The biggest company you may not know all that much about
China's JD.com has a larger fulfillment footprint than Amazon, a broader delivery network than UPS, and it's forcing Alibaba to re-think its model. It may be coming your way—but not yet.
Mark Solomon joined DC VELOCITY as senior editor in August 2008, and was promoted to his current position on January 1, 2015. He has spent more than 30 years in the transportation, logistics and supply chain management fields as a journalist and public relations professional. From 1989 to 1994, he worked in Washington as a reporter for the Journal of Commerce, covering the aviation and trucking industries, the Department of Transportation, Congress and the U.S. Supreme Court. Prior to that, he worked for Traffic World for seven years in a similar role. From 1994 to 2008, Mr. Solomon ran Media-Based Solutions, a public relations firm based in Atlanta. He graduated in 1978 with a B.A. in journalism from The American University in Washington, D.C.
It's easy for brands to have their stories obscured by the mountain of press given to behemoths like Amazon.com Inc., UPS Inc., FedEx Corp., Walmart Inc., and Alibaba. But there's a company not especially well known outside its home market that appears to have put everything together in such a way that it may come to dominate everyone.
Its name is JD.com. Based in Beijing, it has, in the 14 years since it launched its e-commerce site, developed and executed such a formidable model that it could easily threaten the market share of any rival it chooses to take on. For now, JD remains China-centric, although it is expanding into Thailand, Indonesia, and Vietnam. It has no plans at this time to take on Amazon or anyone else in the domestic U.S. market. Most of its shares are in public hands, though Chinese firm Tencent, which runs the ubiquitous "WeChat" Chinese messaging platform, owns 20 percent, and Walmart owns 10 percent.
JD currently has U.S. locations in Los Angeles, New York, and Silicon Valley. The first two facilities support export business to China, while the Silicon Valley facility focuses on research and development activities. Later this year, it may expand its U.S. presence—probably in Los Angeles—to handle U.S. imports from the Middle Kingdom. It does operate a U.S. e-commerce site, but it is relatively primitive and would need to be exponentially upgraded should JD decide to build a major U.S. presence.
Like Amazon in the U.S., JD works with Chinese companies to market their products, manage their inventory, and arrange for deliveries. But that's where the similarities end. JD has 335 fulfillment centers across China, compared to Amazon's 121 or so in the U.S. JD makes at least 95 percent of its own deliveries across China, while Amazon controls about 5 to 7 percent of its deliveries in the U.S.; the vast majority of Amazon's deliveries are still made by third parties. JD has opened a completely automated fulfillment center in Shanghai (as in no human labor on the floor), something Amazon or any other company in the U.S. has yet to do.
While Amazon and others are experimenting with the use of commercial drones, JD has them in the air each day. Smaller drones transport packages to remote, rural villages, where they are offloaded by village "co-ordinators," who make final deliveries by whatever means of transport available. However, the company is actively testing a fleet of much larger, heavier drones, with a capacity of up to 2,000 pounds, that will carry shipments between warehouses, or from farms to warehouses. Josh Gartner, a New York-based JD spokesman, said the company plans to make the larger drones a common sight over China's landscape.
JD has approximately 7,000 delivery stations across China. By comparison, UPS, the largest transport company in the U.S., has about 1,100. JD has 65,000 delivery drivers, slightly less than UPS' 70,000. About 92 percent of JD's deliveries are made within a 24-hour window, according to Satish Jindel, a transport consultant who spent 10 days last November in China observing the company's operations. Virtually all of JD's deliveries are free to the end customer, the exception being inexpensive transactions, where JD may tack on a delivery fee.
For a small number of deliveries—generally those going from manufacturer to customer, bypassing JD's fulfillment centers—JD will use parcel firm SF Express, considered a Chinese version of UPS or FedEx. SF Express and UPS inked a joint venture last May under which UPS picks up parcels in China on behalf of SF Express and ships them to the U.S. through the U.S. carrier's network. Over time, UPS plans to leverage SF Express' network to expand its own Chinese network, especially among small to mid-size businesses.
