In a recent report published by the brand valuation consultancy Brand Finance, JD Logistics was listed as one of the top 25 logistics brands in the world. The logistics branch of the Chinese ecommerce giant JD.com, JD Logistics catapulted onto the annual listing at number 18 just one year after its initial public offering in 2021.
The report spotlighted JD Logistics’ meteoric rise in the ranks of logistics brands, emphasizing its focus on research and development to innovate within the supply chain sector. The company has incorporated technology fully into its business model, utilizing automation throughout its supply chain from warehouse to delivery. It has also placed a strong emphasis on sustainability and is working to set an example for the industry through its green initiatives.
JD Logistics provides its parent company JD.com with one of the largest fulfillment infrastructures of any ecommerce company in the world with a network of approximately 1,400 warehouses totalling over 20 million square meters in space. The company has also begun to extend its supply chain capabilities to third parties, providing personalized solutions and helping businesses large and small to attain better logistical efficiency.
In December of 2021 the company reported having over 190,000 couriers traversing its expansive logistical network. In China, same- and next-day delivery service is available in 94 percent of the country’s counties and 84 percent of its villages and globally its supply chain includes over 80 bonded and overseas warehouses in Europe, the United States, Southeast Asia, Australia, and the Middle East.
The rapid evolution of JD Logistics was predicated by the growth of JD.com. Its founder and current chairman Liu Qiangdong started the business in 1998 as a small booth selling computer parts in an outdoor mall and within half a decade had built it into a successful chain of brick-and-mortar electronics stores with locations across China. In 2003 he made the decision to transition his business online, eventually closing all of his stores in favor of operating exclusively as an ecommerce brand.
As a leader, Liu Qiangdong has been assertive in his belief that a business must be built on trust between the company and its customers. In 2007, wanting to have more control over the quality of service JD.com provided and differentiate itself from the growing number of competitors in the space, he made the decision to move away from third party logistics services and develop an in-house network, including warehouses, fulfillment centers and couriers.
This transition significantly changed the makeup of the business, increasing overhead costs and drawing the eyes of critics who questioned why a company would willingly cut so significantly into their margins. However, the move has proven successful threefold. It has allowed the company to reach previously untapped markets in China’s smaller cities and rural communities, an advantage Liu Qiangdong was uniquely aware of having grown up in a rural village himself. In 2010, JD became the first e-commerce company in the world to launch same- and next-day delivery service and today has the ability to do so with over 90 percent of its orders. Finally, by offering up its unparalleled logistics to other companies the business had created a new revenue stream that has a strong potential for high margins.
JD launched its research lab to develop smart logistics and unmanned technology in 2015, and in 2017 JD Logistics was officially established as a business entity separate from ecommerce. It went public on the Hong Kong Stock Exchange in May of 2021 with an opening price of HKD 40.36 per share and raising an estimated HKD 24.11 billion.
In the company’s first annual financial results published on March 10th of this year, it reported a 42.7 percent growth year-over-year with revenues reaching USD $16.45 billion. Over half of JD Logistics’ total revenue in 2021 came from external customers, showing the continued potential for growth provided by offering its supply chain solutions to third parties outside of its own retail business. The growth rate for its external supply chain hit 41.7 percent, providing services to over 300,000 industry-leading brands. It is currently working to expand further into supply chain services for SMEs in new markets such as retail, fast-moving consumer goods, and what China refers to as the “3C industry” (computers, communications and consumer electronics).
JD Logistics has also experienced strong growth in international markets. 2021 saw it open automated warehouses in six countries including the United Kingdom, United States, Australia and the Netherlands. By year’s end it had nearly 80 bonded and overseas warehouses in total. The company also launched new cargo flights from China to Thailand, the United States and the United Kingdom.
The company invested over USD $400 million in research and development over the course of 2021, a year-over-year increase of 37 percent. By the end of the year JD Logistics had applied for more than 5,500 patents and software licenses with more than half of them being related to automation technology and unmanned technology. It began piloting 5G technology in two of its “Asia No.1” smart warehouses, and activated almost 400 autonomous delivery vehicles across the country for use in last-mile deliveries.
JD Logistics’ services extend further outside of retail logistics as well, seeking to present supply chain solutions that can automate services, digitalize operations and foster intelligent decision-making. As the electric vehicle (EV) industry continues to grow globally, the company’s service platform JD Service Plus has begun to offer supply chain solutions for charging pools, the infrastructure for charging multiple electric vehicles at once.
This includes providing delivery, installation, and after-sale services and it has partnered with some of the global leaders in electric vehicle manufacturing such as Volkswagen, Tesla, Audi, XPeng, Voyah and Aiways for charging pool services. According to JD Logistics, it has increased regional installation efficiency by 15 percent with a 98 percent satisfaction rate. Additionally, the platform provides installation, repair and cleaning for electronic products, home appliances and furniture, maintenance for bags, shoes and clocks, eliminating dust mites, air quality tests, and air purifying services amongst others.
Liu Qiangdong announced in 2020 that JD.com intended to reduce its carbon emissions by 50 percent by the year 2030, a promise that extends to the company’s subsidiaries. According to JD.com’s most recent ESG report, the reusable packaging boxes JD Logistics has implemented into their supply chain solutions have been used over 16 million times. The company also previously found that by slimming their tape width by 15 millimeters they were able to reduce the amount of take used each year by 400 million meters.
JD Logistics is also working to make green improvements to its smart warehouses, including utilizing distributed air conditioning to heat the building rather than boiler rooms and using new energy for its special equipment and terminals. It has installed photovoltaic solar panels at 13 of its logistics parks, and the Asia No.1 smart logistic park located in Xi’an was certified as carbon neutral in 2022. The next carbon neutral warehouse is set to be the Asia No.1 located in Suqian by 2023, and it has stated it intends to utilize green energy at 85 percent of its warehouses by 2025.
