Sephora Deal With JD.com Comes With Greater Logistics Reach
The cosmetics retailer has an e-commerce pact to help sell in China, but the distribution network may be the heart of the deal
Sephora is getting more than a bigger online footprint in its partnership with Chinese e-commerce site JD.com Inc.JD0.06% The cosmetic company is tapping a nationwide logistics network in a country that is hard to penetrate.
JD.com, which got its own start as a brick-and-mortar retailer selling electronics in China, took its business online in 2004 and has expanded to sell products in just about every category, from car tires to clothing and furniture. Like Amazon.com, it also has an online marketplace where third party retailers like Sephora can take advantage of its 105.2 million users and use its payment systems and massive logistics operations for a commission.
In China, which is nearly the size of the U.S. in terms of land mass with more than four times the population, the logistics piece is crucial.
The Chinese logistics industry is highly fragmented, with no reliable national delivery companies with the sort of reach that United Parcel Service Inc. and FedEx Corp. have in the U.S. Meanwhile e-commerce customers are accustomed to having the option to pay once goods are delivered rather than paying immediately online, although that is shifting as new online payment services gain traction in China.