Mar 19, 2020|
In-Depth Report: JD Logistics’ Superior, Superb and Satisfying Services
by Ling Cao
In China, JD has made its reputation among customers for its fast and trustworthy e-commerce and logistics experience. This March marks the 10th anniversary of JD’s same- or next-day delivery service, which set the industry standard for fast e-commerce delivery service.
The company has since launched several innovative logistics solutions such as scheduled delivery service, JD Luxury Express, white glove delivery service, and its new storage service “Jing Xiao Cang”. Continuous innovation makes it possible to not only keep its promise to customers and partners for superior service, but to even offer an element of happy surprise.
A High-End and Intimate Service
In June 2017, JD launched its high-end, intimate and trustworthy white glove delivery service, JD Luxury Express. JD is the first e-commerce company in the world to roll out this type of luxury service. The service currently covers a total of nine cities across China, including Beijing, Shanghai and Guangzhou, and enables customers to enjoy a high-end and special delivery experience.
The initial purpose of launching the program was to provide customers who are looking for luxury and high-value products online, the same type of high-end shopping experience they might experience when they shop offline. With JD Luxury Express, couriers are clad in distinct uniforms, and wear white gloves to deliver qualifying purchases to customers’ homes in electric vehicles rather than JD’s usual tricycles and scooters. JD also offers them social etiquette courses.
The business is expanding as customers have more requirements. On May 16, 2018, almost a year after JD launched the service, JD began to offer it as a value added service, on top of its existing free of charge model, and expand the category range to sports, health, cosmetics and gifts. This decision was based on consistent customer feedback and analysis. A survey of JD customers showed that 41.5% wanted the option to select luxury white glove delivery, especially when buying expensive products or purchasing gifts. Many customers who wanted the service said they would be willing to pay extra for it if their purchases didn’t automatically qualify.
Longfei Ma is among the first group of JD Luxury Express couriers and has been working with the service for almost three years. He said that customers are gradually getting used to this service, and thanks to the job, he learned a lot that benefits both his work and his everyday life, such as how to properly talk to people and how to dress formally.
When asked about his most memorable delivery, he said, “I remembered that in January, right before Chinese New Year, a young man bought many high-end health related gifts for his girlfriend’s parents in Shijingshan district of Beijing, and paid for the value-added JD Luxury Express service. He asked me to have a video call with him to check the gifts before delivery, and asked for my help to say warm blessings to the recipients”, Ma added. “I can tell that this delivery was of great importance to him. The parents seemed very happy when I arrived at their doorstep and explained that it is gifts from their daughter’s boyfriend. The young man also sent me a message of appreciation the next day. He said the delivery was perfect and memorable.”
Many of the brands feel that the service provides joint benefits for both the brand and the recipient, and see it as a core differentiator, enabling them to provide a luxurious, trusted and joyful experience on behalf of the sender. Brands who regularly work with JD include, Ferragamo, Prada and MIDO. Several electronics brands also take the opportunity to use the service when launching new, high-end products. During COVID-19, Huawei and Samsung both launched new, high-end products on JD: HUAWEI Mate Xs and Samsung Galaxy Z Flip (both over RMB 10,000 yuan), which were delivered by JD Luxury Express for free during the promotional period. For both products, JD customers who received their items via JD Luxury Express have become the very first users of the product in China.
In September 2016, JD started to offer a scheduled delivery service in select cities with two-hour delivery windows. In some cities, the window can even be narrowed to half an hour. The move to offer scheduled delivery is in response to customers’ needs for a more personalized service. JD’s customer surveys have shown 98% of customers have a need for scheduled delivery services, and 30% are willing to pay extra for it.
Imagine a young couple who needs to go to work every day while sending their daughter to kindergarten in the morning and pick her up in the late afternoon. If a package is delivered home, nobody is able to receive it during the day. With the service, the mother can easily order fresh food and ice cream, and request the order be delivered at 7pm when they arrive home. This way, she can better manage her time.
At the time, JD was already providing same- or next-day delivery, but the team wanted to provide a more personalized delivery experience that can be more precise for last mile delivery. Qiangming Zhou is the head of JD scheduled delivery service and the originator of the idea at JD. He said, “One of the most challenging parts is that the company needs to break the original fulfillment process rules from when customers make an order to preparing the parcel in warehouse to the last mile delivery. The whole process will require redesign of over 40 systems. Thanks to our powerful technology and capable team, we made it happen.”
