After 17 years of hard work, this company has finally received a golden opportunity!

Written by: Huashang Taolue, Chen Siwen

On November 14, JD Logistics released its third-quarter earnings report, showing a revenue increase to 44.4 billion yuan and a net profit of 2.57 billion yuan.

While professional investors are concerned with performance, ordinary consumers are more interested in a new related phenomenon:

JD Express delivers goods from Taobao and Tmall.

With JD Logistics fully integrating into the Taobao and Tmall platforms, a vast market with 944 million monthly active users and an annual GMV exceeding 8 trillion yuan has opened up to it; from now on, all major domestic e-commerce platforms have established cooperation with this logistics company.

【1】

In China, the relationship between express delivery and e-commerce can be summarized as follows: Logistics arises from commerce, and commerce thrives on logistics.

Without a thriving e-commerce industry, there would be no development in the express delivery industry; conversely, convenient and affordable express delivery further accelerates the popularization of e-commerce. The two industries are interdependent and mutually reinforcing, but in essence, one dominates the other:

The size of the e-commerce market determines the growth potential of the express delivery business.

Express delivery is a typical industry with scale effects: Especially in the field of e-commerce parcels, the more parcels delivered per unit of time, the lower the unit cost and the higher the profit.

On the other hand, as an incremental market, e-commerce continues to grow today, thereby satisfying the express delivery industry's need for stable scale and continuous growth.

The capacity of this market can be estimated through a series of derivations.

In 2023, the national express delivery industry handled 132.072 billion parcels. Among them, the combined market share of "STO Express, YTO Express, ZTO Express, and Yunda Express" was approximately 66.53%, amounting to 87.867 billion parcels; Taobao-related express parcels accounted for 37% of the total "Tongda Express" parcels, totaling 32.51 billion parcels.

When the door to growth opens, what does JD Logistics rely on?

【2】

In the perception of most people, logistics seems to be a simple action of purchasing goods on an e-commerce platform and having them delivered to one's doorstep.

However, actual logistics is a comprehensive system that cannot function properly without any of its components. Without it, desired items cannot be delivered, and any issue in any link may cause the system to break down.

Taking JD Logistics' B2C model as an example. After a supplier produces goods, they are stored in 43 "Asia One" large-scale intelligent logistics parks and over 1,600 warehouses operated by JD Logistics nationwide. After a consumer places an order, these goods are picked and then distributed to nearly 20,000 terminal distribution stations nationwide by over 20,000 trucks through hundreds of sorting centers, ultimately delivered to hundreds of millions of consumers by over 300,000 self-operated delivery personnel.

Consumers can enjoy world-leading delivery speeds such as "half-day delivery" and "same-day delivery" at very affordable prices, relying on the efficiency and stability of this system.

In today's business world, what is lacking is not supply but the certainty of service fulfillment. Therefore, the core of logistics is to provide certainty in service.

This is precisely JD Logistics' core advantage—providing users with high-quality, highly certain services across the entire chain.

Breaking down the circulation chain of e-commerce express delivery can be divided into five links: pickup, sorting, transportation, transfer, and delivery.

Among these five links, delivery is the last one, directly contacting users, and directly determining their experience.

If there are elderly or children in the user's home, it is necessary not to knock on the door or ring the doorbell; for introverted users who do not wish to interact with delivery personnel, packages need to be left at the doorstep or electricity meter box; for overworked office workers who are busy with "996" schedules, door-to-door delivery may need to be postponed to the evening...

These various detailed needs correspond to differentiated service standards. Once these standards cannot be met, users may complain or lodge complaints, which may damage the quality and brand reputation of express delivery companies.

Among the many service standards in the delivery process, door-to-door delivery is the one most closely related to user experience.

Door-to-door delivery is not a new invention in the express delivery industry but an old rule known as the "5 Right Principles" in the logistics industry: A complete logistics service should provide the correct service at the correct place, at the correct time, in the correct quantity, and at the correct price.

The correct place refers to the agreed location for delivery, which must be communicated and agreed upon by both the service buyer and the service provider and cannot be unilaterally mandated.

In essence, whether door-to-door delivery can be achieved determines whether the service is fully fulfilled. In practical operations, door-to-door delivery is even more crucial to user convenience, directly affecting user experience and even becoming the key to distinguishing the quality of express delivery companies.

