MIS712 - JD.com: Strategic Direction & Business Strategies

This assignment provides a strategic direction for JD.com, a major e-commerce platform in China, focusing on automating its e-commerce operations using the Business Model Canvas. It assesses JD.com's current strategies, highlighting its strengths in logistics but identifies a lag in e-commerce automation compared to competitors like Amazon. The report proposes new strategies centered around automating operations and fulfillment centers through the use of robots and drones. Key aspects include establishing strategic partnerships with suppliers and technology providers, improving customer service through faster delivery and a wider product range, and leveraging a multi-sided platform to connect global suppliers. The analysis also considers the cost structure associated with implementing these technologies, emphasizing the potential for long-term cost-effectiveness compared to human resources.

Running head: ASSIGNMENT 2: STRATEGIC DIRECTION
Assignment 2: Strategic Direction
[JD.com]
Name of the student:
Name of the university:
Author note:

1ASSIGNMENT 2: STRATEGIC DIRECTION
Executive summary
The main purpose of this project is to provide strategic direction to the recommendation
suggested in the first part of this assignment. The strategic direction is being given with the help
of the “Business Model Canvas”. The business model canvas strategically discusses its nine
distinguished elements in relation to JD.com. It was being found that by following these nine
elements JD.com can automate its e-commerce site. Moreover, an automated e-commerce site is
expected to provide a better payment experience, shopping experience, efficient delivery of
orders and a wide array of the products to the customers.

2ASSIGNMENT 2: STRATEGIC DIRECTION
Table of Contents
1. Introduction..................................................................................................................................3
2. Current Strategies Assessment....................................................................................................3
3. New Strategies using the Business Model Canvas......................................................................4
Applications:................................................................................................................................4
The Business Model Canvas:.......................................................................................................5
4. Recommendation.......................................................................................................................10
References......................................................................................................................................12
Appendix........................................................................................................................................15
1. The Business Model Canvas..................................................................................................15

3ASSIGNMENT 2: STRATEGIC DIRECTION
1. Introduction
This report gives a strategic direction to “JD.com” to help identify the strategic direction
and implement the recommendation given in the first assignment. Hence, this is mainly a report
that discusses strategies to be followed to be able to implement the recommendation. While
doing so this report will also try to understand in brief advantages and limitations of using robots
or drones as an alternative to human capital. In the first assignment, the necessity to recruit fresh
people was identified for the case study company “JD.com”. On the other hand, the
recommendation section suggested to go for drones or robots instead of hiring fresh people.
Working with robots or drones was believed to be less costly as compared to working with fresh
people. Hence, “JD.com” was suggested to utilise drones or robots and automate its e-commerce
site to an extent it is possible.
2. Current Strategies Assessment
As being found in the first assignment, JD.com is one of the two largest e-commerce
platforms in China. It is next to Alibaba in terms of usability in every single month. JD.com has
been very innovative with its strategies. Notably, those strategies have so far worked for the
company. The modification of the logistics operation with appropriate selection of technologies
have already made it a company that faces less market competition. Porters’ Five Forces analysis
of the e-commerce sector in China identified JD.com as one of the two safest companies to have
less fear of losing in the hand of new entrants (Corporate.jd.com 2019). Despite so many positive
aspects that are there in favour of JD.com it still lags in terms of e-commerce automation. E-
commerce automation is the future of e-commerce business (Chaffey 2015). However, this is not
yet being adopted by JD.com. This report, which shows a departure from assignment 1 provides
strategic direction to the company to help automate its e-commerce site. The strategic direction

4ASSIGNMENT 2: STRATEGIC DIRECTION
will be explained with the help of the “Business Model Canvas”. The canvas will explain each
and every strategy to assure the automation of the e-commerce site.
3. New Strategies using the Business Model Canvas
This section discusses the Business Model Canvas to explain a range of strategies to be
followed to automate the e-commerce site for JD.com. Before moving on to the discussion it is
primarily important to understand the applicability of drones or robots in automating the e-
commerce site.
Applications:
Drones or robots are increasingly becoming part of the e-commerce business. It is
proving to be a valuable innovation, which is reshaping the future of the e-commerce sector.
Moreover, innovation is resulting in increased efficiency in warehouse management. This fact
can be understood by discussing an example of e-commerce automation. Amazon, which is
undoubtedly the world’s largest and most popular e-commerce site seems to have benefitted
from e-commerce automation (Chen 2017). It made headlines by delivering orders with
automated drones. According to an expert view, drones will soon be as common as a mail
delivery vehicle on the road (Park, Zhang and Chakraborty 2017). This is not the end of e-
commerce automation in Amazon. The company stepped a bit further and used robots in its
warehouses. Surprisingly, the number of robots being used in warehouses is more than one
million (ETRetail.com 2019). These robots have already replaced a fair amount of human capital
from the warehouses. These robots can smartly pack, unpack goods and do much more activity.
The fulfillment center in Amazon is yet to be automated. However, it also does not look an

