JD.com, Canadian internet retailer Shopify team up on cross-border e-commerce expansion amid China online sales slowdown

The partnership will link Shopify’s millions of merchants around the world with JD.com’s 550 million active customers in China
Through JD Worldwide, online merchants on Shopify can start selling in mainland China in three to four weeks

JD.com

Tracy Quin Shanghai

Published: 5:30pm, 19 Jan 2022

Why you can trust SCMP

JD.com, China’s second-largest e-commerce services provider, has teamed up with Canadian internet retail giant Shopify to expand their cross-border operations, as online consumer spending on physical goods slowed in the world’s most populous economy.

Beijing-based JD.com, controlled by billionaire founder Richard Liu Qiangdong, announced the partnership on Tuesday, the same day it opened an accelerated channel for North American merchants and brands on Shopify to list products through JD Worldwide, the Chinese company’s cross-border e-commerce marketplace.

“We believe that the partnership will unlock the huge potential of the Chinese market for brands outside [the country],” said Daniel Tan, president of JD Worldwide, in the joint announcement.

The partnership will link Shopify’s millions of merchants around the world with JD.com’s 550 million active customers in China. Through JD Worldwide, online merchants on Shopify can start selling in China in three to four weeks, compared with the typical 12-month timeline for international brands to initiate sales in the world’s biggest e-commerce market.

JD.com and Shopify aim to unlock mainland China for more merchants around the world. The country’s e-commerce market is forecast to reach US$3.3 trillion in 2025, according to GlobalData. Illustration: Handout

“The future of commerce is commerce everywhere – and that starts by removing barriers to entry to one of the most important e-commerce markets in the world,” said Aaron Brown, a vice-president at Shopify, in the same announcement on Tuesday.

JD.com and Shopify indicated that they will move to simplify access and compliance for Chinese brands and merchants looking to reach consumers in Western markets. JD.com will support quality Chinese brands to set up their direct-to-consumer channels through Shopify, and enable Shopify merchants worldwide to access the Chinese firm’s supplier network through the JD Sourcing platform.

The two companies also said their collaboration forms part of a larger strategic pact to “solve cross-border e-commerce challenges across product sourcing, selling and logistics for merchants in the US and China”.

This marked the latest partnership struck by Shopify with a major Chinese company. In August last year, Shopify initiated a pilot programme in which the platform’s online merchants with TikTok for Business accounts can started selling to US and UK users directly through the popular short video app, owned by Chinese tech unicorn ByteDance.

02:20

Intelligent sorting systems help China's JD.com cope with demand during Covid-19 pandemic

For JD.com, the alliance with Shopify could help boost its nascent overseas business, which amounted to less than 3 per cent of its total revenue of 218.7 billion yuan (US$133.9 billion) in the third quarter last year.

That partnership comes at a time when online Chinese consumer spending on physical goods, comprising the bulk of the country’s e-commerce market, increased just 12 per cent last year – the slowest annual growth since the government started tracking this data in 2015, according to a report released on Monday by the National Bureau of Statistics.

Growth in retail sales, a rough indicator of consumer expenditure in the world’s second-largest economy, slowed to 3.9 per cent in November and is expected to continue decelerating, as Beijing’s zero-tolerance approach to Covid-19 infection dampens consumer spending and confidence.

That has resulted in more intense competition between JD.com and industry leader Alibaba Group Holding, as they must also contend with Pinduoduo and other domestic online retail platforms. Alibaba owns the South China Morning Post.