JD teaming up with convenience stores

JD, which is aiming for a US initial public offering to raise up to $1.5 billion, announced its online-to-offline strategy, known as O2O, three days after China's central bank halted barcode - based mobile payment services, a key concept that may sabotage the O2O strategies of China's Internet giants Alibaba Group Holding Ltd and Tencent Holdings Ltd.

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Instead of using barcode - based mobile payments, which allow people to pay for their purchases via mobile devices when shopping at brick-and-mortal stores, JD helps customers to get their online purchases without leaving the home or office.

"Through helping convenience stores reorganize their resources and training their employees, we are going to build an integrated system that allows people to make online purchases from the nearest convenience stores and receive the deliveries within one hour after placing an order," said Hou Yi, who is in charge of logistics planning at JD, which owns the largest logistics and delivery operation among all e-commerce companies in China.

"We are working to optimize the system so people can receive their goods within 15 minutes after purchasing them online," he said.

According to Hou, by teaming up with convenience stores, JD can largely reduce logistics and delivery costs in future.

"For example, the cost of delivering frozen food is very high because it requires high-quality cold-chain logistics. If customers are not available to sign for the package, the frozen food can easily go off," he said.

"However, most convenience stores have freezers. So, in the future, we can deliver frozen products to our partner's convenience stores first and then ask them to deliver the goods to customers when they are available."

Lu Zhenwang, an independent Internet expert, said JD has strong advantages in logistics and delivery. "By using its strength in logistics, it can create tough competition for other e-commerce businesses that specialize in fresh and frozen food," he said.