Jingdong Logistics is not a courier company.

Due to the huge investment of heavy assets in logistics and the failure of e-commerce, Liu was once considered as a person playing with fire. In fact, Bezos is also hesitating whether Amazon should invest heavily in building a logistics base. Many people don't know the value of logistics cards.

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Author | Yuxuan

Jingdong Logistics IPO on the Hong Kong Stock Exchange. This is the fourth time that JD.COM has rung the bell, including the second time that JD.COM Retail has listed in Hong Kong.

But looking at the logistics industry, Jingdong Logistics may be the last one to go to the open market. Compared with Tongda, which was listed earlier, Jingdong Logistics has a market value of HK$ 280 billion, making it the second largest logistics company in China after SF.

This used to be a card of Liu, and it was also questioned by the outside world.

In fact, Bezos is also hesitant, whether Amazon should invest heavily in building logistics infrastructure or simply hand it over to a third-party service company, which is only responsible for taking orders.

Bezos finally decided not only to build his own infrastructure, but also to spare no effort to invest. The core is that only you can fully control the service quality and results.

So is the fate of JD.COM. Because of the huge investment in heavy assets and the loss of e-commerce, Liu was once considered to be playing with fire. However, with the creation of "211instant messenger" in JD.COM, users' online shopping experience has been improved unprecedentedly, even becoming the industry standard. The outside world finally realized the value of this card.

Three years ago, Liu said that the first core demand of Jingdong Logistics was to reduce the socialized logistics cost in China to below 5% and turn it into a socialized logistics infrastructure provider.

Therefore, over the years, JD.COM has carried out integrated infrastructure construction, and all of them are open to the society, built a collaborative supply chain network, and completed the transformation from "enterprise logistics" to "logistics enterprise".

But what is certain is that JD.COM is not a courier company.

Information flow, people flow, logistics and capital flow are several basic elements of commercial society. Logistics may not be the sexiest and most charming, but it has the most far-reaching influence. Especially with the arrival of the AI era, the new story of logistics may have just begun.

0 1

Controversy increases

In the days when JD.COM just started to do logistics, the outside world's doubts never stopped.

For an e-commerce platform, investing heavily in logistics is undoubtedly a very "heavy" thing, which requires renting storage space, investing a lot of manpower and continuously investing in technology research and development.

Private logistics companies in China first grabbed the market from the inefficiency of state-owned monopoly enterprises. Around 2004, the whole logistics industry was still in its infancy.

Liu is obviously aware of this. After the transformation of e-commerce in 2004, JD.COM found that most of the complaints came from logistics. At that time, many businesses of JD.COM Platform were outsourced, but the unit value of 3C digital products was very high. If the express mail is lost, delayed or damaged, it will cause great losses.

For example, at the end of 2005, JD.COM began to sell notebook computers, but at that time, online shopping was mostly limited to books, clothing and other products with low unit price and anti-extrusion. JD.COM wants to sell laptops online, and everyone thinks it's crazy. Why? The main reason is that consumers don't trust logistics and think that they will definitely break their computers.

After several years of thinking, Liu put forward the strategic planning of self-built logistics in 2007. But self-built logistics needs a lot of money and manpower. At that time, JD. COM's cash flow is not abundant. As soon as the logistics plan was put forward, Liu was resolutely opposed by some executives and investors. "JD.COM can't make Amazon +UPS." At that time, investors put words.

Finally, Liu promoted self-built logistics.

Liu once told me what he thought at that time: I insisted on building a logistics system by myself, because at that time, a large number of our customers complained about the slow arrival and damaged goods. After analysis, we found that the use of social logistics at that time could not completely solve these pain points. I think only self-built logistics can fundamentally solve this problem. This time, we didn't do a professional system cost calculation. We started from scratch and didn't even know how to calculate it at first.

Later, Liu gave a budget: it would cost 654.38 billion US dollars. Investors are going to cry when they see this figure. You didn't even get $20 million, and now you say it will cost $654.38+0 billion?

Xin Xu, a core investor in JD.COM, once calculated that a city in JD.COM will definitely lose money if it issues 20 bills a day and 2,000 bills a day, but it will take a long time from 20 bills to 2,000 bills, which may take nine months in some cities and two years in others.

