JD.com is one of the largest online shopping companies in China, and they just announced their latest innovation. The company is proud to announce that they are aiming for delivery times as short as 30 minutes.
Thirty minutes sounds like an astounding speed for any company, but this is just the next step in their latest initiative to improve the efficiency of their supply chain. The company plans to use offline retail outlets to cut unnecessary steps out of the process. Carol Fung, a top executive with the company, is confident that the program will reduce costs and improve the customer experience.
Is the 30 Minute Delivery Time Possible by JD.com?
The 30-minute delivery time is a bold play, but the company has a plan. Instead of having every order go through a warehouse and a distribution center, many products will now go through offline channels to ensure final delivery. This new idea requires an AI algorithm. The algorithm helps determine how close offline retailers are to each customer, and how close the nearest warehouse is to the customer. If the retailer is closer, the program has the shop make the delivery.
JingDong has partnered with several shops to make the program work. These stores include convenience stores, supermarkets, and their crowdsourced delivery platform Dad-JD Daojia. The company plans to cover basic items like wine, beer, flour, rice, and non-alcoholic beverages to start.
Are you going to get your delivery within 30 minutes of ordering?
At launch, the new program includes 20,000 stores spread out across 54 stores. Walmart has signed on to the program, committing 175 stores to the program. With this network, the company expects an average delivery time of just two hours. In some cases, orders will arrive in 30 minutes. The company has pitched this program to potential partners as a way to increase turnover rate and improve store traffic.
Liu Guangdong, the company’s founder, believes this new program will intensify its rivalry with Alibaba. Alibaba has already started pushing a similar program to fuse offline and online shopping. Liu Quingdong believes that their partnerships with retailers throughout China give them a distinct advantage.
The Logistics involved in delivering within 30 Minutes
Delivery logistics is a hotly contested field throughout China. Alibaba has invested billions in various delivery services and investments in brick-and-mortar retailers. These retailers include Hema supermarkets, Sun Art Retail Group, and Intime department stores. The goal is to get closer to consumers, so customers will receive goods quickly. At several Hema supermarkets, customers can now order their groceries and have them delivered.
Alibaba’s logistics subsidiary, Cainiao Network, ensures that deliveries run smoothly. They have standardized billing and optimized routes to improve delivery times and lower costs. JD.com is currently investing in its own logistics services.
There have been several success stories from this young program. Nongfu Spring, a popular beverage brand, reports that 90 percent of orders made on June 18th (a popular shopping day) was completed within two hours. This was done without any staffing for the company. Nongfu Spring reports that they’ve seen a 20 percent increase in daily orders.
China is leading the E-commerce Race
China’s economy continues to grow at a rapid pace, and e-commerce giants view faster delivery times as a way to increase sales. Both Alibaba and JD are especially optimistic about the role delivery will play in reaching smaller cities. First-tier and second-tier cities have already bought into online shopping, with a 36 percent market penetration. Smaller cities only have a 13.8 percent market penetration. This leaves an incredible amount of room for growth, and the company that handles logistics the best will likely come out on top.
Liu Quingdong is certainly hopeful that this new program will lead to even greater success for his company and China in general.