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How E-Commerce Companies are Shaping the Future of Logistics

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The following is a post by Zhenhui Wang, CEO of JD Logistics, a business group within China’s largest retailer JD.com Inc.

Knowing what China’s logistics infrastructure was like 10 years ago, it can be hard to believe that same-day delivery is now the norm, and that an e-commerce company—JD.com—would have the largest nationwide logistics network.

But it’s true. JD.com, China’s largest retailer, online or offline, has more than 236 million active customers and is able to deliver up to 92% of orders same-day or next-day. We use our own fleet for everything from long-haul to last mile. We own our fulfillment centers and delivery stations.

We believe there is more to be done, however, because Chinese consumers are evolving. Whereas they used to care more about price, they now care about quality. And though they used to prize speedy delivery, they want more personalization and better service. That’s why we’re launching two new services: scheduled delivery and white glove delivery.

Scheduled delivery isn’t entirely new to JD.com: since September 2016, we’ve offered it in select cities with two-hour delivery windows. It’s been popular among buyers of maternal and baby products, computer and office products, and for fresh food. Our own customer surveys have shown 98% of customers have a need for scheduled delivery services, and 30% are willing to pay extra fees for it.

With such overwhelming popularity, we got to work on improving our capabilities and I’m now pleased to say that we’re already able to shorten that window to one hour in most areas. We’re also testing 30-minute delivery window in Wuhan, Zhengzhou and Changsha.

As with all JD order fulfillment, execution of scheduled delivery begins further up the supply chain. Our smart logistics capabilities will first use predicitive analytics to ensure inventory is correctly placed in anticipation of orders, making it more possible to have orders ready for delivery within tight, scheduled windows. It also helps calculate the best routes for delivery.

Chinese consumers are evolving. Whereas they used to care more about price, they now care about quality. And though they used to prize speedy delivery, they want more personalization and better service.

Customers who choose JD Scheduled Delivery Service can choose time periods from 9 AM to 10PM in one week, paying less than $1 for the small and medium sized parcels. The exact fee will vary based on time of day; customers will pay less during off-peak hours, helping us further balance delivery volume. Oversize parcels will be charged up to $6.

Scheduled delivery, as many of my colleagues in the global logistics industry know, is not simple to achieve, especially when you’re working on a scale as massive as we have at JD.com, across a country as large as China. As an added layer of assurance deliveries will be on time, we’ll be tracking our scheduled-delivery team in real-time and send them alerts along the way so they can be sure to get to meet their deadlines.

For white glove delivery, we have begun delivering a select number of high-end products with a dedicated delivery team. They drive electric cars instead of tricycles, and are standing by to immediately deliver big ticket items to our luxury customers. They wear special uniforms with actual white gloves. We call this service JD Luxury Express.

JD.com is only able to do this because we have proven that investments in self-operated logistics capabilities are an asset, not a burden, in today’s retail environment. Because we are developing our own technology and mobilizing our own assets, we’re able to execute on concepts like scheduled and white glove delivery faster than any e-commerce company in the world. That’s also the reason why JD Logistics business group doesn’t see itself as a cost center within JD.com, but rather an engine that drives growth for JD.com’s retail and technology operations.

JD.com Announces Environmental Protection Initiatives

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The meteoric rise of consumption in China has helped drive the country’s economic miracle – and improve the lives of hundreds of millions of people – but it has also presented serious environmental challenges. As part of its dedication to tackling these challenges for the benefit of future generations, this week JD.com announced a donation of RMB 10 million to support a series of environmental initiatives in cooperation with World Wide Fund for Nature (WWF) China.

“The protection of our natural environmental is one of the most serious challenges facing humanity,” said Shi Wang, president of WWF China Board and chairman of board of directors of China Vanke Co., Ltd. “Maintaining current levels of consumption would require the natural resources of 1.6 earths – so a greater commitment to conservation and sustainability are crucial to preserving our planet. JD.com has been active in embracing environmental solutions, and these initiatives in cooperation with WWF will encourage more companies and consumers to join the cause of environmental protection.”

“Giving back to society has always been core to JD.com’s mission, and over the years we have been committed to providing support to disaster relief, education, and environment protection,” said Richard Liu, Chairman and CEO of JD.com,  “I am very excited to join forces with WWF, one of the biggest environment conservation organizations in the world, which will take our environmental protection efforts to the next level and further raise awareness of environmental issues to the general public in China.”

As a first step in its cooperation with WWF, JD.com will become the first Chinese e-commerce company to install large scale distributed photovoltaic (PV) power generation systems on warehouse rooftops. Covering a total of 1.5 million square meters, the project is expected to reduce the company’s annual carbon dioxide emissions by 150,000 tons – equivalent to planting 20 million trees or saving 60,000 tons of coal.