JD has 13,000 employees at its Beijing headquarters. Of those, 1,000 are data scientists and other advanced analysts helping JD better understand customers' spending habits and merchants' needs.
Through their ownership in JD, Tencent and Wal-Mart are collaborating with the company in a multi-year strategy to knock Alibaba off its perch as China's leading e-tailer. For its part, Alibaba, which today owns no inventory and does not manage fulfillment, is taking a serious look at JD's model in an effort to extend its own capabilities into JD's niches, Jindel said.
Though JD does not now pose a direct threat to Amazon on U.S. shores, its influence on the Seattle-based goliath is still felt. According to Jindel, in JD, Amazon sees the kind of company it eventually wants to be.
States across the Southeast woke up today to find that the immediate weather impacts from Hurricane Helene are done, but the impacts to people, businesses, and the supply chain continue to be a major headache, according to Everstream Analytics.
The primary problem is the collection of massive power outages caused by the storm’s punishing winds and rainfall, now affecting some 2 million customers across the Southeast region of the U.S.
One organization working to rush help to affected regions since the storm hit Florida’s western coast on Thursday night is the American Logistics Aid Network (ALAN). As it does after most serious storms, the group continues to marshal donated resources from supply chain service providers in order to store, stage, and deliver help where it’s needed.
Support for recovery efforts is coming from a massive injection of federal aid, since the White House declared states of emergency last week for Alabama, Florida, Georgia, North Carolina, and South Carolina. Affected states are also supporting the rush of materials to needed zones by suspending transportation requirement such as certain licensing agreements, fuel taxes, weight restrictions, and hours of service caps, ALAN said.
E-commerce activity remains robust, but a growing number of consumers are reintegrating physical stores into their shopping journeys in 2024, emphasizing the need for retailers to focus on omnichannel business strategies. That’s according to an e-commerce study from Ryder System, Inc., released this week.
Ryder surveyed more than 1,300 consumers for its 2024 E-Commerce Consumer Study and found that 61% of consumers shop in-store “because they enjoy the experience,” a 21% increase compared to results from Ryder’s 2023 survey on the same subject. The current survey also found that 35% shop in-store because they don’t want to wait for online orders in the mail (up 4% from last year), and 15% say they shop in-store to avoid package theft (up 8% from last year).
“Retail and e-commerce continue to evolve,” Jeff Wolpov, Ryder’s senior vice president of e-commerce, said in a statement announcing the survey’s findings. “The emergence of e-commerce and growth of omnichannel fulfillment, particularly over the past four years, has altered consumer expectations and behavior dramatically and will continue to do so as time and technology allow.
“This latest study demonstrates that, while consumers maintain a robust
appetite for e-commerce, they are simultaneously embracing in-person shopping, presenting an impetus for merchants to refine their omnichannel strategies.”
Other findings include:
• Apparel and cosmetics shoppers show growing attraction to buying in-store. When purchasing apparel and cosmetics, shoppers are more inclined to make purchases in a physical location than they were last year, according to Ryder. Forty-one percent of shoppers who buy cosmetics said they prefer to do so either in a brand’s physical retail location or a department/convenience store (+9%). As for apparel shoppers, 54% said they prefer to buy clothing in those same brick-and-mortar locations (+9%).
• More customers prefer returning online purchases in physical stores. Fifty-five percent of shoppers (+15%) now say they would rather return online purchases in-store–the first time since early 2020 the preference to Buy Online Return In-Store (BORIS) has outweighed returning via mail, according to the survey. Forty percent of shoppers said they often make additional purchases when picking up or returning online purchases in-store (+2%).
• Consumers are extremely reliant on mobile devices when shopping in-store. This year’s survey reveals that 77% of consumers search for items on their mobile devices while in a store, Ryder said. Sixty-nine percent said they compare prices with items in nearby stores, 58% check availability at other stores, 31% want to learn more about a product, and 17% want to see other items frequently purchased with a product they’re considering.
Ryder said the findings also underscore the importance of investing in technology solutions that allow companies to provide customers with flexible purchasing options.
