Lenovo in major online sales push with partner JD.com

Online retailer to become preferred platform for Lenovo product launches

PUBLISHED : Wednesday, 27 July, 2016, 8:15pm
UPDATED : Thursday, 28 July, 2016, 7:46am

Lenovo Group, the world’s largest personal computer supplier, is looking to rev up its e-commerce sales under an expanded alliance with JD.com, China’s second-largest online retail services provider.

The initiative could help Hong Kong-listed Lenovo increase domestic distribution for its smartphones and stave off the threat from high-flying technology start-up Xiaomi’s foray into the personal computer market with a new notebook.

At an event in Beijing on Wednesday, Lenovo chairman and chief executive Yang Yuanqing said JD.com will be the company’s preferred online platform to launch strategic products including notebook and desktop computers, printers, smartphones, tablets and other smart devices.

“By working together with JD on initiatives such as data sharing, technological innovation and online channel development, we will strengthen Lenovo’s understanding of customer needs which will support our ability to develop customised products,” Yang said.

Nasdaq-traded JD.com directly sells products from its own inventory, like Amazon, and operates vast online marketplaces where major brands and retailers sell their merchandise.

Its total user base jumped 73 per cent to 169 million in the 12 months to March, compared with 98 million a year earlier.

We believe Lenovo has a backup plan, with similar [notebook] models ... to match Xiaomi without significant impact on overall margins
Ken Hui, equity analyst at Jefferies

Jefferies equity analyst Jessie Guo has forecast JD.com’s annual active customer accounts to reach 188 million by the end of this year, which would augur well for Lenovo’s online sales push.

Richard Liu Qiangdong, the chairman and chief executive at JD.com, said the company’s customers see Lenovo “as a top provider of high-quality, innovative products for both the home and the office”.

JD.com’s market share in so-called 3C products — computers, communications and consumer electronics — during the first quarter reached 43.8 per cent to lead that market segment on the mainland, according to Jefferies.

Data from iResearch, however, showed that e-commerce giant Alibaba Group’s Tmall.com had a 51.3 per cent share of the mainland’s broader online shopping market, which recorded gross merchandise volume of 522.37 billion yuan (HK$606.87 billion) in the first quarter.

New York-listed Alibaba owns the South China Morning Post.

Ken Hui, an equity analyst at Jefferies, said Xiaomi was not a big threat to Lenovo.

“We believe Lenovo has a backup plan, with similar [notebook] models ... to match Xiaomi without significant impact on overall margins,” Hui said.