- Oct 31, 2017
Oldenburger and JD.com Deepen Collaboration to Deliver German Milk in China
Germany’s largest dairy brand, Oldenburger has become a household name in China thanks to its collaboration with JD.com, China’s largest retailer.
Over the last five years, JD has helped Oldenburger deliver fresh, imported milk products to homes throughout China through use of collaborative warehouses powered by JD’s advanced e-commerce technology. Oldenburger, once unknown in China, climbed the charts to become JD’s number one imported milk brand, with RMB 400 million in transactions in 2016.
Importing and ultimately managing the delivery of food products in China can be a challenge for overseas brands looking to gain a foothold in the market. It can be even more difficult to strike a balance of supply and demand from a distance.
“It would have been impossible to become a leading milk brand in China without JD.com as a partner,” said Wang Fan, head of Oldenburger China. “JD’s broad reach to a quarter billion consumers, and its unparalleled cold chain capabilities, have made this difficult-to-penetrate market into a huge growing business with a competitive advantage. We are eager to work together more closely to find ways to bring a wider array of fresh dairy products to Chinese consumers.”
When Oldenburger first began directly selling to the Chinese market, the company owned and operated its own warehouse, transferring products to JD for sorting and distribution to consumers. But because importing milk from Germany to China was time consuming, and demand was difficult to forecast from afar, there would often be too much or too little inventory to keep up with demand. The inefficiencies caused Oldenburger to fulfill only 7 out of 10 orders, resulting in RMB 200 million in lost sales during the Spring Festival holiday season in 2014 alone, Wang said.
Things changed when Oldenburger decided to work more closely with JD.com in May 2015. Using JD’s smart supply chain systems for demand planning and warehouse management, the companies built a collaborative warehouse in Beijing, then in Shanghai, Wuhan and Guangzhou, for a total of 30,000 square meters of optimized warehousing space. Oldenburger now achieves a 98% order fulfillment rate. During JD’s 6.18 anniversary sale this year, a peak time for retail throughout China, 99% of Oldenburger’s orders were delivered on the day they were ordered or the next day.
“This innovative cooperation structure enabled Oldenburger to tap JD’s most advanced technologies, developed over many years through delivering billions and billions of e-commerce orders,” said Ji Jie, head of warehouse department of JD Logistics. “We are happy to be able to share these capabilities with our partners, so they can reap the benefits of improved efficiency and see bottom line results.”