JD.com, a Chinese online retailer, is staking a claim in the country’s very competitive market when it comes to package delivery, by opening its a logistics network to parcels shipped by businesses and consumers. The move announced on October 18 will first roll out for customers as well as business customer in Shanghai, Guangzhou and Beijing, allowing them to send items via the company’s app or via pickup requests through the messaging app WeChat.Alibaba Group Holding’s main e-commerce rival expects to expand the service in order to cover business and a residential deliveries between two points in China.
In turn, this move would turn their network of trucks, vans and warehouses that the company uses to move goods sold on their platform into a more broad delivery service which features delivery, and as a result compete with companies such as SF Express and ZTO Express, and have a similar model to FedEx Crop. and United Parcel Service Inc.According to the company, their network can reach 99% of the Chinese population, and more than 90% of their orders can be delivered in one day or less. The Chief Executive of JD Logistics made a statement noting that this move marks the next step in leveraging JD’s nationwide network that they build over the past 10 years.The company logged $17.7 billion in net revenue in the second quarter, but they are spending more on technology and highly automated warehouses.
Their network includes over 500 warehouses, close to 7,000 pickup and delivery stations, 15 logistics parks, and 250,000 delivery and transportation vehicles, which includes some that are operated by partners. In addition, despite the fact that JD.com does not own any planes, they ship goods through commercial airlines and they also deploy drones for remote rural provinces in China.The company already sells its distribution and a logistics services to corporate customers like UnileverPLC, and also provides courier services for businesses that seek access to the company’s network. However, selling delivery services to parcel customer enables the company to cut its per-package costs, spreading the cost of running the network across still more shipments.
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