- Sep 24, 2019
JD.com’s New Supply Chain Innovation Program Brings Retail Closer and Faster to Home
JD.com has launched a new supply chain innovation program that brings offline and online retail closer together than ever before, seamlessly and conveniently enhancing the shopping experience for customers. The initiative was revealed at a small media event hosted at JD’s headquarters earlier today. By leveraging the offline retail outlets where many products already sit, this program improves the overall efficiency of the supply chain by expanding availability and speeding goods to shoppers. This is possible because, instead of having every product pass through traditional warehouses, distribution centers, and delivery stations before reaching the customer, offline channels can now directly deliver orders that come from JD, instantly expanding what is already China’s most extensive supply chain network.
The first of its type globally, the new program integrates multiple types of offline channels, including supermarkets, convenience stores, some brands’ offline stores, and Dada-JD Daojia, China’s leading crowdsourced delivery company. As a result, JD is able to increase efficiency and get products into its customers’ hands even faster. The average delivery time with the program is two hours, but customers can receive orders in as little as 30 minutes. Further, brands participating in the program with JD are likely to see improved store traffic and turnover rates.
The supply chain innovation program is part of JD’s broader Retail as a Service (RAAS) strategy to open its extensive resources to partners and others. It is also builds upon JD’s highly advanced and successful inventory integration project with Walmart. In that program, customers who buy any product from JD’s first-party platform that is also available in a Walmart store may receive it from the store if it is closer to their house than a JD warehouse. With this enhancement, several other retailers have also joined the program including Better Life, Nongfu Spring, Nestlé, Coca-Cola, Tsingtao Beer, and liquor retailer 9bianli. Currently the program covers items such as non-alcoholic beverages, beer, wine, rice, and flour — many products that are bulky, heavy, and challenging to store and ship.
Coca-Cola is one partner that is already seeing benefits from this innovative smart supply chain initiative. When consumers order Coca-Cola beverages on JD, the system instantly analyzes factors such as proximity to the delivery address and determines whether it’s more effective to source from a JD warehouse or from one of the offline channels. If an offline channel is chosen, the product will be packed offline and delivered to the consumer directly. Before the end of 2020, Coca-Cola plans to expand its participation in more than 20 cities and operate about 20 delivery locations (such as convenience stores) in each city.
Another partner that is already reaping significant benefits is top Chinese beverage brand Nongfu Spring. Since joining JD’s program, the daily orders in Nongfu’s offline water stations have increased about 20% overall and doubled on June 18, the final day of JD’s 18-day anniversary sales festival. Further, 90% of orders were delivered within two hours without adding employees in Nongfu stations, a clear indicator of increased efficiency.
“Partnering with JD for this innovative program boosts traffic while increasing delivery speed, which is extremely beneficial to consumers,” says Li Zhou, Chief Secretary of the Board, Nongfu Spring: “We see enormous potential to deliver more orders from offline channels in the future, and will roll out the program in more cities around China soon.”
“We’re shortening the supply chain by empowering offline retail channels to fulfill orders directly, rather than having to go through warehouses.” said Carol Fung, president of JD FMCG. “The fact is a lot of products, especially ones that we need and those we use every day, are already in nearby stores, but they are delayed by going through the many links of the traditional supply chain. This program cuts out unnecessary steps, improving efficiency for retailers, maximizing resources, reducing costs, and improving the customer experiences.”
Currently the program covers 20,000 offline stores in 54 cities, including 175 Walmart hypermarkets, 198 Nongfu Spring offline water stations in Beijing, and 166 9bianli liquor stores throughout China.