already materialised: Hunkemöller has announced that it will use the distribution centre in Venray for all its online orders.
So, we expect to hear a lot more from Ochama in the future… Want to know more about the parent company JD.com and how Chinese e-commerce players are rewriting the rules of retail? Soon, you can read all about it in the second edition of The Future of Shopping, an invaluable update for the new retail landscape, to be published by LannooCampus in the spring of 2022.