However, door-to-door delivery is precisely the hardest service to achieve.

The four major links of pickup, sorting, transportation, and transfer can all improve efficiency through automation, standardization, and intensification. However, the "last mile" delivery from the terminal outlet to the doorstep is a highly differentiated process.

The "last mile" is short on the map but often fraught with issues. Large or heavy items, buildings without elevators, property obstructions... All these issues can only be resolved through the manpower of countless delivery personnel.

The number of delivery orders determines the manpower required. Financially, this means a huge cost investment.

This is why many express delivery companies set up parcel lockers, stations, and collection points: to simplify the ever-changing conditions of the "last mile" and greatly standardize the delivery process, thereby improving delivery efficiency.

For example, sacrificing the quality of end-of-line services often leads to criticism from users for express delivery companies such as "STO Express, YTO Express, ZTO Express, and Yunda Express".

In this service, JD Logistics' standard is to consistently provide "door-to-door delivery" over the past decade.

This is not because JD Logistics is unaware of cost control paths but a strategic choice made by the company—making significant investments in manpower to truly connect the "last mile" and achieve full service fulfillment.

However, JD Logistics' service standards are not only reflected in "door-to-door delivery" but also encompass a series of differentiated service contents corresponding to highly segmented user needs:

For example, "on-demand pickup and delivery" based on consumer habits; "do not disturb" without knocking on the door; "flexible pickup" until 9 PM; "aviation delay compensation" with full compensation for even a one-minute delay; and "three must-compensate" scenarios including "one-hour late pickup," "overall delay," and "failure to deliver to the door"...

Timeliness, coverage, and full service fulfillment are services that directly affect consumer experience. They not only represent JD Logistics' standards but also represent the industry's highest service standards.

Therefore, when JD Logistics integrates with Taobao and Tmall, these standards will undoubtedly enhance the experience for both users and merchants.

However, for JD Logistics, this is still not all it needs to further win the market.

【3】

For e-commerce business operators, logistics is often one of their most concerned operational links.

After JD Logistics fully took over delivery, product timeliness also improved. For example, a higher proportion of same-day and next-day deliveries undoubtedly increased consumer satisfaction—for instance, in areas with sudden temperature drops, consumers often demand faster delivery of electric heaters.

However, the additional value brought by JD Logistics needs to be discovered through integration.

For example, JD Logistics' intelligent sorting service can provide precise inventory management suggestions based on historical data and market demand, significantly improving inventory turnover and reducing the risk of inventory backlog.

These changes on both the consumer and merchant ends represent the value provided by JD Logistics' services. Supporting the gradual realization of these values is a super logistics system built over 17 years, organized by over 430,000 people, and costing over 100 billion yuan.

From upgrading automation equipment to increasing end-point manpower investment; from building distributed warehousing clusters as close as possible to consumers to re-planning supply chains; from continuous investment in cloud and intelligent logistics to improving the efficiency of every bottleneck in the supply chain...

Under these investments and constructions, as many machines as possible replace human hands and brains, improving efficiency while reducing the possibility of errors.

A recent application is JD Logistics' "Smart Wolf Goods-to-Person" system, which, through highly efficient space utilization, achieves high-density storage in high-bay warehouses with a clearance height of less than 10 meters, with a space efficiency 2.5 times the industry average. Combined with JD Logistics' unique algorithms and technology, Smart Wolf handling robots and Smart Wolf elevator robots not only significantly improve operational efficiency but also shorten the investment return cycle by 30% compared to similar products.

As of September 30 this year, including cloud warehouses operated by third-party property owners, JD Logistics has over 3,600 warehouses with a total managed area exceeding 32 million square meters.

The vast distributed warehousing allows goods to be directly transported from merchants' factories to locations closest to consumers; all unnecessary circulation links are reduced...

This benefits from JD Logistics' integrated supply chain services, effectively helping merchants reduce delivery links, shorten transportation distances, and reduce logistics costs and secondary losses caused by multiple handling. In the third quarter of 2024, JD Logistics had 59,000 external integrated supply chain customers, and this business helped generate quarterly revenue of 20.7 billion yuan.

