Only a few e-commerce companies that build their own logistics can survive, because the scale and investment are both obstacles, but JD Logistics is the origin of the self-built and self-operated system of domestic e-commerce. JD has a strong sense of self-control in its corporate spirit, and most of its logistics revenue comes from providing procurement, warehousing, logistics and other supply chain services for its own e-commerce platform. According to public disclosure, before JD launched FBP (Fulfilment by POP) in 2016, the logistics fulfillment cost rate of self-operated distribution was 8.1%, while the gross profit margin of self-operated products in the same period was only 7.2%, which means that the product gross profit is not enough to cover the logistics cost. The expansion of the scale of third-party business provides a foundation for the opening of JD Logistics, and can use redundant production capacity to reduce marginal costs. In 2018, JD Logistics became independent from JD and fully opened to the public, which promoted the transformation of JD Logistics from a cost center to a profit center, and also indicated that JD has stepped out of the scope of e-commerce logistics and transformed into comprehensive logistics. JD Logistics’ stable timeliness and high-quality terminal services provide partners with integrated logistics solutions including warehousing, transportation, distribution, customer service, and after-sales services. At the same time, it shares online and offline channel resources with JD Mall and launches supply chain finance and insurance products with JD Finance.
Currently, JD Logistics has six physical networks for small and medium-sized items, cold chain, large items, LTL, cross-border, and crowdsourcing, most of which are self-owned assets. However, the domestic express delivery market is in a red ocean of competition. To maintain the market positioning of high-quality delivery, it still needs huge business imports to achieve profitability. The main motivation for Amazon members to pay is the free two-day delivery logistics service, and the domestic market environment is a nationwide free shipping, so JD also faces challenges in promoting PLUS paid membership.
JD Express mainly cooperates with civil aviation in terms of air parcels, and has outstanding advantages in terminal value-added services, so it needs to vigorously build its collection capabilities. In addition to its own large-scale automated warehouse and distribution center, JD Cloud Warehouse can also cooperate with JD on third-party socialized warehousing resources. JD exports the in-warehouse operating system and links it with the mall operation. Coincidentally, Amazon Onsite and Cainiao Cloud Warehouse both have similar ideas, that is, to control resources by the system.
JD.com’s overall supply chain service is completely lacking in traditional express delivery companies, and it is also its biggest advantage. Most e-commerce companies have a strong demand for financing in terms of stocking, but there are some difficulties in retail warehouse receipt financing: on the one hand, the pledger’s inventory turnover rate is high, which is different from the pledge of bulk inventory, such as milk powder, diapers, shoes, cosmetics and other consumer goods that can be in and out at any time. For the established warehouse receipts, more frequent release, replacement, re-pledge and other operations are required, and digital processes must be adopted. On the other hand, the pledged goods have the risk of warranty expiration or out of season. If the loan is not repaid in time, in order to avoid default, a strong disposal and realization system is also needed to ensure that the products are processed within the saleable period, otherwise the warehouse receipts will face price drops and cannot make up for the risk of financing principal. JD.com’s sales and warehousing are both self-operated and controllable, and data can be shared with financial institutions. Therefore, JD.com has unique advantages in supply chain finance and has the ability to cash in pledged goods. JD.com has actively carried out warehousing and logistics layout for cross-border e-commerce imports, and has established multiple overseas warehouses in North America and Europe. JD.com’s Haitun Global has bonded warehouses in Hangzhou, Guangzhou, Zhengzhou, Langfang and Shanghai in China, and has opened a procurement center in France. JD.com started exporting relatively late, and currently focuses on Southeast Asia, establishing self-operated overseas warehouses in Thailand, Indonesia, Vietnam, etc., and cooperating with local logistics to provide terminal distribution; international transportation has opened export special lines from China to Jakarta, Bangkok, Surabaya, Laem Chabang and other places, including a one-stop JD SEA Gateway cross-border logistics solution from collection, inspection, customs declaration/clearance, international transportation, product tracking, inventory management, after-sales service, etc. JD Logistics provides import customs clearance and delivery services in China in cooperation with eBay for cross-border direct purchases. After customers place orders in Indonesia, JD purchases from Walmart, which is airlifted to the local area by JD Logistics’ international supply chain, complementing the local warehouse stocking model in Indonesia. According to the plan, JD’s logistics network will cover the entire Southeast Asia. In addition, JD also operates in Russia, South Korea, Italy, Poland and other markets by direct mail, and will deploy overseas warehouses on the Russian route.