JD.com has signed a partnership with South Korean manufacturer LG Electronics to sell RMB 5 billion ($707 million) worth of products on the e-commerce platform.
Why it matters: Chinese e-commerce giants are increasingly partnering with manufacturers to facilitate product development and marketing. The trend propelled emerging e-commerce models such as consumer-to-manufacturer (C2M), which connects consumers and producers to manufacture tailored products at lower prices.
- The defining feature of a C2M model is highly competitive pricing brought about by connecting factories with consumer insights, such as preferences, location, and behaviors.
- The C2M model has powered Pinduoduo’s rapid ascent and is now gaining momentum among Pinduoduo rivals including Alibaba and JD.com.
- Covid-19 has made health-related home appliances more popular across online marketplaces. JD sales for air purifiers and steam sterilization washing machines surged during the pandemic, the company said.
Details: Under the partnership, the two companies will cooperate in a range of areas, including product development under the C2M model, smart supply chain operations, marketing, offline expansion, and manufacturing of exclusive products.
- LG will also invest in JD Home Appliance Stores and set up more than 1,000 whole-house appliance demonstration stores, creating smart offline retail platforms in lower-tier markets.
- The two companies have already worked under the C2M model for small home appliances. In May 2018, they started to develop C2M air purifiers, beauty tools, hand-held vacuum cleaners, and clothing care steam “styler” systems based on JD.com data.
Context: JD.com rolled out its C2M unit Jingzao in 2018. The platform now offers products including custom shirts, luggage, towels, and bedding.
- JD also partnered with electronic brands such as Lenovo, Konka, HP, and Dell to develop tailored products under the C2M model.
- Alibaba boosted its C2M push recently with plans to transform 1,000 manufacturers into “Super Factories” with output exceeding RMB 100 million ($14 million) each within the next three years.