JD.com is launching a standalone delivery service (JD)
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Chinese e-commerce giant JD.com said earlier this week that it's launching a standalone parcel delivery service, which will be available to third-party retailers in its home country, The Wall Street Journal reports. The new service will allow businesses and consumers in several Chinese cities to set up domestic shipments via JD's mobile app, website, or via the popular WeChat messaging platform.
The e-tailer said that this delivery service — built upon the infrastructure JD uses to deliver its own orders — can reach 99% of China's population and complete 90% of deliveries within 2 days.
The company says this network now includes over 500 warehouses, almost 7,000 pickup and delivery locations, and 250,000 delivery vehicles. JD has also spent heavily on warehouse automation and other advanced logistics technologies, such as delivery drones and robotics.
JD's move could fuel consolidation within the Chinese logistics market as it grows with online retail sales in the country. E-commerce sales in China surpassed $1 billion last year, up 32% from 2016. This growth has created surging demand for express deliveries, which will increase by 17.9% annually from 2015-2021, according to iResearch. But China's logistics industry is still highly fragmented — in addition to JD, major domestic players include Alibaba-backed ZTO Express, Best Logistics, JD-backed e-Shang Redwood (ESR), and SF Holdings.
Meanwhile, FedEx, UPS, DHL, and even Amazon have warehouses and fulfillment centers in the country. But JD's strategic position within China's online retail space — it controls about a third of its e-commerce market — and its massive shipping network could prove attractive to retailers, especially third-party merchants already on its marketplace. That, in turn, could allow JD to quickly gobble up market share in China's logistics space.
More importantly, the move offers an idea of Amazon's standalone parcel delivery service could look like, if and when it decides to launch one. To cope with its surging order volume, the Seattle-based e-tailer has built out its delivery infrastructure over the last few years — today it owns 32 jumbo jets and operates 258 warehouses and fulfillment centers across the US.
These and other moves — in particular, its launch of Delivery Service Partners earlier this year — have led many to speculate that it'll closely mimic JD and open up that capacity to third-party retailers in the form of a delivery service. As such, the Chinese e-tailer's shipping service could offer a unique glimpse into Amazon's much-hyped logistics plans. Amazon is likely curious itself — if it plans to open its shipping capacity to third-parties, it will want to learn from JD's potential failings.