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China’s Smart Hardware Landscape 1: JD’s Super Incubator

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This is part one in a three part series exploring China’s hardware landscape and the companies that will drive next century’s hardware innovation.

JD.com, China’s leading online retailer, claims to have had 40% of China’s smart hardware market in terms of sales as of July 2015.

It’s undoubtably the primary platform for Chinese makers to debut and sell their smart hardware products. It has totaled more than 1000 smart hardware products, with 95% launching there.

JD is one of the few distributors in China that has realized a considerable sales volume for smart hardware. Apart from JD’s own online store, smart hardware products are also available on JD’s channel on WeChat (JD’s mobile marketplace is the only official shopping channel on the massively popular messaging app).

According to the company, a total of 8.66 million units of smart hardware were sold through JD in 2014. Total orders were 6.75 million, a 280% year-over-year increase. Not long after landing on JD, US-based Misfit found China became its top market for its activity tracker Shine.

For JD, expanding into the smart hardware sector is a no-brainer. Its founder started up more than a decade ago with a physical booth in the Beijing’s Zhongguancun electronics shopping market. Electronics and home appliance accounted for around 80% of JD’s annual revenue in the last three years.

But as it turns out, when it comes to smart gadget, it isn’t so simple as the traditional electronics retail business. It took a while for the whole world to realize the smart hardware economy is fundamentally different from that for the traditional consumer electronics.

In the last few years, makers around the world began to find themselves struggling with either industrial design, manufacturing or financing. JD would have nothing to sell if makers couldn’t manage to ship products.

What’s interesting is JD responded in a big way, far beyond our expectations for an online retailer. A variety of initiatives were developed in the last couple of years to engage products at various stages. They are now under a dedicated division, JD Smart.

The division now operates a crowdfunding site, a retail site, platforms for pre-orders and product testing. It offers makers Cloud services, a software development platform, and development kits by partnering with third parties. Also, it has opened two JD Milk Tea Shops, experience stores which host products available on JD or of its partners’, in Beijing and Shenzhen, respectively.

A few other big Chinese tech companies also want a piece of China’s smart hardware market, and their approaches are similar to JD: providing supporting services hoping hardware products to connect to their platforms and store user data with them.

Baidu announced its plans in the first half of 2014, offering Cloud services and an online store. Alibaba unveiled Alink platform in mid-2014. Tencent, Xiaomi and JD are the most ambitious.

JD has rolled out JCloud, which provides Cloud storage and data analytics services, and JD Cloud Assistant (our translation), which enables functions and features created for third-party hardware products. Some 300 products had connected to JD Cloud Assistant as of March 2015.

In March 2014 JD+, a hardware incubation program, was launched to offer marketing support, funding and other resources to early-stage hardware startups. Its first batch has around 20 projects.

JD+ said earlier this year that its goal was to have some 100 projects hatch over the next three years, and help 80% of them successfully raise the next round of funding, while bringing 30 of them into an acceleration program.

More recently JD and HWTrek, the Taiwan-based smart hardware platform funded by JD, initiated the Spice program which is dedicated to bringing early-stage foreign hardware products to China market.

JD has also began investing in hardware startups in or outside of China. Its portfolio companies include PICOOC (with product lines similar to Fitbit’s), Iqegg (air purifier), Broadlink (IoT solutions) and Misfit.

Image credit: JD

Source:: China’s Smart Hardware Landscape 1: JD’s Super Incubator

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