(Yicai) June 19 -- After making a high-profile entrance into the food delivery business earlier this year, Chinese online retail giant JD.Com has now set out plans to leverage its mature supply chain infrastructure and vast user base to enter the hotel and tourism services market.

JD.Com will offer supply chain services to the hospitality sector to help hotels optimize costs, the Beijing-based company said in an open letter to hoteliers yesterday.

Mirroring the approach it took when launching its food delivery arm JD Takeaway, JD.Com is first underscoring its commitment to potential new partners by offering up to three years of zero commissions if hotel operators join its JD Hotel Plus Membership Program.

JD.Com aims to reduce the operational costs of hotels and restaurants by two-thirds through these services, said founder Richard Liu.

The new push comes after Liu told a new conference two days ago that JD.Com had failed to roll out any new business models, saw its market share slide, and had experienced slower growth, labeling the past five years as a “lost” period. He said the company intends to step up innovation, launching six new projects in the short term, starting with a global stablecoin.

JD.Com's revenue rose at the fastest pace in three years in the first quarter, thanks mainly to new initiatives such as its food delivery business, where it is challenging on-demand services titan Meituan. The firm also completed the acquisition of a consumer finance firm last month, joining Baidu and Alibaba as the third Chinese internet giant to enter the sector.

Chinese media outlet The Paper reported earlier this month that JD.Com was hiring for travel-related roles, seeking candidates with experience at major online travel agency Ctrip or Meituan in particular, and offering triple salaries for product managers, system architects, aviation operations, and other core roles.

Shares of JD.Com [HKG: 9618] closed 3.6 percent lower at HKD124.70 (USD15.89) apiece in Hong Kong today. The benchmark Hang Seng Index fell 2 percent. JD’s New York-listed stock [NASDAQ: JD] ended down 2 percent at USD32.50 yesterday.

Highly Competitive Market

JD.Com's e-commerce users and partners greatly overlap with the core customer base of four-star-plus hotels, while their frequent consumption habits can generate additional demand for travel and related services, the company said in the letter.

According to JD.Com, it serves more than 800 million high-spending users nationwide and has deep alliances with 30,000 large and eight million small and medium-sized suppliers.

JD.Com's expansion into the tourism sector is a strategic upgrade of existing businesses rather than entering a new field from scratch, Chen Liteng, a digital lifestyle analyst at NetEase Economy Society's e-commerce research center, told Yicai.

"JD.Com launched flight booking services in 2011, established a travel channel in 2014, and has accumulated supply chain resources through investments in Chinese online travel agency Tuniu and strategic cooperation with Ctrip," Chen said.

The core advantage of JD.Com in hospitality is its mature supply chain management system, Chen pointed out, adding that it can replicate the industrial supply chain experience to the travel sector, reducing hotel costs via direct procurement and leveraging retail and food delivery clients to drive traffic.

However, the travel market is much more competitive than the food delivery sector, with major platforms having deepened their presence for decades, Chen noted. "JD.Com may face fiercer competition, potentially triggering a new round of price wars in local lifestyle services.”

Editors: Tang Shihua, Martin Kadiev