Danone Waters China (DWC), a subsidiary of Danone Group, will work with e-commerce giant JD.com to distribute its popular beverage products throughout southwest China.

The companies will build a shared warehouse in Chengdu, the capital of China’s southwestern Sichuan province. The facility will use JD.com’s advanced logistics technology to store and manage inventory for the region, not only for orders of DWC products on JD.com, but also for DWC’s own regional fulfillment needs, including offline grocery stores.

The shared warehouse will leverage JD’s supply chain management technology, including demand planning, inventory placement, warehouse and transportation management to maximize efficiency across different sales channels. It will serve as a major distribution center in Southwest China, merging online and offline operations for DWC, which has seven factories in China across six regions, with 300 sales offices and nearly 7,000 employees.

The move furthers JD’s push into the logistics business following the creation of JD Logistics earlier this year as a stand-alone business unit. JD operates China’s largest in-house fulfillment and last-mile delivery network, with 405 warehouses and a team of more than 65,000 full-time staff who can deliver more than 92% of JD orders same or next-day.

As part of the joint effort, JD will leverage its big data capabilities, developed over years from analyzing billions of data points. The technology enables JD to help suppliers more accurately predict the ebb and flow of demand, and more efficiently manage stock. JD’s expertise in the area can help limit stock outs, waste, and higher logistics costs for last-minute replenishment that have traditional plagued retail as a result of multiple layers of handling by a mix of third-party providers.

“China is a market with both huge opportunities and major challenges when it comes to managing distribution across our many sales channels,” said Hanbin Lyu, VP of Danone Waters China. “With its impressive in-house logistics network and advanced supply chain management technology, not to mention its trusted position as a platform for high-quality, authentic branded goods in China, JD is an ideal partner to help us maximize efficiency.”

JD has been expanding its efforts to help brands grow their China business by better managing their supply chains. Using its state-of-the-art logistics capabilities, JD recently helped a European dairy brand increase efficiency, enabling it become the top imported milk brand on JD.com.

JD Logistics has also supported delivery of fresh produce and frozen products to consumers in China from major Western retailers. The services rely on JD’s sophisticated cold-chain delivery and monitoring solutions to ensure that over 300 fresh and frozen items, including imported meats, seafood, ice cream, fruits and luxury bakery goods, are delivered at the right temperature and in perfect condition.

The efforts in logistics are part of JD’s broader “retail as a service” strategy. As changing consumer demands are forcing changes throughout global retail models, large-scale e-commerce companies like JD are at the forefront of developing the most efficient and advanced supply chain and logistics technologies that can be used far beyond retail itself.

“We believe our infrastructure and technology will benefit shippers and industries, including those that don’t sell directly on our platform,” Wei Tang, Vice President of Logistics  at JD, said. “Online retailers like JD can lead the way to more efficiency, transparency and reliability in commerce, benefitting both customers and suppliers.”

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.”