Chinese ecommerce powerhouse has international expansion on its agenda and has identified the UK as a key target as it pushes into Europe.

JD, which describes itself as China’s largest ecommerce company by revenue and sells everything from grocery to fashion to electronics, is committed to generating 50% of revenue from overseas operations inside a decade.

It recently unveiled a plan to enter the USA by the end of this year.

Now Europe is in focus. Founder and chief executive Richard Liu outlined an aggressive European expansion plan in an interview in the Financial Times last week.

The etailer’s platform and fulfilment service will launch in France in 2019, and the UK and Germany will follow. A start date for Britain has yet to be specified, but can be expected within two years.

JD plans to invest €1bn to establish a logistics network in France and will build a UK-based research centre in Cambridge to open early next year to drive artificial intelligence and big data initiatives.

“UK talent and education is first-class globally,” Liu told the FT, pointing out that hiring British AI expertise was cheaper than recruiting in China.

Despite enjoying huge success at home, JD is fearful of eventual saturation in China’s online market, and that has prompted its drive to pursue overseas growth.

While exact details have not been disclosed it seems likely JD will – initially at least – focus on a more premium online offer.

“Farfetch is the kind of operator that appeals to JD at present. Premium UK and European brands such as Alexander McQueen, Emporio Armani and La Perla are being targeted by the etailer for its exclusive Toplife site in China”

That would make ground-up logistics more easily manageable because less warehousing is needed and faster fulfilment is more achievable. Brand relationships will likely focus on a curated selection of luxury lines rather than mass FMCG goods.

Evidence of this can be seen in the £314m funding JD pumped into UK-based luxury platform Farfetch last year, when Liu also took a seat on the board.

Farfetch is the kind of operator that appeals to JD at present. Premium UK and European brands such as Alexander McQueen, Emporio Armani and La Perla are being targeted by the etailer for its exclusive Toplife site in China.

Only this month, Liu met British Prime Minister Teresa May to agree a £2bn trade deal for UK sellers via JD China.

Tie-ups a possibility

It makes sense that JD will adopt a parallel strategy in Europe. In the UK, JD may be expected to seek out high-end fashion, jewellery and home goods retailers, especially those attracting large numbers of Chinese tourists.

Upscale department stores could offer WeChat Pay services, a more popular version of AliPay, while the proposed Cambridge tech centre may prove a fruitful source of innovative in-store tech for retailers keen to upscale the shopper experience.

But wider European retailer partnerships should not be ruled out. JD’s ecommerce expertise and advanced technology and data resources could help many European retailers fearful of Amazon’s advances to enhance their online offer.

Moving beyond fashion?

While it is unlikely that mainstream grocery will be on JD’s radar at first, longer term that possibility exists.

JD’s China alliance with Asda-owner Walmart is less than two years old, but has already revolutionised how the US titan does business in the market.

Alibaba proclaims itself as leading the transformative ‘new retail’ vanguard, radically reshaping the landscape with online-to-offline (O2O) initiatives.

But it is not alone: is also at the forefront where big-box grocery is concerned.

Backed by JD Logistics, strategic allies Walmart and local player Yonghui currently lead in China in areas such as fresh food delivery and O2O integration. JD is not averse to teaming with any retailer – high-end or mass-market – to further its goals.

Linking with a big retailer with an existing logistics network would also boost JD’s fulfilment capabilities.

The plan to enter France, Germany and the UK in quick succession means such alliances will probably be needed if JD is to truly establish itself as a credible European ecommerce player. at a glance

Alibaba and its charismatic leader Jack Ma often take the spotlight where China’s online giants are concerned, but its fierce domestic rival is no less a force.

Founded in 1998, emerged online in 2004 and hauled in general merchandise volume revenue of approximately £75bn. To underscore how fast JD is growing, in 2011 it delivered GMV of £3bn .

As the core of its business, operates an Amazon-style platform offering branded goods along with a growing array of third-party merchants using its portal to host online storefronts.

This is different from Alibaba’s online model, which is essentially a giant online mall hosting numerous sellers, both brands (Mars, Nestlé, P&G) and retailers (Sainsbury’s, Aldi, Woolworths).

Until recently, JD was considered to be lagging behind Alibaba in terms of sales, but in recent years JD has upped its game considerably, making up ground on Alibaba at home in terms of GMV.

Partnerships and expertise

It has struck some astute partnerships, such as with global giant Walmart and the Chinese equivalent of Google, Baidu, giving it prime position in search. Among other partners, it can count on Tencent, China’s huge tech giant behind the popular WeChat payment system.

Both Chinese online giants have moved into the physical retail space in the last couple of years. This was initially through strategic partnerships with bricks-and-mortar players eager to upscale their operations using the etailers’ digital and logistical expertise.

But now both Alibaba and are developing automated and unmanned stores. JD plans to open 500 Amazon Go-style checkout-free stores in China this year.

JD has particular expertise in logistics, having built its Chinese supply and fulfilment chain from the ground up and, unusually for an ecommerce operator, owning and operating its system via a wholly owned subsidiary, JD Logistics.

That gives it an advantage over Alibaba, which is still heavily reliant on third-party courier firms for fulfilment.

JD’s logistics business is leading on innovative delivery methods, offering everything from an exclusive ‘white glove’ service for high-end consumers, to a fleet of heavy-lifting drones, to autonomous parcel trucks and robots, either in test phase or already deployed in its domestic business.