On the street, China's Jingdong aims to steal march on Alibaba

Tue Nov 26, 2013 3:59pm EST
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By Paul Carsten

BEIJING Nov 27 (Reuters) - Courier Chen Honglei packs boxes of clothing, appliances and utensils into his electric three-wheeler to deliver to customers in northwestern Beijing, helping China's second largest e-commerce company Jingdong maintain its logistics edge in a cut-throat market.

The Beijing-based firm, also known as JD.com, operates its own network of couriers and warehouses, a factor it says ensures timely and efficient delivery. Larger rivals Tmall and Taobao, the online marketplaces run by mega-firm Alibaba Group Holding Ltd, still depend on merchants and external courier firms for their logistics.

"We work until everything is delivered," said Chen, working with a team to move the packages from a canal-side warehouse in northwest Beijing.

Chen is one of a 10,000-strong fleet of couriers that Jingdong uses to deliver packages to major locations across China within 24 hours. The company also has 1,400 warehouses nationwide to supply a customer base that accounts for over a sixth of China's 591 million registered Internet users.

"Jingdong is doing what Amazon did in the U.S., and is going to change the market," said Bryan Wang, a Beijing-based vice president with Forrester Research. The world's largest online retailer Amazon.com Inc runs its own logistics network in the United States and China.

"For higher value purchases, customers are going to Jingdong rather than Taobao or Tmall. Why? Because Jingdong will take responsibility," said Wang, referring to Jingdong's purchase-to-delivery model.

Alibaba has said it plans to partner up with delivery service firms and invest $16 billion in logistics and support by 2020.

"E-commerce is logistics," said Frank Lavin, CEO of Export Now, which supports international brands selling online in China through Alibaba's Tmall.   Continued...