Struggling JD ‘goes FedEx’ to boost sales

CHINESE e-commerce firm JD.com Inc said yesterday it would add a FedEx-style parcel delivery service to its e-commerce offerings, a move which could help the firm 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 Ltd’s Cainiao network, as well as dedicated domestic parcel delivery firms such as ZTO Express and YTO Express Group Co Ltd.

China’s second-largest ecommerce firm said the new service would allow businesses and individuals in Beijing, Shanghai and Guangzhou to send parcels to locations around China, using the firm’s app to schedule a pick-up by one of the company’s staff.

The logistics network — which would be able to deliver most packages the same or next day — has previously only been used to ship packages purchased on JD.com’s e-commerce platform or by third-party companies that lease JD.com’s logistics assets.

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

The firm — which prides itself on owning its logistics network and warehouses — posted a second-quarter net loss of US$334.4 million, far below what analysts had expected amid rising investment costs and slowing sales.

China’s express delivery market was worth around 976 billion yuan (US$140 billion) last year, the State Post Bureau said in January, up 32 percent from 2016. Delivery firms dispatched about 40 billion parcels last year.