JD.com spies profits in parcels

Chinese e-commerce firm JD.com Inc said on Thursday it will launch a parcel delivery business, a move that could leverage its network of warehouses and drivers to bolster flagging profits.

The shift pits JD.com into greater competition with major rival Alibaba Group Holding’s Cainiao network, as well as domestic logistics providers such as ZTO Express and YTO Express Group Co.

China’s second-largest e-commerce company, which counts Tencent Holdings, Walmart Inc and Alphabet Inc’s Google as investors, has been looking to squeeze more from its extensive warehousing assets to boost growth.

The company, which owns and controls its own logistics network, posted a second-quarter net loss of $334.4 million, steeply below what analysts had expected amid rising investment costs and slowing sales.

“This marks the next step in leveraging the nationwide logistics network that JD has built over the past decade,” Zhenhui Wang, CEO of JD Logistics, said in a statement posted on JD.com’s website.

“JD.com is known throughout China for the fastest and most reliable delivery, and we are confident that users will appreciate the convenience of this new service.”

JD.com said the new service would allow businesses and individuals in Beijing, Shanghai and Guangzhou to send parcels within China, using the company’s app to schedule a pick-up.

The company “aims to eventually make residential and business deliveries for shippers from anywhere to anywhere within the Chinese mainland in the future,” it added in the statement.

China’s express delivery market was worth around 976 billion yuan ($140.7 billion) last year, the State Post Bureau said in January, 32 percent up from 2016.

Delivery companies carried about 40 billion parcels last year.