Now the service can cover more than 246 cities, and JD is expecting to expand this service to more cities and categories. If JD misses the delivery time window, JD will return the scheduled delivery expense to customers, and give JD’s “Jingdou” (gold bean) loyalty points as additional compensation, which can be exchanged for products on JD. JD is also opening this service to some of the merchants who use its warehousing and delivery service, and even for parcel delivery in cities like Dalian, Liaoning province, where JD is testing scheduled delivery service for parcel pick up.
These are just several examples among many more innovations by JD Logistics to make sure it can provide sustainable and consistent value to customers and partners. Like Jon Liao, JD.com CSO said at JD Logistics 2020 annual meeting on January 11th, “JD Logistics is the climber, which is competing with itself rather than others. It’s also the long-distance runner, which pursues long-term value.”
In September 2019, JD launched Jing Xiao Cang (京小仓JD’s mini storage), its storage service for customers and enterprises. The program leverages JD’s warehousing and logistics capabilities to provide a professional storage solution, enabling customers and companies to store items for both short term and long term purposes. The service is managed by JD Logistics, JD.com’s logistics arm, which is pioneering provide this service as a supply chain infrastructure service provider. The service has now expanded to several cities, including Beijing, Shanghai and Guangzhou. JD expects to expand it to more cities this year.
When asked why JD decided to enter the storage market, Yang Lei, one of the two founding members of JD’s storage service program said, “JD Logistics has been eyeing this market for a while. We did a thorough market analysis before bringing this project to life.” According to the research, JD found that Chinese customers and enterprises are looking for convenient and reliable storage services.” Unlike in the US, where the public self-storage market is mature, with a market size of more than RMB 200 billion yuan（approx. $US 29.2 billion dollars）and a total storage area of more than 200 million square meters, in China, there is huge potential for development and growth. One of the driving forces for the growth of the U.S. self-storage market is high home rental expenses. China is experiencing a similar trend, as storage demand is rising, particularly in tier one and two cities, in step with high rental costs.
JD saw the potential of this market early on. Moreover, the company has the existing warehousing resources to support this service as well as a strong reputation among customers and enterprises. When asked why they are willing to store their items with JD, respondents answered that JD is “safe and trustworthy.”
“It’s not easy to launch a new business from scratch. But the company encourages us to work on innovative programs,” said Lei. “It’s like participating in a marathon, patience and persistence are the keys to success.”
One of the problems facing JD is that users will have plenty of nonstandard-sized items, which cannot all go into one box. How can JD earn customers’ trust and make them feel that the storage service is secure, when they cannot actually see which products are stocked in which container? JD relied on technology to build transparency into the process. The company will give each item a unique code, and couriers will also take pictures of each item, so that users can see the whole supply chain process and the photos from within the WeChat mini program app. Unsurprisingly, it took a big team from JD to work this out together, including couriers, as well as team members from warehouses, operations, systems and even payments, but the effort was worth it to ensure customers’ peace of mind in using the service. At JD Logistics, innovation programs have been highly supported. Jing Xiao Cang is among seven of the major innovative programs launched in 2019. Others include the company’s 5G powered logistics park and JD Cloud Box, JD’s self-developed logistics transaction platform. Zhenhui Wang, CEO of JD Logistics said at JD Logistics 2020 annual meeting, “In 2020, we will give innovative programs more support and space to develop. We want more colleagues to participate.”
The service has received good feedback from users thus far. Ms Wu, a Beijing-based mother is using JD’s storage service to stock two containers holding approximately RMB 150,000 yuan worth of Lego bricks for her child. She said, “It’s quite convenient as it helped me spare two cabinets of space in my house.” Wu added, “I plan to store out of season clothes, small appliances, and old furniture with JD.”
Mr. Cao, regularly lives overseas, and his wide range of hobbies meant he had a bunch of equipment to store in his home in China. He used JD’s storage service to store eight containers of goods, including an exercise bike, skateboards, ski suits, a guitar and more. Cao said, “JD’s storage service can free up space in my house and store my beloved equipment in a secure and convenient way.”
Lei and the team are continuously making updates to the program based on user experience. The team plans to add several other functions, such as allowing customers and enterprises to store items in one city, and have them picked up and delivered to a location in another city.
Today, JD is still the only company who can provide all three services at scale, day in and day out. With people having come to expect this type of service, the challenge facing JD is how to go the next step further and exceed expectations. When it comes to service, it has always been JD’s mission to exceed customers’ expectations.