JD Logistics, fighting against “arrogance” for 14 years

Author: lesy

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Liu Qiangdong once said in an interview: "If JD.com needs to spend ten years to build logistics, any other company It will take ten years, and this is almost insurmountable. ”

JD Logistics’ moat is built with money. The investment that has been constantly questioned for more than ten years has resulted in JD Logistics currently setting up operations across the country. There are 800 warehouses covering a total area of ??20 million square meters. The "storage and transportation" business model implemented on this heavy asset basis not only means high costs that are difficult to match in the industry, but also creates a great differentiation from competitors.

At 9:30 today, the “robotic arm” developed by JD Logistics held a bell-ringing ceremony with Skechers China CEO Chen Weili and others.

For investors, JD Logistics has also become a rare target. JD Logistics' IPO received eight cornerstone investors who agreed to subscribe for approximately HK$11.9 billion in shares, including SoftBank, Temasek, Tiger Global, China State-owned Enterprise Structural Adjustment Fund, China Chengtong Investment, Blackstone, Matthews Funds and Oaktree. On May 28, JD Logistics officially landed on the Hong Kong Stock Exchange. The opening price on the first day of listing was HK$46.05 per share, an increase of 14.1% at the opening, and the market value reached HK$280.5 billion.

At present, among the major domestic express delivery companies, SF Express and the "Tongda Department", except for SF Express, which has a market value of more than 300 billion yuan, the other four have a market value of less than 50 billion yuan. JD Logistics currently ranks first in the country in market value The second largest company in the logistics industry.

Many people compare JD Logistics with SF Express. However, the vast majority of JD Logistics’ revenue comes from integrated supply chain customers, of which JD’s retail self-operated business accounts for the largest proportion. This is different from SF Express. Even the "Tong Da System" are completely different species.

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The distinction between Jingdong Logistics and other competing products has begun since the beginning of Jingdong’s development.

At the end of 2005, JD.com began selling laptops. But at that time, most online shopping was limited to books, clothing and other products with low unit price and anti-extrusion. If JD.com wanted to sell laptops online, it would be difficult to estimate the risks during transportation. This risk was not only reflected on the shipper. , consumers’ trust in express delivery at that time also inhibited them from purchasing expensive and fragile products such as laptops online to a certain extent.

Loss, delay, damaged packaging...all logistics problems require JD.com's main 3C business to have a strong and safe logistics system to provide support.

For the first time, a strategic plan for self-built logistics appeared on the board of directors, and a financing budget of US$1 billion was proposed. No one believes what this investment will bring in return. In the classical Internet era, the asset weight of logistics discouraged the e-commerce industry.

JD.com’s logistics strategy now seems to be against all opinions and far-sighted, but at the time, no one had the answer to the future.

JD.com raised US$10 million, all of which was spent on logistics. The media and colleagues are all waiting to see JD.com’s jokes. Why does an Internet company need to do logistics?

Regarding the external doubts about JD.com’s money burning, Liu Qiangdong believes that JD.com’s money burning is to build a large number of logistics centers and information systems, and to actually transform funds into the company’s future core competitiveness and user experience. .

JD Logistics’ money-burning tactics are completely different from the types of money-burning subsidies such as online ride-hailing and bicycle sharing in recent years. In the early conversations between Liu Qiangdong and Wu Xiaobo, Liu said that JD.com’s money-burning was converting funds into assets, which was visible and tangible, while the subsequent money-burning subsidy wars such as online ride-hailing were completely unpredictable. Invest, there is no way of knowing whether users will still come to you after you stop subsidy.

In 2007, JD.com began to build its own logistics system integrating warehousing and distribution. In April of that year, the company established a South China region, covering the six provinces of Fujian, Jiangxi, Hunan, Guangxi, Guangdong, and Hainan. In the same year, it began to establish its own delivery team.

Investment in this huge capital hole has just begun.

In November 2008, JD.com had insufficient warehouse space and orders exceeded production capacity. JD.com had to issue an announcement on its website to dissuade users from placing orders on JD.com. In 2009, after JD.com received a new round of strategic financing, it decided to build its own warehouse.

The most characteristic logistics service of JD.com was implemented in 2010 - the implementation of "211 Limited Time Delivery", that is, users who place an order before 11 pm can receive it before 3 pm the next day. goods; users who place an order before 11 noon can receive the goods on the same day.