Supporting JD Logistics' extreme timeliness and coverage are its six major networks, including warehousing, integrated transportation, last-mile delivery, large items, cold chain logistics, and cross-border logistics, covering almost all regions, towns, and populations in China.

Relying on this system as its core competitiveness, JD Logistics has created a series of stories, records, and values.

Delivering hairy crabs from Suqian, Jiangsu, to Kunming, Yunnan, over 2,000 kilometers away, can be done in just 24 hours. For merchants who believe that "hairy crabs must be delivered early to determine their survival," this is a significant difference.

Using intelligent cold chains, nationwide warehouses, and supply chain sorting technology, Xinjiang Kashgar plums are sold nationwide from the edge of the desert. For local fruit farmers, this means a fivefold increase in income and praise with "Yakexi" (excellent in Uyghur).

Racing along JD Logistics' path are a series of agricultural product brands such as Xiuwen kiwifruit, Ningde large yellow croaker, and Ningxia Yanchi Tan sheep, as well as countless revitalized counties like Kashgar.

In the past, package delivery in Xinjiang generally took 5-7 days. However, during this year's JD.com "Double 11" event, 80% of orders in Urumqi can be delivered on the same day or the next day, and the delivery timeliness for packages in other regions of Xinjiang will also be shortened by more than two days.

But JD Logistics hopes this coverage can reach farther and wider—during Double 11, nearly 300 villages such as Resuo Township, Jiangzi County, Tibet; Pilale Township, Aktao County, Xinjiang; and Yangmei Yi, Miao, and Hui Ethnic Township, Liupanshui, Guizhou, joined JD Logistics' self-owned delivery range; nearly 200 remote townships such as Huoyan Town, Turpan, Xinjiang; Tuoba and Tingka Townships, Ganzi, Sichuan; Paiyang Township, Qiandongnan, Guizhou; and Baijia Township, Zhenping County, Ankang, Shaanxi, can enjoy JD Logistics' one-stop door-to-door worry-free service for large home appliances and furniture, including delivery, installation, disassembly, and collection.

When JD Logistics' warehouses are distributed across the country, its delivery network covers the entire country, and inventory and logistics are optimally rotated under algorithms, this system ultimately becomes its ability to provide value to both merchants and consumers simultaneously, giving JD Logistics the confidence to surpass the industry.

This ability even extends along the supply chain to upstream manufacturing links.

Puyuan, Tongxiang, Zhejiang, is China's largest woolen sweater distribution center with over 6,000 business operators and 13,000 sales outlets, attracting national distributors and fashion buyers. While creating a huge volume of logistics, it also presents room for improvement:

How can the industry achieve faster timeliness, shorter links, and higher efficiency? Or even help merchants reduce overall costs?

This is not only a challenge for Tongxiang woolen sweaters but also occurs in many industries in China. At this critical juncture, JD Logistics has emerged as a solution.

In September this year, the Puyuan woolen sweater industry zone special warehouse built by JD Logistics officially opened. In addition to basic logistics services, the warehouse also provides services such as in-warehouse quality inspection, labeling, hanging tags, printing, ironing, and other semi-processing services. By advancing the production chain, it enables manufacturers to respond faster to consumers. As a result, merchants can accurately adjust production capacity and inventory based on sales, achieving the goal of cost reduction and efficiency enhancement.

In Wuhan, Hubei, JD Logistics has set up special warehouses for clothing, pharmaceuticals, and medical devices; in Zhongshan, Guangdong, there is a special warehouse for printing consumables, and a national retail shared warehouse system is being jointly built with the retail giant Lele, which integrates wholesale and retail.

Accessing a new system with competitive services is the beginning of JD Logistics gaining a larger market; matching high-quality services for a vast user group is the start of improving the experience for the Taobao and Tmall system and even more merchants, enterprises, and consumers.

These changes among transacting parties and platforms will spur new quality competition and improvements, becoming a new source of progress in logistics costs and efficiency across society.

The 16-year-old Double 11 shopping festival unfolded in a new atmosphere this year and concluded with a new experience. The extreme services and user experience brought by JD Logistics also signify more new dividends and business opportunities for JD Logistics in the future.

These opportunities lie in the hands of both platform merchants and users but ultimately rest in the hands of JD Logistics—to become better and make everything better.

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