Comparing the history of JD.COM and Amazon, the two companies have many similarities, such as self-purchasing and self-selling, controlling the supply chain, selling all kinds of products, providing a one-stop consumption platform and an open platform for third-party sellers. However, JD.COM did something that Amazon didn't do, and that was to build its own logistics system. Amazon mainly does its own warehousing, but the "last mile" distribution is completely handed over to the logistics company.

Self-built logistics means that JD.COM has to endure long-term losses. Taking JD.COM as an example, from 20 13 to 20 15, the accumulated capital expenditure reached 9.46 billion yuan, and the capital expenditure directly related to logistics reached 6 billion yuan. "In terms of capital expenditure/market share ratio, JD.COM is the highest among its peers," said a brokerage analyst.

JD.COM undoubtedly did the hardest and most tiring work. Leading industries in JD.COM introduced "2 1 1 time limit" on 20 10, that is, users can receive the goods before 3 pm the next day if they place an order before 1 1 afternoon; Users can order before noon 1 1 and receive the goods on the same day.

"2 1 1 prescription" not only subverts the logistics industry, but also subverts the e-commerce industry. The fast and good receiving experience gives JD.COM a unique advantage, which is deeply embedded in the minds of consumers.

According to the data of the State Post Bureau, the complaint rate of Jingdong Logistics is one in a million, which is about one twelfth of that of Tongda Department. During the period of insufficient transportation capacity in Spring Festival travel rush, the complaint rate of Jingdong Logistics was one eighteenth of that of Tongda Department. Of course, a better user experience is based on nationwide storage networks and distribution capabilities, which is the result of huge capital investment.

On 20 14, JD.COM launched the channel sinking strategy and the Pioneer Station plan. Nearly 20,000 dealers in JD.COM can apply to open a station in their hometown. By 20 17, jingdong logistics has completed the coverage of large and medium-sized service networks in almost all regions, towns and populations in China.

Back to the beginning, the starting point of JD. COM's decision to do logistics is simple, that is, to provide better and better customer experience. What the skeptics didn't see or deliberately ignored was behind JD.COM. COM, the industry expense rate is greatly reduced and the efficiency is greatly improved. So it is not the most important whether the model is light or heavy. The most important thing is what value it creates.

02

The value of logistics

Internet companies often pursue a profitable business model, but neglect to build a company with long-term value. Logistics, on the other hand, its business model is not complicated, but it is a very valuable asset. But what is needed behind is the investment of warehouse counterweight assets, the overweight of continuous scientific and technological means, the pursuit of efficiency, the service consciousness of courier brother and so on. In order to form a commercial infrastructure, it is a hard job.

In 2005, when JD.COM wanted to invest100000 USD in the logistics field, the media and peers were laughing at JD.COM. How do Internet companies do logistics? Will bring down the enterprise one day.

However, the money burned by JD.COM is actually building a large number of logistics centers and information systems, which is actually transformed into the company's future core competitiveness and user experience. Any company can succeed as long as it can burn out its core competitiveness.

2007 -20 16, mainly serving the e-commerce platform in JD.COM, Jingdong Logistics achieved many goals.

In 2007, JD.COM built a logistics system in the core city of Beishangguang, with a total logistics area of 50,000 square meters; In 20 10, the service of "2 1 1" was launched for the first time in the industry, and the distribution service standard was established for the logistics industry. In 20 14, JD.COM-Shanghai "Asia No.1" warehouse was officially put into operation, which is the modern intelligent logistics warehouse with the largest building scale and the highest degree of automation in Asia. In 20 16, jingdong logistics established "x division" to develop intelligent warehousing and logistics systems, unmanned vehicles and drones.

According to the analysis of GF Securities, it is the core of JD.COM. COM design logistics mode, reduce the number of goods moving, reduce transportation costs and improve the delivery speed after placing an order. Jingdong Logistics' warehouse allocation mode of "regional warehouse-pre-warehouse-terminal network distribution" directly changes the transportation distance of goods by placing them near consumers, thus shortening the time for goods to reach consumers.

Compared with SF Express and Tongda, they optimize transportation routes, increase the density of transit hubs, increase investment in automation equipment, enhance transportation capacity and improve efficiency by investing resources in terminal outlets, transshipment centers and transportation tools. Essentially, they improve the delivery time without changing the distance.