What seems like a conventional user experience today was almost a crazy move 11 years ago, and everyone was skeptical because Amazon didn't do it at the time.

At the beginning, the biggest problem was that it could not be realized, because it meant that orders would generate waves, and the matching warehousing, production, sorting, transportation, and distribution also had to have waves. After one click, it was difficult to adjust the time at first, and there was no reference, so I could only explore it bit by bit. Finally, based on the warehouse distribution foundation over the past few years, JD.com achieved "211 limited time delivery".

This has not only become JD.com’s benchmark service, but also raised the threshold of user experience in the e-commerce industry to a new level.

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In the blink of an eye, 14 years later, JD.com has gone from building a self-built logistics system with integrated warehousing and distribution, to JD Logistics becoming independent and fully opening its integrated supply chain solutions to the society. Today, JD Logistics' business scope covers FMCG, clothing, home appliances, furniture, 3C, automobiles, fresh food and other industries, with more than 190,000 corporate customers.

Integrated supply chain solutions are the core of differentiated competition between JD Logistics and its friends. Empowered by technology, it provides a full range of supply chain solutions and high-quality logistics services covering various business fields, from warehousing to to distribution, from the manufacturing end to the end customer, providing standardized and customized services to meet all customers' supply chain needs in one stop, helping customers optimize inventory management, reduce operating costs, and efficiently allocate internal resources, allowing customers to focus on their core businesses.

According to the prospectus, in view of the core role of inventory management in integrated supply chain solutions, all customers who use JD Logistics warehousing and supply chain technology services are considered integrated supply chain customers. The number reached 52,700 in 2020, an increase of 62% compared to 2018.

Over the years, enterprises’ demand for supply chain logistics services has gradually shifted from homogeneity to diversification, and the integrated supply chain logistics service market has grown rapidly. According to the CIC Consulting report, the market size of the integrated supply chain logistics service industry is expected to increase from RMB 2.0 trillion in 2020 to RMB 3.2 trillion in 2025, which is approximately 1.8 times the growth rate of China's logistics expenditure during the same period.

JD Logistics has become China’s largest integrated supply chain logistics service provider, which is inseparable from years of accumulation and deep cultivation:

First, it has established a warehousing-centered Six major logistics networks with efficient coordination, including warehousing network, comprehensive transportation network, distribution network, large item network, cold chain network and cross-border network;

The second is in supply chain logistics warehousing, transportation and distribution, etc. Each link has advanced automation equipment and software systems;

The third is the core barriers and industry insights established through more than ten years of serving JD.com, as well as the combination of logistics infrastructure and logistics technology applications.

As of 2020, JD Logistics has more than 250,000 employees, including more than 240,000 employees in warehousing, express delivery, and customer service.

In terms of salary expenditures, JD Logistics *** calculated expenditures for front-line employees in 2020 to be 26.1 billion yuan. Based on a conservative estimate based on the number of front-line employees disclosed in the prospectus at the end of 2020, the average annual expenditure per employee is nearly 110,000 yuan, and the monthly expenditure is nearly 9,000 yuan. Yuan. At the same time, according to public information, JD Logistics is also one of the few companies in the industry that insists on paying five insurances and one fund for its employees every year.

Some people have always said that JD Logistics’ integrated logistics services continue to suffer from huge personnel salary expenses. In fact, the number of 240,000 employees not only did not bring down JD Logistics, but made the company suffer from a large amount of labor. Unique in an intensive industry, there is no trapped system or insecure employment risks. Front-line couriers without supervisory on-site supervision have become the word-of-mouth communication node of the corporate brand.

Liu Qiangdong’s decision to build his own logistics despite public opinion 14 years ago has blossomed in all directions. In addition to gaining the trust of the capital market, it is also reflected in user experience, customer solutions, employee protection, and investors. Returns, domestic logistics system development process and other aspects. At the 2017 JD.com annual meeting, Liu Qiangdong once said with great ambition: "When we decided to build our own logistics in 2007, we were ridiculed by countless people along the way, but today it has been proven beyond a doubt that what we did back then was Our strategy is correct.”

Today, JD Logistics was listed in Hong Kong and opened sharply higher than 14%, achieving a brilliant start. They have been holding their breath for too long.