JD Logistics’ “Party B” logic and ledger

Double 11 has passed, but the thoughts left behind by Double 11 are still there.

Recently, many veterans hope to talk about the performance of JD Logistics. Because whether it is Double 11 or JD Group’s recently released 2020 Q3 financial report, JD Logistics’ performance is remarkable.

In fact, standing at the juncture of the express delivery landscape turbulence and the differentiation of giants, it is indeed necessary for us to systematically sort out and re-examine the "unconventional" player JD Logistics. In the old ghost's view, we can use "nine words" to analyze it - build walls high, accumulate grain widely, and be Party B.

Let me first tell you something that I have personally experienced. On the day JD.com released its Q3 financial report (16th), Lao Gui placed an order from JD.com at 10 a.m. for an urgently needed office supply and received the goods at 4 p.m. Coordinates are Beijing.

If it were on other e-commerce platforms, it might be surprising that "half-day delivery" could be maintained during Double 11. But when shopping on JD.com, this is the shopping method and delivery speed that consumers expect.

Why do you say that? Because JD Logistics’ “half-day delivery” has been in existence for 10 years. This kind of "sustained stability" has already left a deep imprint on consumers' perceptions.

In March 2010, JD.com officially launched the "half-day delivery" (i.e. "211 limited time delivery") service, which brought huge changes to the express logistics industry. E-commerce platforms, merchants, express delivery logistics companies, and consumers suddenly realized that express delivery can be so "fast."

At that time, Jingdong Mall began to pilot the "211 Limited Time Delivery" service in 6 cities: using two 11 o'clock every day as time division points for fast delivery services, that is, placing orders before 11 a.m. Same-day delivery; if you place an order before 11 pm, it will be delivered before 3 pm the next day, which directly increases the delivery time of the product to half a day.

In Lao Gui’s view, the birth of “211 Limited Time Delivery” is one of the landmark events in the development of China’s express delivery.

Its logic is that logistics and business flow simultaneously promote online shopping products to be shipped from the place closest to consumers. In fact, JD.com has strictly followed this logic since it decided to build its own logistics network in 2007, from the construction of warehousing to the construction of sorting lines, to the layout of trunk and branch logistics and the development of technology.

With the continuous development of JD Logistics, "211 Limited Time Delivery" has now become the standard service in more than 200 cities across the country. In 2018, this service experience that was previously exclusive to Chinese consumers also went abroad, allowing Thai consumers to enjoy the "half-day delivery" delivery experience.

Over the years, friends and I have been discussing whether express delivery services need to be so fast? The old ghost's answer has never changed: of course.

At the same time, the "211 Limited Time Delivery" has activated many consumers who have a wait-and-see attitude towards online shopping, and at the same time, consumers' willingness and frequency of online shopping have significantly increased.

According to statistics, from 2016 to 2018, the average annual compound growth rate of online consumption in many urban agglomerations in my country exceeded 20%, especially in Beijing-Tianjin-Hebei, Yangtze River Delta, Chengdu-Chongqing, the middle reaches of the Yangtze River, Central Plains, In more than ten urban agglomerations that have achieved "half-day delivery" coverage, such as Guanzhong Plain, the proportion of total consumption in the country has increased rapidly year by year. In the past 10 years, the entire Chinese retail industry has been updated and services have been upgraded.

Some people say that speed in the city is not fast, but speed in the countryside is really fast.

That’s right. For this reason, in 2019, JD Logistics brought time-limited express delivery services "into villages" and proposed a "24-hour delivery to thousands of counties and towns" timeliness improvement plan, focusing on low-tier cities, counties and surrounding towns through the construction of logistics infrastructure , using big data to accurately prepare goods, deploy goods closer to sinking markets, and improve the logistics service experience in sinking markets.

In 2020, this plan has been completely upgraded. At present, JD Logistics' network of large and small and medium-sized items has achieved almost 100% coverage in mainland administrative districts and counties. Its self-operated distribution services cover 99% of the country's population, and 90% of districts and counties can achieve 24-hour delivery.