These two different delivery methods are directly related to the design idea of business model. For JD.COM, logistics is an essential link for JD.COM to provide consumers with high-quality experience and businesses with perfect supply chain services. In this mode, JD.COM can analyze the consumer data, pre-position the inventory, put the goods in storage in advance, and realize efficient distribution.

By the end of 2020, relying on 7280 distribution stations in JD.COM,190,000 self-owned distribution personnel and JD.COM intelligent warehousing network, 90% of self-operated orders in JD.COM can be delivered on the same day or the next day, and more than 60% of orders can meet the "2 1 1" deadline.

The self-built logistics system is of great significance to JD.COM and has become a moat in JD.COM. Remodeled the experience standard of online shopping for urban users.

In the history of JD.COM, three strategic decisions played a decisive role.

The first time was to transform into an e-commerce in 2004; The second time, I decided to expand to all categories, from only 3C products to one-stop consumption platforms. The third time, I decided to build my own warehouse logistics system. After 20 10, with the rapid outbreak of the whole e-commerce industry, JD.COM also maintained rapid growth, attracting world-class fund financing and supporting this huge logistics network covering all of China.

Ten years ago, the cost of social logistics in China was still very high, and a large number of logistics losses plagued enterprises. But today, the proportion of socialized logistics cost in GDP in China has dropped from 18.4% in 2007 to 14.7%, which means that the logistics loss has been reduced by several trillion yuan. With the joint investment of many companies such as Jingdong Logistics, the digitalization and intelligentization of the logistics industry have been greatly accelerated, and this number is likely to fall below 5% in the next decade, which is equivalent to or even beyond that of developed countries such as Europe and America.

Investment in logistics has also formed a virtuous circle in JD.COM. First, intensive financing, a large number of investment in logistics systems, and then form a scale advantage, which in turn drives growth. JD.COM is one of the few companies in the world that can maintain a high growth rate of 10, and it can maintain a high growth rate for many years after reaching a scale of 10 billion.

Many times, if you want to get the maximum long-term return, you have to do what others think is impossible.

03

Leave JD.COM.

With JD.COM weaving a network of suppliers, consumers and entrepreneurs all over the country through information, logistics and capital, JD.COM is no longer a pure retail company, but can become an open platform driven by technology and diversified business. Jingdong Logistics has also changed from a service support department of JD.COM Group to a logistics service provider in various industries.

This is inseparable from many core competencies of Jingdong Logistics. The first principle of logistics is scale, and the cost is optimized under the effect of scale.

On the basis of scale, the point-to-many integrated supply chain service is the core advantage of JD.COM, which is also based on JD.COM. COM's understanding of e-commerce infrastructure. The advantages of warehouse network, insight into various industries accumulated in more than ten years, and logistics technical ability to help customers make supply chain decisions are not available to other enterprises in the industry. Together, they laid the foundation for logistics to go out of JD.COM and be completely open.

Jingdong Logistics is also looking for a breakthrough in the opening strategy. The overall development of Jingdong Logistics has gone through three stages: self-built logistics in JD.COM in 2007, full opening of Jingdong Logistics in 20 17, and a new stage of integrated supply chain service in 20021year.

In 20 17, jingdong logistics decided to fully open its capabilities and resources to external customers and operate independently of JD.COM group. At the beginning of opening to the outside world, Jingdong Logistics can not only provide warehousing and distribution services, express delivery and express mail services, large-scale logistics services, cold chain logistics services, cross-border logistics services, logistics technology services and so on. And its integrated supply chain can tailor various supply chain solutions according to the specific needs of different vertical fields.

According to the consulting report, integrated supply chain logistics service is an advanced form of outsourcing logistics service market. Compared with isolated supply chain logistics service providers, integrated supply chain logistics service providers have the ability to provide more comprehensive services including express delivery, vehicle and LTL transportation, last mile distribution, warehousing and other value-added services (such as door-to-door installation and after-sales service). These services are provided in the form of comprehensive solutions to meet the various needs of customers.

The market scale of integrated supply chain logistics service industry is very huge. According to the prediction of combustion knowledge consulting, the market scale will reach 2 trillion yuan in 2020, and it is expected to further increase to 3.2 trillion yuan in 2025. On the demand side, customer needs in different vertical fields are complex and diverse, and integrated supply chain logistics services are attractive. The demand of end consumers for faster and more flexible supply chain logistics services is also constantly prompting enterprises to upgrade their supply chain.

