JD.com chooses the Netherlands as test bed for omnichannel foray into Europe
Chinese e-commerce giant JD.com has developed and launched its first omnichannel retail concept called Ochama in the Netherlands, with four physical locations open in Amsterdam (Diemen), Leiden, Rotterdam and Utrecht.
These are JD.com’s first physical stores in Europe. They follow the debut of the contactless Amazon Go
Ochama stores are different, acting as withdrawal points for a retail model that mixes food and non-food items, allegedly a first for omnichannel e-commerce in the Netherlands. At launch, there are eleven product categories ranging from fresh fruits and vegetables to office furniture, but these are expected to increase.
While Ochama’s one-stop website and app contains what JD.com calls “A-brand products,” the lines are generally reasonably priced and do not feature any high-end beauty brands. or clothing, for example, at least for now. Sparkling wines start at just over € 5 and go up to € 37.50 for a champagne.
“We can deliver a nice cheese as well as a vacuum cleaner to collect in our stores or to deliver to home”, commented Mark den Butter, general manager of Ochama, in a YouTube video presenting the concept. Buyers – who must first become members of Ochama for € 10 (although the fee is temporarily waived to boost usage) – order online and pick up the same day at stores, where robots prepare packages. Home delivery is another option.
Can the price advantage attract punters?
Pass Lei, Managing Director of Ochama, JD Worldwide, said in a blog post: “With the rich experience in retail and advanced logistics technologies that the company has accumulated over the years, we aspire to create an unprecedented purchasing format for customers in Europe with a better price and better service.
The pricing part will depend on the number of consumers who adopt the one-stop-shop format, register to become members, and become active users. However, den Butter notes that by making full use of logistics and supply chain management technologies, stores are reducing product prices by 10% at launch.
Perhaps the most interesting part of the model is the automated warehouse in the withdrawal store which is partly visible to consumers. They can attend a fleet of automatons including AGVs (Automated Land Vehicles) and futuristic robotic arms that take care of the picking, sorting and transfer of merchandise. Scanning a QR code initiates a robotic process that results in a buyer’s order being processed and transported to them by a conveyor belt, enabling a cashless shopping journey.
By using high-tech robots, automation solutions and advanced supply chain management, JD.com hopes to tap into the Dutch penchant for innovation and the environment. At the same time, the company will reduce labor and operating costs.
Target highly urbanized countries
JD.com chose the Netherlands to test Ochama because it is one of the most urbanized countries in Europe. World Bank data show that in 2020, 92% of Dutch people live in cities. On the European continent, among the key economies, only Belgium scores better (98%) and these two markets are followed by Luxembourg (91%), Denmark and Sweden (both 88%).
These countries could therefore be next on the Ochama treatment list if all goes as planned in the Netherlands, although JD.com has not commented on expansion plans elsewhere in Europe.
In mid-November, JD.com reported a 25.5% revenue increase to $ 134 billion in the third quarter, almost all from China. At the time, CFO Sandy Xu said, “More and more new and existing users are buying high frequency products such as supermarket categories. He added that third-party markets and omnichannel strategies will continue to be a priority.
Closer to its home market, in September 2021, JD.com also expanded in the travel retail sector by acquiring a stake in the activities in North Asia of the global duty-free operator based in Paris. Lagardère Travel Retail, which is part of the French group Lagardère.