China’s e-commerce giants have long understood that speed is the top priority when it comes to delivery—and have invested accordingly. America’s e-commerce kings, for their part, also expressed interest in lightning quick delivery times. Amazon, the undisputed industry leader in the United States, has recently trialed same-day delivery service for fresh groceries in the UK.
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Jacob Cooke is Co-founder and CEO of WPIC Marketing + Technologies.
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American customers can also experience the pleasure of placing an order and receiving it on that same day, provided the item(s) selected are eligible for same-day shipping, and the receiver is willing to pay a premium, or $13 per month for a Prime membership.
But while Amazon benefits from a lack of any real competition (Walmart+, touted to be a serious rival to Amazon Prime, has again delayed its launch), China’s highly competitive e-commerce market engenders an intense environment of one-upmanship in the world of logistics.
With Alibaba repeatedly increasing its stake in the postal tracking platform Cainiao, and JD Logistics exploring an initial public offering (IPO), the gap between Chinese and American e-commerce will continue to widen.
Alibaba’s push for logistics dominance may soon expand past its domestic borders. Cainiao recently announced a five-fold increase in chartered export flights from 260 to 1,260 over the next nine months. The company says this will allow its cross-border shipment delivery times to decrease from 7-10 days to a mere 3-5 days, a step towards its ultimate goal of delivering packages anywhere in China within 24 hours and throughout the world within 72 hours.
JD Logistics—the logistics arm of e-commerce giant JD.com—has not stood by the wayside while its fierce rival has poured money into improving its logistics capabilities. A pioneering 5G-powered smart logistics park in Beijing and fully automated warehouse in Shanghai have set the company apart in the realm of smart supply chains.
If there were any doubts about these capabilities, the company’s actions amid the initial stages of the coronavirus pandemic put them to rest: JD.com leveraged its automated delivery technologies to ship supplies to hospitals in Wuhan Province, when vehicle operators were stationed 750 miles away in Beijing. Amazon, meanwhile, stumbled while trying to provide its customers with the same level of service at the height of the lockdown.
In China, major investments like the ones that JD and Cainiao have made point to what has become a simple truth in the e-commerce space: a company’s logistics capabilities can distinguish a platform from its competitors. If anything, “in-a-flash” delivery times and unparalleled efficiencies have become “table stakes” in China’s online retail space.
As Wan Lin, President of Cainiao, said at the company’s annual industry summit, “Logistics has become a game-changer and a key differentiator that sets one business apart from one another.” The potential for efficiency in all nodes within the supply chain should lead to accuracy and cost savings that eventually reach the consumer.
Indeed, it is the Chinese consumer who ultimately benefits from ferocious competition between e-commerce giants — competition which may escalate further should JD Logistics and Cainaio proceed with their intended initial public offerings.
As this publication first reported, JD Logistics could go public in Hong Kong as early as 2021. If Cainaio were to follow suit in the coming years, the silos that have existed between Tmall and JD.com will begin to disintegrate. Consumers will no longer have to choose the best shipping option based on the platform they made their purchase; rather, the market will determine how a product is best shipped.
Letting the market decide what goes where and for what price—usually the lowest one—will further accelerate the demise of brick-and-mortar retail in China and elevate digital platforms and ecosystems to own an even greater share of their consumers’ lives. This, in turn, will exacerbate the already-wide gap between the American and Chinese online consumer experiences.
To be sure, there is no fundamental reason why Americans shouldn’t experience the quality customer service and world-leading delivery times to which Chinese consumers have become accustomed. Amazon’s revenue dwarfs that of Alibaba, and it too has invested heavily in autonomous delivery systems and robotic warehouse workers, not to mention expanding its distribution hubs around the world.
And yet, the US e-commerce landscape pales in comparison when it comes to logistics capability. SF Express, the second-biggest logistics company in China and one of the biggest in the world, predicts 12-hour delivery times will become standard across the PRC within the next five years. As competition for logistics supremacy continues — perhaps even accelerates — what is considered as an industry standard for delivery times in 2025 may be halved by 2030, and so on.
Whether or not American companies learn from Chinese juggernauts like Alibaba and JD.com is their prerogative. What is true for now, and in the foreseeable future, is that China has taken the lead and shows no signs of sliding to second-place any time soon. E-commerce in China is for hares, not for tortoises.