Reducing waste through smart packaging 

Another environmental problem that has emerged alongside China’s consumption boom is the massive amount of packaging material that is discarded each year – a trend that continues to accelerate. A look at the numbers gives a clear picture of the challenge: in 2016, China led the world with over 31 billion packages delivered –– a more than 20-fold increase over the past 10 years.

To help alleviate this problem, JD along with nine major brands, including Lego, Nestle, Unilever, P&G, and Wyeth, recently announced the launch of the Green Stream Initiative to promote the use of sustainable, “greener” packaging materials throughout the supply chain.

Headed by JD Logistics, the Green Stream Initiative is the company’s largest environmental project and a major focus for the next three years. By 2020, JD expects to reduce the number of boxes used throughout the supply chain by 10 billion – the total number of all boxes used in China in all of 2015. By working with the brands, the company expects that 80% of packaging materials will be recyclable, with over 50% of plastic packages replaced by biodegradable material and 100% of logistics packaging materials to be composed of recyclable or reusable materials.

JD is continually looking to leverage technology to create efficient e-commerce solutions that have a positive impact on the environment. In June, the company began operating its first fleet of clean energy delivery trucks in Beijing, Shanghai and Chengdu – becoming the first domestic logistics player to employ large-scale “green” delivery vehicles. The over 100 new energy delivery trucks are expected to reduce JD.com’s annual carbon dioxide emissions by over 584 tons! And since deploying its electronic invoice system in 2013, JD.com has issued more than 500 million electronic invoices saving over 216 tons of paper.

JD has long been dedicated to becoming the most trustworthy smart supply chain partner for its clients. Looking ahead, the company is committed to increasing its cooperation with brand owners, logistics companies and packaging companies to encourage recyclable packaging and the use of bio-degradable materials.

JD.com Launches White-Glove Delivery Service for High-End and Specialty Products

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E-commerce giant JD.com, China’s largest retailer, is launching a new luxury white glove service that will change the experience of shopping for high-end products online.

The service, JD Luxury Express, offers personalized delivery by specially-trained JD employees. Clad in distinct uniforms, complete with white gloves, they will deliver qualifying purchases to customers’ homes in electric vehicles rather than JD’s usual tricycles and scooters.

As consumers are increasingly buying new categories of products online, luxury brands have been concerned that the specialized retail experiences and high levels of service their clients expect are difficult to replicate through e-commerce. With its own self-operated logistics network, for which JD controls everything from the storage of products to last-mile delivery, JD is in the unique position of being able to control handling of luxury products from start to finish.

JD Luxury Express will give peace of mind to brands that their products and customers are getting the best possible buying experience, and JD customers who are already accustomed to JD’s authenticity guarantees, will be able to enjoy a wider range of products without losing the personalized service they’ve come to expect from high-end purchases.

“We are pushing the envelope because we understand that when it comes to the extension of luxury to online, existing delivery services don’t cut it,” said Xia Ding, President of JD Fashion. “This is just one step JD is taking to strengthen our partnerships with the world’s top luxury brands. We will continue to create new, exciting ways for customers to make luxury purchases, bridging the gap that still persists between online and offline luxury experiences.”

“Customers who buy premium products online deserve a premium service,” said Zhenhui Wang, CEO of JD Logistics. “JD is raising the bar for what consumers and brands will come to expect from a luxury e-commerce experience.”

The new service is launching initially in Beijing, Shanghai and Guangzhou, and is expected to expand significantly over the next few years, making JD the first e-commerce company to roll out this type of luxury service on a large scale. White glove delivery will be automatically included in the purchase of expensive, smaller items such as luxury watches and jewelry, which usually will be delivered the same or next day in those cities. The company will explore expanding the range of products, with luxury fashion likely to be included later this year.

As Chinese consumers become more discerning and conscious of quality, customers are increasingly turning to JD for high-quality, authentic products from fashion and apparel to electronics and fresh produce. As of the first quarter, JD had more than 236 million active customers. With JD Luxury Express, JD will extend its reputation as the single best source for anything and everything shoppers in China need and want.

JD.com Leads Way For AR/VR In E-Commerce

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JD’s lead scientist for augmented reality and virtual reality (AR/VR) technologies at the company’s fast-growing Silicon Valley R&D Center said June 1 that the company’s drive to offer the best possible shopping experience for its more than 236 million active customers will include greater use of those advanced technologies.

The scientist, JD’s Hui Zhou, told attendees at Augmented World Expo 2017 (AWE), the industry’s premier gathering in Santa Clara, California, that his team is working to build an e-commerce platform that will offer an improved, immersive shopping experience for customers and will offer partners a new range of innovative marketing tools.  He also described how JD is leading in China by establishing the first e-commerce AR/VR industry alliance to develop common tools and standards. The alliance already includes more than 30 companies.

