JD.com has launched a new supply chain program integrating offline channels and multiple retail partners in an effort to boost delivery efficiency.
Why it matters: As China’s new retail industry further blurs lines between online and offline shopping, related sectors like logistics and supply chain are pushed to innovate.
- The initiative is based on an inventory integration program between JD and Walmart. The duo inked a strategic alliance to explore new opportunities combining e-commerce and retail in 2016.
- Offline stores are seeking out alternatives as orders and traffic slow amid a shift in Chinese consumer preference in favor of online platforms, which deliver to customer doorsteps.
“The fact is a lot of products, especially ones that we need and those we use every day, are already in nearby stores, but they are delayed by going through the many links of the traditional supply chain. This program cuts out unnecessary steps, improving efficiency for retailers, maximizing resources, reducing costs, and improving the customer experiences.”
—Carol Fung, president of JD FMCG in an emailed statement
Details: The new program integrates multiple offline channels for JD and its partners including supermarkets, convenience stores, and some branded offline stores, as well as Dada-JD Daojia, its online grocer. It covers 20,000 offline stores spanning 54 cities, including 175 Walmart hypermarkets, 198 Nongfu Spring offline water stations in Beijing, and 166 9bianli liquor stores throughout the country.
- Under the partnership, when customers use JD’s first-party platform to buy a product that is also available from an offline partner, they may receive it from there if delivery is faster.
- Instead of routing every product through an inflexible system of traditional warehouses, distribution centers, and delivery stations before reaching the customer, offline channels can now directly fulfill orders from JD.
- The average delivery time through the program is two hours, but the company said that some customers receive orders within 30 minutes.
- The program has been in testing for six months so far, a JD spokeswoman told TechNode
- Brands participating in the program are likely to see increased offline store traffic and a higher number of orders, the company said.
- The program currently covers items such as non-alcoholic beverages, beer, wine, rice, and flour, which are typically bulky and heavy, and hard to store and ship.
- Other partners have joined the program include supermarket chain Better Life, Nestlé, Coca-Cola, Tsingtao Beer, and liquor retailer 9bianli.
Context: JD.com and Walmart invested $500 million in Dada-JD Daojia in 2018.