JD expands foray into local services

Chinese e-commerce giant JD has launched a standalone food delivery application and an independent user-review service, in a move to expand its presence in the country's burgeoning local services market.

Industry experts said JD's latest move will intensify the competition with food delivery platforms such as Meituan and Alibaba Group's Ele.me, while creating new sources of revenue in the traditional e-commerce industry whose growth is currently slowing down.

Liu Qiangdong, founder and chairman of JD, said on Monday that the company will roll out a dedicated app for its food delivery service, and a new ratings platform called JD Dianping, which Liu pledged will remain permanently non-commercial.

He said the app has been developed in response to user feedback that food delivery services were too hard to find within JD's main app. Users can leave reviews on JD Dianping, with pictures of products and takeout services they have purchased or restaurants and hotels they have dined or stayed in.

Liu emphasized that the new standalone app will not only provide food delivery services, but also integrate with instant retail, reviews, travel and shopping services as JD aims to build a comprehensive local services ecosystem.

The company has introduced JD Zhenbang, an artificial intelligence-powered ranking system covering restaurants, hotels, airlines and tourist attractions, and leverages AI models to analyze and capture massive data to generate relatively authentic and objective evaluations.

Liu stressed that both JD Dianping and JD Zhenbang will not accept paid listings and will "never be commercialized".

The company also announced its entry into the coffee market, with the launch of a beverage brand called 7Fresh Coffee. It has opened a coffee store in Beijing, with three to five stores being added each week, covering the main districts of the capital by the end of the year.

Hong Yong, an associate research fellow at the Chinese Academy of International Trade and Economic Cooperation, said JD's recent move will reshape the landscape of local services market, and promote the sector to shift from subsidy-led competition to efficiency-driven growth, finally benefiting consumers, merchants and delivery workers.

Hong said JD has gained an upper hand in the supply chain capabilities, including smart warehousing and cold chain logistics, which will help merchants lower operational costs, while it vowed to provide zero commission fees and social insurance for riders, which is conducive to improving the quality and efficiency of fulfillment.

"JD's strategic push into the local services field reflects its ambition to move beyond traditional e-commerce boundaries and establish a service ecosystem covering various scenarios by leveraging its supply chain strengths and high-frequency consumption. It will create new growth avenues for the sector," said Chen Liteng, senior analyst at the Internet Economy Institute, a domestic consultancy.

Noting that JD is integrating food delivery, reviews, coffee and other local services into its core e-commerce platform, Chen said the release of a standalone food delivery app and JD Dianping signifies that the company hopes to use high-frequency consumption represented by food delivery to stimulate low-frequency consumption like e-commerce to boost user engagement.

He added that the launch of 7Fresh Coffee, which targets the freshly made beverage market, will expand JD's current business portfolio and its footprint in offline markets, signaling JD's transition from an e-commerce company to a one-stop lifestyle platform spanning online shopping and local services.

The Beijing-based e-commerce platform entered the highly competitive food delivery sector in February, and promised to provide comprehensive support to catering merchants, and step up the recruitment of full-time delivery riders. It also entered the hotel and tourism industry in June by offering supply chain services for hotels.

In September, Alibaba released a major update to its navigation platform Amap, adding a new AI-powered feature allowing users to leave a ranking for local service business.

Restaurant review app Dazhong Dianping, which is owned by Meituan, announced it would invest at least 3 billion yuan ($421.8 million) in the next five years to upgrade its local life service business infrastructure.