In the fields of fresh food, fast-selling goods and clothing, the growth rate is the fastest. By the end of 2020, the largest vertical areas include automobiles, fast-moving consumer goods, clothing and 3C electronics. At present, Jingdong Logistics has deeply served brands such as Amway, Nestle, Xiaomi, Skechers and Mengniu, and made some model innovations in the upgrading of production areas and industrial supply chains.

Taking Nestle as an example, the supply chain management of merchants is facing many challenges due to the increasingly complex and changeable consumption trends, whether it is the difficulty of omni-channel sales or the diversification of new generation consumption.

In 2020, Nestle and Jingdong Logistics jointly built a large-scale intelligent warehousing and distribution center in Tianjin, with an area of nearly 30,000 square meters and a daily cargo throughput of over 1000 tons. It is an important supply chain base for daily operation and support of Nestle. The center undertakes all the fulfillment business of Nestlé' s commodity warehousing, sorting, direct terminal supply, e-commerce and offline stores, and can implement full-link visual control of commodity flow between different channels and provinces. After the intelligent upgrade, the storage efficiency of the center has been greatly improved, and the operation speed of the code scanning and spraying link has been increased by 160%.

From self-built logistics to opening to the outside world, the growth path of Jingdong Logistics has changed from a cost center to a profit center. With the increasing proportion of external customers' income, according to the prospectus, its proportion has increased from 29.9% in 20 18 and 38.4% in 20 19 to 46.6% in 2020.

In the past, the core reason for the continuous loss of Jingdong Logistics was that the external volume was too small and the internal cost was too high. Now the loss situation has been reversed. Excluding the factors that do not affect the company's value, the profit of Jingdong Logistics will exceed 654.38+07 billion in 2020.

At the same time, the revenue of Jingdong Logistics also grew well. In 20 18, 20 19 and 2020, the revenue was 37.9 billion yuan, 49.8 billion yuan and 73.4 billion yuan respectively, of which 20 19 increased by 3 1.6% and 47.2% compared with 2020. In the first quarter of 20021,the logistics revenue of jingdong reached 22.4 billion, up 64. 1% year-on-year, and continued to maintain rapid growth.

According to JD. COM's "35 cents theory", if JD.COM has a chance to earn a dollar, JD.COM will only take 70 cents and leave it to the partners, of which 35 cents will be reserved for the welfare and incentives of employees and the rest for the future development of the enterprise. Under this line of thinking, Jingdong Logistics is optimistic about the integrated supply chain for a long time and will continue to invest. In 2020, the number of corporate customers exceeded190,000, of which the number of integrated supply chain customers reached 52.7 million, an increase of 62% compared with 2065.438+08.

In the future, the purpose of Jingdong Logistics to focus on market share growth is very clear. In 2020, the market share of Jingdong Logistics will reach 2.7%. In the short to medium term, Jingdong Logistics will still give priority to business growth and market share expansion before making profits. The vast trillion-dollar market space is indeed worthy of sustained and massive investment.

From the consumer Internet to the industrial Internet, the business scope and strategic direction of Jingdong Logistics have also undergone great changes, and the integrated supply chain service will also usher in major development opportunities. Today's consumer Internet has been highly developed, but the digitalization and intelligence of front-end industries are still in its infancy. For Jingdong Logistics, it can rely on the massive data accumulation in the consumer Internet to drive the digital collaboration in all aspects of front-end industrial manufacturing, which will be the potential growth point of Jingdong Logistics in the future.

In the Jingdong Logistics Prospectus, this round of fundraising will be used to expand the scale and enhance intelligence. 55% of the raised funds will be used to upgrade and expand the six major logistics networks to maintain a competitive advantage; 20% of the fundraising will be used to develop advanced technologies related to supply chain solutions and logistics services, including automation technology, data analysis and algorithms, and other underlying technologies; 15% of the raised funds will be used to expand the breadth and depth of integrated supply chain solutions, deepen existing customers and attract potential customers.

With the success of IPO, Jingdong Logistics came from behind and became the second largest logistics company in China, second only to SF. Of course, in the highly competitive logistics industry, there are still many enterprises that want to do supply chain logistics, including rookie, Best Express and SF Express. They are also making efforts in this field, and a new pursuit of logistics industry is about to start.