5ASSIGNMENT 2: STRATEGIC DIRECTION
impossible feat for the company. Amazon will soon be automating its fulfillment centers by
implementing robots in these centers (ETRetail.com 2019).
The Business Model Canvas:
Key Partners:
These are strategic business entities, which will help through pursuing diverse roles in
automating the e-commerce site for JD.com. The application of robots or drones will not happen
at one time but will be expanded over a significant time span. Two domains of the logistics
operations at JD.com will be automated. These are Operation Automation and Fulfillment
Automation. This will be done in collaboration with many key partners. These are Oberlo app,
dropshipped product suppliers, Tickspot, Wave and Asana (Businessnewsdaily.com 2019).
Oberlo will create access to existing Shopify store to source the products. Similarly, dropshipped
product suppliers will be used as a resource to sell their products online. Tickspot can help in
automating the budgeting. Wave will help in automating invoicing and bookkeeping. Asana will
help to automate project management.
Key Activities:
Key activities will include automating the Operation and Fulfillment center. Operation
automation means accessing to global partners to increase efficiency in selling a variety of items
while not necessarily stocking these into the warehouses and automating related aspects of the
business like invoicing. Robots and drones have their applicability in the fulfillment centers.
Robots can be used in warehouses for various purposes such as packing and unpacking of goods.
Similarly, drones can be sued to deliver orders.
Key Resources:

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Under physical resources, robots and drones will be purchased and implemented into
practice. Additionally, the strategic collaboration will be established with dropshipped product
suppliers. Under financial resources, the budget will be made considering all activities that will
be part of the e-commerce automation process. Approval on the budget will be required from the
higher management personnel (Asogwa and Etim 2017).
Value Propositions:
The proposed automation of the e-commerce site will offer improved service experience
to customers. The time span incurred in the order delivery will considerably reduce. There will
be less communication gap between businesses and suppliers. JD.com will have a wide array of
stocks in its e-commerce site. This is definitely worth an achievement as customers would get
everything available on the website when they shop online. There are many e-commerce sites
customers can shop from; however, not all e-commerce sites give value to their spending (Hua,
Morosan and DeFranco 2015). The proposed automated e-commerce site will provide customers
a wide array of products in the different price range. Hence, the automated e-commerce site will
not just provide easy access to products manufactured in different parts of the world but would
also ensure valuable pricing.
Customer Relationships:
There is healthy competition between JD.com and Alibaba. Alibaba has been in the
leading position for a long span of time. There are high expectations from JD.com due to being
one of the two most popular e-commerce sites in China. JD.com has been able to meet its
customers' needs through its streamlined logistics operations. With the help of appropriate
technology such as enhanced GPS accuracy, shipment tracking systems and social media JD.com

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has been able to maintain an efficient capacity in order delivery (Corporate.jd.com 2019).
However, there are areas where the company has not been so good or not yet arrived. These
areas include but not limited to automation of operations or part of it. In contrast, Amazon has
been exceedingly well in identifying and implementing potential innovative technologies. The
use of drones to deliver the orders has already made headlines. Moreover, they use more than a
million robots at its warehouses. These robots help them with packing and unpacking of goods,
and much more. They will very soon automate their fulfillment center (Wu and Gereffi 2018). It
shows a huge difference between these two companies in terms of innovation. Despite having a
reactive nature to technology JD.com is quite late on responding to the rising demands of various
technological innovation. They should identify the evident gap in the form of a lack of
technological advancement.
Channels:
Channels through which customers want to be reached should be identified to make it
count. In an e-commerce business, the principal line of the channel is the e-commerce site
through which the business and customers both interact with each other. The business offers a
wide array of products to customers through its e-commerce site. On the other hand, consumers
search for their desired products on a range of e-commerce sites that are available to them. It
should, therefore, be the intent of the e-commerce service provider to maintain some uniqueness,
so as to be able to attract more new customers and enjoy a healthy customer retention rate. The
market competition is increasingly growing, which means the business should constantly look
upon improving their services (Lu et al. 2015). Services can be improved by applying innovative
thoughts to it.

