“A few months ago, we had a logistics expert come through and order a few things and he was really impressed with the operation,” Gartner said, adding that the expert ordered items from several locations and received a single order with all items.
Gartner credits the network design – larger trucks moving products from warehouse to delivery station – for that delivery success.
“It’s a much more efficient process, otherwise you would have more vehicles,” he said.
On the vehicle equipment front, the company has been utilizing electric vehicles and entered into an agreement last year with SAIC Maxus and Dongfeng Motor Corp. to develop autonomous delivery vehicles. JD Logistics has jointly researched two models of autonomous light electric vans with SAIC Maxus and Dongfeng, respectively, for delivery of goods from JD’s distribution centers to delivery stations in the future.
The company began testing autonomous delivery via robots at Renmin University and Tsinghua University among other schools last June. The autonomous robots deliver goods to a designated location and customers receive a unique passcode to open the robot’s secure locker to retrieve their packages.
“With technology as the driving force, JD operates the most advanced retail operation in the world,” said Zhenhui Wang, CEO of JD Logistics. “Our extensive in-house logistics network provides the ideal real-world scenario in which to test autonomous vans. Working with our partners, we will continue to enhance our smart logistics and push the bounds of traditional logistics solutions.”
Like Amazon, JD Logistics is also venturing into drone delivery. Currently, the company is using drones to make deliveries to remote areas of China, bringing online shopping and quick delivery to residents of these areas.
The program works by dispatching orders from regional delivery stations to JD’s network of dedicated “village promoters” in each village, who then distribute the orders directly to customers, significantly shortening delivery times and reducing logistics costs. JD.com currently has more than 300,000 village promoters across the country.
“The focus is one rural areas that have lower order densities,” Gartner said.
On a larger scale, the company has also started testing “heavy-load drones” capable of carrying 1 ton of goods at a time. Gartner noted these drones will move product traditionally carried by truck between warehouses.
JD signed a strategic cooperation agreement with the municipal government of Hangcheng, in Shaanxi Province, to set up the first urban drone delivery platform in the world. JD will explore the model and plans to test city drone delivery in Hancheng to evaluate its viability. Additionally, the company will also test its automated delivery vehicle and logistics facilities and hopes to build Hancheng City into a model city for smart logistics.
Having conquered China delivery – more than 92% of products sold by JD.com are delivered within one day, including many that are delivered same day – JD Logistics may be looking abroad, specifically the U.S.
According to a report in January, the company is planning U.S. operations later this year and will use some of the $2.5 billion in funding to do so. Gartner declined to confirm any U.S. plans, saying only that “we’re still focused on China and Asia.”
The Bloomberg article quoted founder Richard Liu as saying the company will begin selling online to U.S. customers in the second half of this year.
“This year, Vietnam, India, Philippines, Malaysia – every Southeast Asian country – we will come by the end of this year,” Liu is quoted as saying. “Our future is we will invest in U.S. and build a warehouse fulfillment center in U.S. so you can get same-day delivery.”
The story noted that JD.com could leverage its relationship with Walmart Stores, which is an investor in the company, for help in building a U.S. logistics network.
The approach to last-mile delivery in China is very different than it is in the U.S., so it remains to be seen how JD Logistics would handle that operation in America. If the stories are true, we may find out very soon.