Ten years on, JD Logistics’ logic remains firm. Products are shipped from the place closest to consumers, shortening the delivery link as much as possible, reducing the number of handling times, and improving delivery time.

Over the past ten years, JD Logistics’ network has accelerated its decline. It not only sells high-quality goods and services from first- and second-tier cities to lower-tier cities, but also relies on the advantages of a supply chain platform that integrates warehousing and distribution to help the majority of producing markets develop a characteristic agricultural economy and form a two-way virtuous cycle between sinking markets and consumption in first- and second-tier cities.

Over the past ten years, JD Logistics’ services have been continuously upgraded. During this year's "Double 11", JD Logistics used the pre-sale front-loading model to start warehousing and production when consumers paid the deposit. The pre-sale goods were front-loaded to the express delivery station closest to the consumer, achieving minute-level delivery time. "Half-day delivery", "next-day delivery" and "minute delivery" provide consumers with diversified and time-efficient services.

Such logic, such network, and such services are the walls built by JD Logistics.

Before talking about "Guang Ji Liang", Lao Gui also shared a real case with you.

Ke Bei, 26 years old, is from Jinhua, Zhejiang, and the owner of Saibang Office Supplies Store in Yiwu.

Although he started operating stores as early as 2014, Kebei doesn’t know much about e-commerce. He has great connections and good service. Over the past few years, foreign trade, schools, and procurement from government agencies have become Saibon's three major sources of revenue. The hard work and Yiwu people's unique business acumen have made his business successful. In 2019, Saibon’s sales exceeded 15 million yuan.

However, the epidemic brought everything back to square one. Physical stores are empty, schools are not in sight, and foreign trade sales revenue has dropped from 30% to less than 3%.

When Kebei was at a loss, JD Logistics provided him with 3 solutions -

1. JD Logistics and JD Retail *** both located near Saibon physical store Open a special warehouse for stationery categories to provide professional supply chain management equipment and capabilities.

2. Help Saibang realize the warehousing switch from 3C warehouse to affordable special warehouse for stationery category. The cost is greatly reduced and the management is more professional.

3. Help Saibang complete a major promotion "baptism", and test whether the performance ability has been significantly improved after entering the warehouse despite the sudden increase in order volume. More importantly, whether you can make money.

JD Logistics has applied for a single product flash sale event for Saibon on November 1. This single product is a "set of 50 gel pens" and only sells for 9.9 yuan. Ke Bei disagreed. He didn't believe that the sales could be so hot during a big sale. The result was unexpected. This item sold out. JD Logistics provided on-site assistance. Ke Bei led all employees to work overtime until one o'clock in the morning. They transferred goods from other warehouses overnight to replenish the goods, organized manpower to pack the trucks, and finally got through the day.

Has Saibon made money? Cobb knew what was going on.

“More than 5,000 pieces of the 9 yuan 9 set were sold, 11 times that of last year. At the same time, the sales of other notebooks, markers, and markers also increased by 2-4 times. The unit price for customers was only 10 yuan. With just a few dollars, 120,000 yuan was recorded that day. Several operational data indicators were also very eye-catching. The number of daily visits to the warehoused products increased by more than 10 times compared with before the warehouse was placed. Store visitors increased by 365%, and customers who placed orders increased. The number increased by 598% year-on-year.”

Afterwards, Kebei reviewed online and offline. He summarized it in 24 words-short-chain direct shipping from origin, JD Logistics marking, and retail logistics**. *Build, multi-platform, one package of goods.

Behind these 24 words is the important role that JD Logistics’ intelligent supply chain system plays in promoting digital industrialization and industrial digitization, and promoting the deep integration of the digital economy and the real economy.

Yiwu, where Saibon is located, is the largest small commodity gathering place in the world. The Yangtze River Delta economic circle where Yiwu is located has the largest stationery industry cluster in the country. This deep integration has improved the production efficiency of the real economy, changed the production model of the real economy, and has become an important driving force for the transformation and upgrading of the real economy.

