Competition continues to heat up as China’s two largest
ecommerce companies, Alibaba and Jingdong (formerly known as 360Buy) go head-to-head
in the logistics and last-mile delivery space. Last week Alibaba officially
announced its plan to create a logistics network to connect all of China with a
goal to provide same day delivery anywhere in the country. Alibaba plans to
accomplish this via partnerships – depending on express providers such as
Shentong Express, ZTO Express and YTO Express for last mile delivery. As for
regional distribution centers, it is likely Alibaba will take ownership of most
of these facilities allowing its customers to utilize space and value-added
services.
Meanwhile, Jingdong has opted to own its logistics network. The
company is building its network across the country and currently has six large
logistics centers, over 900 distribution stations and covers over 1,000
districts and counties. In mid-May, Jingdong announced the building of its
newest logistics center in Shenyang. Expected to be completed end of 2013, the
facility will be about 174,000 sq m and will be highly automated, similar to
Amazon facilities.
Jingdong’s logistics subsidiary accounts for more than 85%
of all orders placed on Jingdong’s websites. Interesting to note, not only does
its logistics subsidiary handle deliveries on behalf of Jingdong but it also has
an express license from the Chinese government to provide similar services for
other companies.
The fierce competition between China’s two largest ecommerce
companies has prompted Jingdong to expand its last-mile delivery options.
Dubbed as the “speed-up” project, Jingdong now offers 3-hour delivery within
Beijing, Shanghai, Guangzhou, Chengdu, Wuhan and Shenyang. Its courier network
utilizes vans and bicycles to deliver from city warehouses directly to
customers. Payment options include credit card or cash on delivery.
Simultaneously, the company is also offering evening
delivery services and later cut-off times to the same cities. According to its
press release, Jingdong now offers same-day, next-day and timed delivery to 150
cities across China.
Real-time tracking of deliveries is also provided for
Jingdong’s customers. The company
outfits its employees with satellite-based tracking devices so customers can
track everything from what time their purchases were packed to where the
delivery person is via a map and also how to reach the delivery person by
mobile phone.
Competition within the largest ecommerce logistics market
will continue and perhaps improve a domestic network that has been lacking in
technology, warehousing and distribution facilities and last-mile service
options. No matter what option Alibaba or Jingdong may take in managing their
logistics network, the ultimate winner in this environment will be the Chinese
consumers and SMEs.
