Alibaba vs JD: The Battle to Get Singles' Day Packages to You
This post comes courtesy of our content partners at TechNode.
For the past few weeks, Chinese e-commerce titans have been racking their brains as the year’s largest shopping spree, Singles’ Day on Nov 11, drew near. This isn’t just a competition of who has the best marketing stunts or the biggest subsidies for vendors; the life and death of the online retailers also dependent on those who deliver the parcels safely and on time.
This year’s Singles' Day promotion week, which runs from Nov 11-16, is projected to reach a new record of over one billion packages (in Chinese), a 35 percent increase from last year and about the number of packages that got sent during the entire year of 2006, according to the Chinese State Post Bureau. That means every Chinese person will receive at least one package on average during Singles Day this year. The peak day will see a turnover of 340 million parcels, triple the regular amount, estimates the Bureau.
READ: The Past, Present, and Future of Singles' Day, the World's Largest Shopping Spree
To deal with the influx of orders, China’s e-commerce twins – Alibaba and JD.com – are gearing up their logistics ammunition. Alibaba, known for its “asset-light” platform approach, has a logistics unit Cainiao that partners with a consortium of third-party delivery services to fulfill orders. JD.com, on the other hand, prides itself on direct sales and in-house logistics system, which makes it less profitable than Alibaba – at the moment, according to the company – but they say this ensures the “quality” of products and delivery.
Here’s a roundup of how the duo is battling to get the nation’s parcels shuffled during the shopping holiday.
Subsidies
China’s courier service providers have long been fuelled by heavy subsidies and this year will be no different. In October, two major players ZTO Express and Yunda Express announced price hikes (in Chinese) so as to “provide better services amid rising labor, material, and transportation costs,” though neither has disclosed the scale of the increase. In response, JD.com ramped up its logistics subsidies from RMB 600 million to RMB 2.1 billion to offer vendors discounts on warehousing and distribution. 2017 marks the first year that JD.com opens its logistics platform to third party suppliers, who will also be benefiting from JD.com’s generous subsidy package during the festival period.
“The price change in certain courier services is a business decision they make on their own. To evaluate the price of delivery services, one must look at their efficiency and quality, as well as putting their prices into the global logistics context,” Shi Jimiao, Vice President of Cainiao Network told TechNode.
As part of the face-off, Cainiao is shelling out RMB 1.5 billion in subsidies for logistics partners and merchandisers to beef up their delivery efficiency. The money will be used to encourage merchandisers to store items closer to consumers so dispatching can happen more promptly, a Cainiao spokesperson told TechNode.
New Retail
This will be the first Singles' Day for Alibaba to experiment with “new retail,” a notion coined by Jack Ma to describe the increasingly blurred boundaries between online and offline shopping experiences. The health and beauty retailer Watsons, for example, has partnered with Cainiao who can deliver goods already sold on the brand’s online Tmall store from its physical storefront to a customer’s home.
JD.com has rolled out a similar initiative to make use of its offline retail partners. During the shopping holiday, Walmart stores across the country have become JD.com’s city warehouses. A product ordered on JD.com’s online e-commerce platform, if available at a Walmart offline, can be immediately brought by a JD.com courier to the buyer’s home.
Bringing offline players into the game also means more data for the e-commerce titans and a more complete user profile for precise marketing and logistics optimization. JD.com has started to merge shopping data with consumer behavior gathered from its largest shareholder Tencent, which captures as much as 60 percent of Chinese people’s eyeball time, says Kiki Fan, GM of Planning and Implementation Department at Tencent.
Automation
Both e-commerce titans are flexing their muscles to prove that the sci-fi dreams for drone delivery are coming true. In June, JD.com began deploying drones for last-mile delivery in Xi’an, the Central Chinese city famed for the Terra Cotta Army, through 40 designated routes. Drone deliveries are getting their start especially in remote parts of China where ground travel is costly and inefficient.
This week, Cainiao showed off an army of drones that successfully delivered six boxes of passionfruit over a five-kilometer waterway to an island in East China’s Fujian Province. The flight took nine minutes and each drone can carry up to seven kilograms, says the company. Both Alibaba and JD.com are putting unmanned fulfillment centers into use for this year’s Singles' Day.
Green Initiatives
China has grown into the world’s largest retail market thanks to the advance of e-commerce, but it’s also become a country with mountains of packaging waste. With rising environmental awareness from consumers and government officials, the country’s e-commerce players are taking steps to become greener. On Oct 31, JD.com announced it will increase the number of new energy-fuelled delivery cars to over 1,000. The shift comes as no surprise as China is on its way to phase out the combustion engine and become a world leader in new energy. JD.com has also narrowed the width of packaging tape from 53mm to 45mm to “cut more waste in warehouses,” a spokesperson told TechNode.
READ: Treat Yourself This Singles' Day With These Delicious 11-11 Deals
In a similar move, Cainiao has vowed to employ 20 “green warehouses” across China by Nov 11, where parcels will be packaged with renewable materials before shipping, the company said. At the end of last year, Cainiao unveiled a type of sturdy, reusable paper boxes that incorporate a folding technique and biodegradable glue to replace wrapping tape. The “Cainiao Green Foundation” was formed in March with Cainiao’s network of six Chinese logistics providers, who together will devote about USD 40 million to environmental initiatives.
Photo: xcnnews.com
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