JD.com and Fung align for AI development

Dive Brief:

JD.com has teamed up with Fung Retailing, an operator of about 3,000 stores globally, to build a research and development center dedicated to developing artificial intelligence projects and the sharing of AI information and expertise, according to the South China Morning Post.
The companies are aiming to seamlessly integrate online and offline retail platforms in a single system and to create an end-to-end system to manage products, pricing, storage, order and payment. The pair also plan to develop technologies related to virtual fitting, unmanned stores and smart shopping assistants, according to the report.
The partnership news follows a previous announcement from JD.com in September, which detailed the e-commerce giant’s plans to invest about $4.5 billion in the creation of an AI research center.

Dive Insight:

In a related story that appeared after this announcement, the South China Morning Post described JD.com as being "late to the race" among e-commerce companies to invest in AI-powered functions and features. That has also been said of JD.com’s fellow Chinese e-commerce titan, Alibaba.

But both appear to be making up for lost time. Alibaba debuted a new touchscreen FashionAI system for personal apparel recommendations during its massive Singles Day sales event last November. The company also aggressively promoted (perhaps too much so) the performance of its AI technology in a Stanford reading test.

For its part, JD.com has begun to work more closely with investors Walmart and Tencent, both of whom have been exploring what AI can do for operations. Now by partnering with another Asian retail company on a well-funded R&D center with an AI mission, JD.com is making a deeper commitment to develop AI projects, but doing it in a way that it can also learn from the experience of another retailer.

In reality, both Alibaba and JD.com may not be so behind in AI, considering that studies have suggested many retailers are at roughly the same stage of working with the technology. Late last year, for example, an SLI Systems survey found that more than half of retailers already use or intend to deploy AI technology soon.

In any case, JD.com isn’t just looking to keep pace with other retail firms as the entire sector investigates and more fully develops AI technology. This R&D venture also comes at a time when JD.com is broadening its horizons outside of Asia, with reported plans to increase its market exposure in the U.S. and Europe. This isn’t just looking into technology for its own sake, but looking into how technology can potentially help manage a vast and growing retail enterprise more effectively.