“Omnichannel strength is not a fad; it is a strategic necessity for e-commerce and retail businesses to stay competitive and achieve sustainable success in 2024 and beyond,” Wolpov also said. “The findings from this year’s study underscore what we know our customers are experiencing, which is the positive impact of integrating supply chain technology solutions across their sales channels, enabling them to provide their customers with flexible, convenient options to personalize their experience and heighten customer satisfaction.”
Transportation industry veteran Anne Reinke will become president & CEO of trade group the Intermodal Association of North America (IANA) at the end of the year, stepping into the position from her previous post leading third party logistics (3PL) trade group the Transportation Intermediaries Association (TIA), both organizations said today.
Meanwhile, TIA today announced that insider Christopher Burroughs would fill Reinke’s shoes as president & CEO. Burroughs has been with TIA for 13 years, most recently as its vice president of Government Affairs for the past six years, during which time he oversaw all legislative and regulatory efforts before Congress and the federal agencies.
Before her four years leading TIA, Reinke spent two years as Deputy Assistant Secretary with the U.S. Department of Transportation and 16 years with CSX Corporation.
As the hours tick down toward a “seemingly imminent” strike by East Coast and Gulf Coast dockworkers, experts are warning that the impacts of that move would mushroom well-beyond the actual strike locations, causing prevalent shipping delays, container ship congestion, port congestion on West coast ports, and stranded freight.
However, a strike now seems “nearly unavoidable,” as no bargaining sessions are scheduled prior to the September 30 contract expiration between the International Longshoremen’s Association (ILA) and the U.S. Maritime Alliance (USMX) in their negotiations over wages and automation, according to the transportation law firm Scopelitis, Garvin, Light, Hanson & Feary.
The facilities affected would include some 45,000 port workers at 36 locations, including high-volume U.S. ports from Boston, New York / New Jersey, and Norfolk, to Savannah and Charleston, and down to New Orleans and Houston. With such widespread geography, a strike would likely lead to congestion from diverted traffic, as well as knock-on effects include the potential risk of increased freight rates and costly charges such as demurrage, detention, per diem, and dwell time fees on containers that may be slowed due to the congestion, according to an analysis by another transportation and logistics sector law firm, Benesch.
The weight of those combined blows means that many companies are already planning ways to minimize damage and recover quickly from the event. According to Scopelitis’ advice, mitigation measures could include: preparing for congestion on West coast ports, taking advantage of intermodal ground transportation where possible, looking for alternatives including air transport when necessary for urgent delivery, delaying shipping from East and Gulf coast ports until after the strike, and budgeting for increased freight and container fees.
Additional advice on softening the blow of a potential coastwide strike came from John Donigian, senior director of supply chain strategy at Moody’s. In a statement, he named six supply chain strategies for companies to consider: expedite certain shipments, reallocate existing inventory strategically, lock in alternative capacity with trucking and rail providers , communicate transparently with stakeholders to set realistic expectations for delivery timelines, shift sourcing to regional suppliers if possible, and utilize drop shipping to maintain sales.
National nonprofit Wreaths Across America (WAA) kicked off its 2024 season this week with a call for volunteers. The group, which honors U.S. military veterans through a range of civic outreach programs, is seeking trucking companies and professional drivers to help deliver wreaths to cemeteries across the country for its annual wreath-laying ceremony, December 14.
“Wreaths Across America relies on the transportation industry to move the mission. The Honor Fleet, composed of dedicated carriers, professional drivers, and other transportation partners, guarantees the delivery of millions of sponsored veterans’ wreaths to their destination each year,” Courtney George, WAA’s director of trucking and industry relations, said in a statement Tuesday. “Transportation partners benefit from driver retention and recruitment, employee engagement, positive brand exposure, and the opportunity to give back to their community’s veterans and military families.”
WAA delivers wreaths to more than 4,500 locations nationwide, and as of this week had added more than 20 loads to be delivered this season. The wreaths are donated by sponsors from across the country, delivered by truckers, and laid at the graves of veterans by WAA volunteers.
Wreaths Across America
Transportation companies interested in joining the Honor Fleet can visit the WAA website to find an open lane or contact the WAA transportation team at trucking@wreathsacrossamerica.org for more information.