By Cate Hull
JD.com, the third largest Internet company in the world, and the biggest in China, is starting its own shipping business.
The company signed an agreement with Orient Overseas International Limited, the Hong Kong-based holding company which specializes in international transportation and logistics, and with the shipping group COSCO.
Under the agreement, the three companies will form a joint venture for the acquisition of Shenzhen-based Eshipping Global Supply Chain Management, an online logistics platform controlled by Cosco.
The joint venture, based in Shanghai, starts with initial registered capital of 255 million yuan, around 33 million Euros.
The new venture will compete with Alibaba in the Asian markets.
Established in 2014, Eshipping offers a platform to integrate international supply chain resources, including logistics, warehousing, courier, logistics financing, trading, and other market resources, to provide small and medium-sized enterprises and cross-border retailers one-stop logistics services covering landside transportation, ocean freight forwarding, air freight forwarding, overseas warehouses, and supply chain finance.
JD.com is China’s largest online retailer and biggest overall retailer, as well as the country’s biggest Internet company.
Its unrivalled nationwide fulfillment network covers 99 percent of China’s population and provides standard same-and next-day delivery, a level of service and speed that is unmatched globally.
Despite the company’s success in e-Commerce, JD.com remains committed to brick and mortar as part of its portfolio.
JD.com believes smart consumption, smart supply chain, and smart logistics are transforming the consumer experience. “Brick-and-mortar retailers know what exactly is happening in their stores. Not only that, but their knowledge about a range of things, from customer behavior to traffic flow, enables them to continuously optimize the customer experience. These techniques provide huge opportunities for brick-and-mortar retailers,” said Chen Zhang, chief technology officer for the company.
“The conventional belief is that traditional retail is slowly dwindling down and being replaced by online retailers. However, even though e-commerce penetration has grown rapidly in the last few years – it currently accounts for roughly 8.5 percent of retail in the U.S. and 15 percent in China – the future is still bright for offline stores,” he said.
Zhang said smart supply is enabling retailers to markedly enhance operational efficiency. “It’s driven by AI and big data that provide retailers with information such as customers’ preferences, how many of each individual item they’ll want to buy, and over which time period. Essentially, smart supply removes much of the guesswork that traditionally went into optimizing brick-and-mortar retailers. Now, armed with precise information about sales, pricing, and inventory, brands can improve their time to market, inventory control, and product design, and retailers can make smarter decisions about their offerings,” he added.
Cate Hull is the CEO of FreightExchange, a freight and logistics company based in Sydney.