Every pen, down to the smallest detail, must be electronically scanned and registered in the system when put into storage, put on the shelves, shipped out of the warehouse, and packaged. Saibon knows the quantity of each SKU very well. Information changes like this have greatly improved production efficiency.

JD.com has put online traffic, offline warehousing and distribution network and other resources into place, and supported high-quality merchants with good reputation and good reputation like Saibon, creating a chain for the stationery industry that integrates factories, distribution, warehousing and distribution, The intelligent supply chain that integrates offline stores and online sales has also explored new ideas for the transformation of the real economy driven by intelligent supply chains.

There are many similar examples.

In September this year, the large-scale intelligent warehousing and distribution center jointly built by Nestlé and JD Logistics was officially opened in Tianjin. The park covers an area of ??nearly 30,000 square meters and has a single-day cargo throughput of more than 1,000 tons. It has undertaken the import of Nestlé products. All contract fulfillment businesses including warehouse, sorting, terminal direct supply, e-commerce, and offline stores. At the same time, JD Logistics joins hands with the home furnishing brand Youfei Home to solve the problem of high cost and high loss in home logistics; serves the maternal and infant brand Aiqin to build a maternal and infant supply chain; and reaches cooperation with the century-old Northeast industrial giant Wazhou Group to build industrial product supply chain logistics New model...

In terms of supporting the economy of the place of origin, JD Logistics has cooperated with Suzhou City, Anhui Province, to jointly upgrade the county-level smart logistics system in the counties and townships under the jurisdiction of Suzhou, and jointly promote the 100-billion-level smart logistics industrial park construction to help build a modern logistics backbone network in Anhui and East China. In July this year, JD Logistics jointly built the super-large JD Logistics Intelligent Cloud Warehouse Lunan Warehouse in Pingyi County, Shandong Province. By integrating social logistics resources, it has improved the economic efficiency of the production area. In the next three years, this model will be replicated across the country.

If the logic of "211 limited time delivery" is that the storage of goods is closest to consumers, then the logic of the deep integration of the digital economy and the real economy is that the platform is closest to the production of goods.

For JD.com, deeply cultivating the economic and industrial belt is "gathering grain widely", using the supply chain-driven model to truly help the real economy and promote consumption prosperity and revitalization of the real economy. With the acceleration of opening up and technology strategies, JD Logistics’ integrated supply chain service capabilities continue to expand and open up to industries and origins.

China has hundreds of such economic and industrial belts. Currently, JD Logistics is building smart supply chain solutions for different industries and categories across the country.

From the data point of view, "Guangji Liang" has driven the steady growth of JD Logistics' various businesses. During Double 11, the volume of open business orders increased by 102% year-on-year, the volume of personal express delivery orders increased by 164%, the volume of JD cloud warehouse orders increased by 138%, and the volume of JD's cold chain less-than-truckload transportation business increased by 100%.

Regarding "not being the king", you can use what JD Logistics CEO Wang Zhenhui said at the 2020 Global Smart Logistics Summit:

This positioning of "always treating yourself as Party B" And mentality is also the key to the rapid development of JD Logistics. The logic and ledgers behind it are also clearly visible -

The "Party B mentality" has enabled JD Logistics to achieve leapfrog development and become an important growth pole for JD Group.

On November 16, JD.com Group released its 2020 Q3 financial report. Net service revenue reached 22.8 billion yuan, accounting for more than 13% of the overall net revenue for the first time. Technology and services based on the supply chain have Revealing strong growth potential. As of September 30, 2020, JD Logistics operates more than 800 warehouses, including the cloud warehouse area managed by JD Logistics, with a total warehousing area of ??approximately 20 million square meters. Based on technology-driven and intelligent supply chain, JD.com Group’s inventory turnover days dropped to 34 days, setting the fastest inventory turnover efficiency since its listing.

