JD.com to boost logistics business

A man walks past an adevertisement for JD.com in Nanjing, capital of East China's Jiangsu province on June 12, 2013.[Zhen Huai / Asianewsphoto]

JD.com, China's online retail giant, is gearing up to make its logistics business one of the four key engines that drives the company's development in the future.

As one of the leading business-to-consumer, or B2C, retailers in China, JD.com will build up four business divisions, which are e-commerce, logistics services, information technology and Internet finance, in the future, said a company's senior executive on Thursday.

"Starting as an e-commerce company providing an online marketplace for e-retailers in China, we hope we can be involved in the whole supply chain of e-commerce in the future," said Shen Haoyu, chief operation officer of the Beijing-based JD.com.

"By providing logistics services to retailers, which use our online platform to do business, we can not only better the customers' experience but also make the service a growing point for our business," he said, adding that what makes JD.com stand out from many other e-commerce players in China is the company's self-built and self-operated logistic system.

Many of China's e-commerce companies, such as China's e-commerce king Alibaba Group Holding Ltd, are building their own warehouses and delivery teams. JD.com started to build up its own logistic network about five years ago.

About 90 percent of the 1 million orders JD.com receives every day are delivered by the company's own delivery team.

Though JD.com has provided its logistics services to third-party vendors since earlier this year, only a small number of them choose the company's logistics service over traditional courier companies in China.

With the upcoming Singles Day online shopping spree in China, JD.com wants to attract the attention of more third-party vendors by offering them free delivery service between Oct 26 and Nov 30.

"Thousands of vendors have signed up for the free service and the number keeps increasing," said Wang Zhijun, vice-president of JD.com, who is in charge of the logistics service.

Wang said the company plans to invest at least tens of million yuan in the free delivery promotion.

Insiders said that by providing a free delivery service during the Singles Day online shopping festival, the company will attract more vendors to sell their products through JD.com, which will pose a threat to the company's competitor Alibaba.

Alibaba's Tmall and Taobao marketplaces reported a combined 19.1 billion yuan ($3.12 billion) in daily sales for their Double Eleven promotions last year.

Shen of JD.com denied targeting Alibaba, saying that is not the company's intention. "We can only improve our service and build a stronger logistics sector when more people use our logistics service," he said.

Song Yang, e-commerce senior analyst with the Beijing-based research firm Analysys International, said, regardless of strategy, JD.com has invested a lot in building its own logistics network.

"JD.com is a very 'heavy' company with more than 14,000 deliverymen. Not to mention the cars, warehouses and other facilities. Opening its service to third-party vendors is an unavoidable choice for JD.com," Song said.