The scientist, JD's Hui Zhou, told attendees at Augmented World Expo 2017 (AWE)

He also said that JD’s VR Shopping Galaxy app and the company’s AR-enabled app called JD Dream already allow shoppers to step into a complete virtual reality shopping experience to browse and buy a limited range of products on JD.com, or to preview how a piece of furniture, for example, would look in their own homes.

Hui said he envisions a time when every one of JD’s listed products, which today include more than 200 million SKUs, could become part of a virtual- or augmented-reality gallery that would allow customers to have a more satisfying and interesting shopping experience.  The company is actively pursuing new and advanced 3D-modeling techniques that would help accomplish this monumental task and make the vision a 3D reality.

Applying advanced AR and VR, Hui said, can transform the shopping experience from today’s standard 2D “WYSIWYG” (what you see is what you get) transaction to something closer to a “WYEIWYG” (what you EXPERIENCE is what you get) — a fully immersive, 3D experience.

For more about the AR/VR industry alliance visit vr.jd.com.

In China, It’s Time to Give Back

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To understand the culture of giving in China, one must understand its history.

China has come a long way in the last several decades to become the booming economy it is today, with megacities filled with skyscrapers. It wasn’t so long ago that I was growing up in the countryside of Jiangsu province where, like most people in rural China, my family had enough to get by and not much more.

Even by the 1990s, as Chinese cities were rapidly industrializing, people in rural areas still had much less. So when I managed to get into Renmin University in Beijing—something very rare for someone of my background—my entire village pooled its resources to help. They donated a total of 76 eggs and 500 yuan to send me off for the opportunity that changed my life. I knew then that given the chance, I would help other students do the same.

That chance has come. I founded JD.com, an e-commerce company that is now the largest retailer in China. With 70% of JD employees being from rural areas, fostering development for people in those regions is important to me. Since 2010, we’ve given at least hundreds of scholarships and grants to students from my alma mater, as well as to students in need from my hometown, Suqian. JD also partners with well-known colleges to provide bachelor’s and master’s degrees to employees who want to further their education. Over 2,000 employees have participated so far.

This week I have decided to donate 300 million yuan to Renmin University for expansion, scholarships, research and other initiatives, including primary and secondary educational outreach. Children who get opportunities at a young age are better prepared to achieve at the highest levels.

Of course, as the CEO of a company with nearly 10,000 engineers, I know that having a steady stream of highly trained and well-educated students will be good for the future of my own company. But that isn’t why I’m doing this—my plan, from the time I started JD, was to build an ethical business, selling authentic products, that would provide the best benefits possible to employees and the best experience for customers. Once successful, I wanted to give back to society. And I chose education as my cause because I firmly believe that it will benefit the entire country.

China’s philanthropic culture is still developing. I give back, and I urge others to do the same, because I remember my own struggle to pay for university and my neighbors who gave everything they could to make it possible. Most Chinese entrepreneurs my age or older grew up in a more difficult time and appreciate everything we have now. We know that we succeeded not only because of our own hard work, but because were helped along the way. Looking now at the smart and motivated students in China, I know what a huge difference they can make on society if given access to education. They will need opportunities like the ones my generation of successful entrepreneurs had. That is why we need to give back.

Coffee or Dessert? Chinese Consumers Are Ordering Both

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KitchenAid and De’Longhi Launch Stores on JD Worldwide as Chinese tastes change

Appliance brands KitchenAid and De’Longhi are deepening their partnerships with e-commerce giant JD.com, China’s largest retailer, as Chinese consumers are bringing home their growing love of coffee and desserts.

Consumption of coffee and baked goods have soared in China for years, but largely as an indulgence in Western-style cafes in China’s first and second-tier cities. Most Chinese apartments do not come furnished with ovens.

 

Now, data from JD shows demand is growing for everything from high-end embedded ovens to coffee makers and stand mixers, creating a fast-growing market for international brands. JD has offered ovens for home use for years, but sales, including those of table top convection ovens and embedded ovens, took off in 2015 with more than 4 million units shipped directly from JD in the last two years.

Consumers with more spending power in top tier-cities who previously purchased lower-cost convection ovens are now upgrading to higher-end products, while shoppers in lower-tier cities are beginning to buy baking products as well. Meanwhile, sales of stand mixers on JD grew nearly five-fold from 2014 to 2016, enjoying the most popularity among young shoppers born after the 1980s and 1990s.

To tap this burgeoning market, KitchenAid, is opening a store on JD Worldwide, a cross-border e-commerce platform that ships goods direct from brands anywhere in the world right to consumers’ doorsteps in China. The store will expand the mix of KitchenAid products available to some 236.5 million customers on JD.com.