"Party B's mentality" allows JD Logistics to continuously improve its service quality and always rank first in the industry's service quality camp.

The State Post Bureau’s announcement on the express delivery service satisfaction survey and time limit punctuality test results for the third quarter of 2020 shows that in terms of public satisfaction among express delivery companies, JD Logistics is the only one with a score of more than 80 points ( One of the two companies including 80 points). Since JD Logistics was included in the survey, it has always been in the first camp.

"Party B's mentality" has allowed JD Logistics to grow rapidly and continue to bring value increments to the real economy.

During Double 11, JD Logistics’ agricultural specialty product business volume increased nearly five times compared with the “618” period; 93% of its self-operated orders were delivered within 24 hours, setting a new record; based on “Thousands of Counties and Tens of Towns” With the 24-hour delivery time improvement plan, 92% of districts and counties and 83% of consumers in towns and villages can enjoy 24-hour delivery service. Especially in tier 4-6 cities, JD Logistics’ delivery volume has increased by 100%, and the downward strategy has achieved remarkable results.

Lao Gui’s friend Andrew said bluntly, “Build walls high, accumulate food widely, and be Party B” can even be seen as the business wisdom of JD Logistics.

Gao Zhuqiang has established an efficient and stable brand image for JD Logistics, bringing a good reputation to manufacturers, merchants and consumers. Taking the "211 limited-time delivery" service as the starting point, JD Logistics has expanded a single time-limited service into a multiple time-limited service system, expanded the time-limited service network from first- and second-tier cities to cover the whole country and benefited urban and rural areas, and upgraded the time-limited service standard from "half-day delivery" For "minutes". Such time-limited service infrastructure is extremely irreplaceable because it is difficult to replicate.

Guangjiliang has laid a large and stable business foundation for JD Logistics and laid a solid foundation for future development. JD Logistics started from the e-commerce express business, but it is not constrained by the e-commerce express business. Paying equal attention to digital industrialization and industrial digitization, digital economy and real economy, and consumer economy and industrial economy enable JD Logistics to simultaneously develop the entire industrial chain and expand the scale effect of the socialized intelligent supply chain infrastructure built over more than ten years. While reducing costs and increasing efficiency, it will effectively assist the transformation and upgrading of the real economy.

Being Party B has attracted more and better partners for JD Logistics and created newer and better service products. For a rapidly growing supply chain platform like JD Logistics, maintaining a good "Party B mentality" is the key to attracting partners and innovating service products.

The essence of the supply chain platform is service. No matter how big the platform is, it is still a "store"; no matter how small a partner is, it is still a "customer". Only by always standing from the perspective of Party B can we continuously innovate and improve service quality; only by making "guests" feel "at home" can we ensure that "guests come like clouds".

At present, the entire logistics and express delivery industries are in a period of rare development opportunities and policy dividends. On the one hand, under the new dual-circulation pattern, strengthening the backbone of the industrial economy and improving the capabilities of the industrial chain and supply chain are the "No. 1 national projects" in the upcoming "14th Five-Year Plan" and even in the coming decades; on the other hand, the domestic economy is taking the lead Recovery from the epidemic has given domestic companies a valuable window of time to catch up with or even surpass advanced foreign companies.

my country is the only country in the world that has the manufacturing, sales and consumption capabilities of the entire chain, all links, and all sectors. The current development logic of JD Logistics is very clear, which is to fully and deeply embed in the industrial chain and supply chain, truly serve manufacturing, sales and consumption, promote the digital economy to support the real economy, and promote the integration of the consumer economy with the industrial economy. As long as we adhere to this development logic and continue to promote the strategy of “building walls high, accumulating food widely, and becoming Party B”, JD Logistics’ core competitiveness will become stronger and stronger.

Although the development path of JD Logistics is difficult to copy for peers, its development philosophy is of great reference value - "real", truly creating value for society, users and employees. .

What do you think?