Wednesday May 12, 2021
29-04-21

JD.com targets Europe with German and Polish warehouses

JD.com's Frankfurt warehouse
JD.com's Frankfurt warehouse

China’s JD.com has taken a major step into European e-commerce with the opening of two warehouses in Germany and Poland to serve online shoppers across the continent.

The international expansion move, following the recent IPO plans for JD Logistics, should enable the Chinese e-retail giant to broaden its JD Worldwide business, which primarily connects international brands selling to Chinese consumers.

Covering Europe from two locations

Stard Huang, head of JD’s international logistics business, announced this week that the company has begun operating two highly automated warehouses in Poland and Germany to serve local clients. Both warehouses started trial operations in March.

JD’s warehouse in Poland is located on the border with Germany, only 90 kilometers from Berlin, and is connected to the major highways, airports and ports in Europe. The warehouse in Germany is located in the north of Frankfurt, in the centre of the country.

Together, the two warehouses can cover the whole European area to provide convenient and rapid fulfillment for clients, according to the company. No details were provided about the capacity of the warehouses, which distribution services will be provided or which companies will be the delivery partners.

Robots improve efficiency

JD said that it also brings its cutting-edge AGV (automated ground vehicle) system to both warehouses. This transforms the picking process, which traditionally would require workers to shuttle in the racks by bringing shelves to the working station. Implementing AGVs is 2.5 times more efficient than manual picking. They can recognize QR codes on the floor for route planning and automatically obstacle avoidance.

“Through the warehouses in Poland and Germany, we have brought our quality supply chain, logistics and automation technologies to Europe,” said Huang. “The two warehouses will be set as the examples to be further replicated in other places in the region.”

Aiming for worldwide deliveries in 48 hours

JD.com explained that its international logistics business “is committed to promoting the development of global trade and providing integrated supply chain services to industry players”.

As of the end of 2020, JD Logistics operated 32 bonded and overseas warehouses with an approximate aggregated floor area of 440,000 square meters. Through collaboration with international and local partners, the company has established international routes that reach more than 220 countries and regions.

In its IPO prospectus, JD Logistics stated: “Leveraging our cross-border logistics network, we strive to provide a “48-48 service” to address our customers’ cross-border logistics needs, meaning that any package can be delivered from China to the destination country within 48 hours after pick-up and can be delivered to the end consumers within 48 hours thereafter.”

90% next-day deliveries across China

In China, JD Logistics has developed a nationwide network of more than 900 warehouses offering supply chain services and enabling same-day and next-day deliveries to most major cities. It delivers about 90% of JD.com orders on the same day or the next day.

The company operates six “highly synergized” logistics networks: warehousing & distribution, line-haul transportation, last-mile express and freight delivery, bulky item logistics, cold-chain logistics and cross-border logistics. For last-mile deliveries, the company has 190,000 delivery workers and operates nearly 7,300 local delivery stations (depots) covering 444 cities in China along with more than 8,000 own service stations and lockers for parcel collections and drop-offs and 250,000 shared partner service stations and multi-carrier lockers.

Investing in logistics expansion

JD Logistics officially filed its IPO prospectus with the Hong Kong Stock Exchange in February but no further announcements have been made about the planned IPO since then. According to Bloomberg, the fast-growing company could raise up to US$5 billion through a share sale putting its overall valuation at US$40 billion.

JD.com said in a blog post that JD Logistics planned to use the funds raised to invest in the expansion and upgrade of its logistics networks, and to develop advanced technologies to be used in supply chain solutions and logistics services including the research of fundamental technologies such as 5G, cloud computing, IoT and more to drive long-term service innovation.

The logistics subsidiary has grown rapidly in recent years, benefitting from JD.com’s strong growth and from offering its services to third-party clients. Its revenue increased by 43% to RMB 49.5 billion for the nine months ended Sep. 30, 2020 while its net loss fell to just RMB 11.7 million (US$1.8 million) from RMB 2.23 billion (US$345 million) in the same period of 2019.

SourceJD.com, CEP-Research
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