Meanwhile, another traditionally Western indulgence—coffee—is also experiencing a boom. According to GfK, the compound annual growth rate of family use coffee machines in China has reached more than 50% over the last three years. The number of coffee machines JD sold in 2016 nearly doubled from 2014. Interestingly, while the interest in baked goods has tended to be among younger consumers, coffee makers did particularly well with people over 45, perhaps reflecting the strong inroads coffee brands like Starbucks have made in China over the last two decades.

Appliance brands KitchenAid and De’Longhi are deepening their partnerships with e-commerce giant JD.com,

“People don’t typically associate China with baking, but in the last three years we’ve seen a surge in its popularity,” said Ting Qi, General Manager of JD Worldwide. “JD.com’s customers in urban areas are gaining more exposure to international products and experiences. Chinese consumers are changing from coffee drinkers to coffee brewers, and they’re doing their own baking at home. The shift in Chinese consumption presents a tremendous opportunity for international brands.”

“We are seeing unprecedented opportunity for growth in China as middle class consumers are looking for high-quality products to match their desire to upgrade their overall lifestyles,” said Eric Su, CEO of KitchenAid Greater China. “It was important for us to partner with an e-commerce company as trusted as JD.com to bring to China the cooking experience, design and quality we have long been known for in the U.S. and Europe.”

Italian appliance maker De’Longhi Group also is also opening a direct sales store on JD Worldwide and sells products including imported retro-style coffee makers, and Braun and Kenwood hand mixers, which are not otherwise available in mainland China. JD and De’Longhi have cooperated since 2010.

“China’s love affair with coffee is growing fast, but is still in its beginning stages,” said Gilbert Zong, CEO of De’Longhi Greater China. “As one of the largest retailer of home appliances in China, JD.com provides a unique opening for us to reach that burgeoning market.”

JD.com Deliveryman Plays Hero in a New LEGO “Micro Movie”

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In commemoration of “LEGO Super Brand Day” on JD.com, China’s largest online retailer, LEGO has released one of its famed movie shorts featuring a JD Deliveryman as its hero.

The movie was released just in time for Children’s Day on June 1. It took 168 hours for 12 LEGO building masters to create scenes entirely featuring the beloved bricks from the Danish toy maker. The story follows a package delivered via drone, truck and scooter, as a JD delivery man rushes to his destination.

Complications ensue, and the package almost goes astray until (spoiler alert) the JD deliveryman saves the day, getting his customer’s package to the right place, just as real-life JD delivery people do thousands of times a day, all across China!

“LEGO Super Brand Day” is the latest Super Brand Day on JD.com, a program launched in 2016 that features a famous brand every two weeks with special discounts and products. Leveraging JD’s reach to more than 236 million customers, the promotions have helped brands including Samsung, Coca-Cola and Dell reach record sales in China. On May 18, Adidas held a Super Brand Day promotion and sold over 230,000 items, or nearly 300 times the average daily sales of the brand on JD.com.

JD and LEGO have been working together successfully since 2015, and LEGO saw its sales through JD nearly double last year. In early 2017, LEGO expanded its cooperation with JD and set up a marketplace flagship store.

Mattel and JD.com Extend Partnership, Bringing More Fun to Chinese Children

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In celebration of Children’s Day in China, JD.com, China’s largest retailer, and toy maker Mattel Inc have announced an extension to their partnership to bring popular toys to China.

The companies, which have been working together since 2013 to offer Fisher Price, Barbie, Thomas & Friends, Hot Wheels, Mega Bloks and more on JD, held a joint event on May 27 in Beijing to commemorate the extended partnership and will roll out special sales and discounts for JD customers of Mattel brands and toys.

JD.com,Mattel brands and toys.

The renewed partnership comes as Mattel is launching its new campaign “Thomas and Yongbao’s Friendship Journey”. Thomas, the No.1 blue engine from the Island of Sodor and his Chinese engine friend Yongbao, who was officially launched last year, are now on a journey, inviting kids across China to join them in  delivering happiness and making friends. The campaign will start from the 1st Chinese stage show of Thomas & Friends—Here Comes the Carnival, which will premiere in Beijing before embarking on a national tour.

JD is an official retailer of Yongbao and other Thomas toys. In addition, millions of Barbie dolls have been snapped up by JD.com shoppers since Mattel began selling on the company’s platform. As Chinese consumers become more concerned with high-quality branded products, demand for the best imported brands of toys has strengthened. According to GfK, Chinese toy market was more than 55 billion RMB in sales last year.

“China is now home to an estimated 200 million children younger than 14 years old,” said Carol Fung, President of JD Fast Moving Consumer Goods. “These children, as well as their parents, are becoming loyal fans of the characters and toys made famous by top-quality international brands such as Mattel. We know they will welcome the chance to buy both exciting new products and longtime favorites from the most trusted seller in China.