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Service automation is one of the ways through which the level of service can be
improved (Willcocks and Lacity 2016). Service automation can be attained in a number of ways.
This can be attained through research automation, e-commerce platform automation, fulfillment
automation, operation automation, data analytics automation and marketing automation. As
recommended to JD.com, service automation can also be achieved by using drones or robots
across the operations and fulfillment centers. Implementing robots in warehouses can be time-
consuming; however, relatively cost-effective as compared to relying on human resources.
Moreover, they can work in a more efficient manner than humans. The operation can also be
automated by relying on other business partners such as accessing to warehouses of other
business entities. One of such examples is accessing to Shopify store with the help of Oberlo app
(Ballard 2017). By using this app the business will be able to source a range of products from
around the globe. This does not just reduce the level of dependency on the limited number of
suppliers but also enhances the efficiency to offer a widened variety of products at the most
competitive price range.
Customer Segments:
Customer segments are of various kinds like Mass market, Niche market, Diversified,
Segmented and Multi-sided Platform. E-commerce sites use a multi-sided platform (Liu et al.
2015). It acts as an intermediary platform to both the buyers and sellers. Sellers are the suppliers
those who can be limited to a certain region or also can be expanded over a global network. It is
pretty challenging to reach to the global suppliers through an e-commerce site until and unless
being put to automation. Automation will help to reach to a number of suppliers who are situated
in dispersed regions across the globe. It just requires access to an app that HELPS TO connect to

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the global suppliers on just a click. Once the product is sold it is shipped from the supplier of the
product. It is far much better than depending just on few suppliers.
Cost Structure:
The proposed business model will incur costs across the various areas such as key
resources to be accessed to and key activities to be performed. Key resources can be divided into
two broad categories such as physical and financial resources. Under physical resources, drones
or robots can be pretty expensive. Automating the entire warehouse and fulfillment operations
will require a number of robots or drones to be purchased to effectively replace the human
capitals. Key activities will include automating the warehouse and fulfillment operations.
Warehouse automation will be brought with the help of robots. These robots will be taking care
of varieties of works performed in warehouses. This includes but not limited to like lifting the
loads, loading and unloading the goods, packing and unpacking the orders and much more
(Mendling et al. 2018). Automation in the fulfillment center will also require robots. Moreover,
the efficiency of the fulfilment center can be increased by using automated drones to deliver
orders. On a broader aspect, the proposed automation of the e-commerce site for JD.com will
require robots and drones in huge quantity. Purchase and post-purchase management will be
costly.
Revenue Streams:
Customers of JD.com are currently paying for the products they buy from its e-commerce
site. The e-commerce site offers a wide array of products to customers. The leadership position
as held by Alibaba for so many years in China and the dominion of Amazon at the global level
just suggest the key benefits, which the customers look to from their e-commerce service

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providers. Moreover, customers expect much more from JD.com in terms of ease of finding their
required products on its e-commerce site, the offered price range and delivery efficiency
(Alshamari 2016). Customers currently pay to JD.com by means of credit card and PayPal. Both
of these come with high transaction fees. Customers are willing to buy from a platform, which is
more secure and fast as well. There is news that JD.com will soon be coming up with its new
blockchain platform. The company will do this with the help of its first app "CoinDesk"
(Coindesk.com 2019). A blockchain platform would not just cut the transaction fees for JD.com
but will also provide a much-secured payment platform to its customers.
4. Recommendation
The proposed suggestion for automating the e-commerce site with the help of drones and
robots will require an action plan to be implemented and monitored over a period of time. Hence,
an action plan discussing the key activities to be performed is needed. Moreover, this action plan
will be implemented and followed over the next 6-12 months. Key activities on a broader aspect
will include automating the Operation and Fulfillment centers.
Operation Automation:
To be able to run a business in an effective manner, it is important to find inventory,
maintain a budget, track employees and keep tidy bookkeeping. Inventory management is one of
the key challenges being faced by e-commerce service providers. E-commerce business
possessing an incapable forecasting system may fall into a situation that one or few of its
suppliers run out of stock. An automated e-commerce operation will establish a virtual
connection with suppliers from across the globe. This means the number of suppliers will
increase and so the range of products. With this, the efficiency to deliver the range of products

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will enhance. However, forecasting will still be an essential part of the operation as this will help
to know about the stock availability in the suppliers’ firm. In the course of automating the
operation, it is essential to tie-up with a key business partner like Oberlo app. This Oberlo app
will enable access to an existing Shopify store to source the products. Moreover, joining hands
with dropshipped product suppliers can also be helpful. By joining hands with dropshipped
product suppliers there will be no need to keep inventory rather purchase the products only after
the orders have been placed (). Key activities will also include collaborating to other key partners
like Tickspot, Asana and Wave. These strategic partners will respectively help in budget
automation, project management automation and bookkeeping and invoicing automation.
Fulfillment Automation:
Automation is required to enhance the level of efficiency in delivering orders. The
automation will be brought together with the help or robots and drones. Automated drones, in
particular, are potential prospects for JD.com. They will expectedly be available on roads in the
future to come in a way parcel delivery vehicles are there. In addition to this, an adequate
number of robots will be placed within the fulfillment center to take care of other tasks as well.
Moreover, there are other areas as well where robots can be used such as packing and unpacking
of orders. Moreover, JD.com can also collaborate with key business partners to access their
facilities. In this regard, JD.com has options in the form of ShipBob, ShipCentral and ShipMonk.
The ordered products will be processed in their facilities supported by robotic automation.