CSCMP's Supply Chain Quarterly
January 20, 2019
Forward Thinking

JD.com says its fulfillment technology will support "boundaryless" shopping for other retailers

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China's biggest retailer brings "retail as a service" model to CES trade show.

China's largest retailer, JD.com, has built a "massive smart logistics infrastructure" to serve its 300 million e-commerce customers, and is now opening that system up to brand partners and other retailers, the firm said in a release on Saturday.

Calling itself the world's third largest internet company by revenue, the firm has leveraged its enormous reach to develop a physical network of fulfillment and transportation that it is offering for commercial use through the "retail as a service" (RaaS) strategy it unveiled in 2018.

Although that huge network currently operates primarily in China, JD will be pitching the idea to North American retailers this week as it attends for the first time ever the Consumer Electronics Show (CES), the glitzy Las Vegas trade show that offers an annual look at the latest retail technologies, products, and services.

"As China's largest retailer, JD is in the unique position of being able to research and develop, and commercially deploy, innovative new technology that is shaping the future of shopping worldwide," Chen Zhang, JD.com's chief technology officer, said in a blog post. "As JD opens its technology up to other companies and industries, the features that we've already rolled out in China from automated warehouses to virtual shopping are going to be enjoyed by consumers everywhere."

By enlisting other retailers to use its fulfillment network, JD could be following a similar path to Seattle-based online retailer Amazon.com Inc., whose Fulfillment by Amazon (FBA) program offers third party logistics (3PL)-type services and helps the company achieve greater economies of scale and leverage lower prices from business partners.

The young, Beijing-based company started in 1998 as an offline electronics retailer, launching its online business in 2004. At that time, China didn't have well-developed logistics infrastructure, so JD decided to develop its own nationwide, in-house logistics network, the firm said. Today, that network can deliver over 90 percent of orders same- or next-day, and covers 99 percent of China's population, according to JD.com.

As an example of its advanced fulfillment capabilities, JD.com said Saturday it has launched two autonomous logistics facilities in the Chinese cities of Changsha and Hohhot, saying these "smart delivery stations" are using autonomous vehicles to perform last-mile delivery.

The stations house fleets of delivery robots carrying up to 30 parcels each inside compartments similar to the banks of lockers installed by Amazon at many Whole Foods Markets stores and urban apartment building lobbies. However, JD's lockers are mobile instead of stationary, steering themselves to addresses within a 3.1-mile radius with features including route planning, obstacle avoidance, and traffic light recognition. Upon arrival, they use facial recognition technology to ensure the person claiming the parcel is the correct consumer, JD said. Running at full capacity, these delivery stations can deliver up to 2,000 packages a day.

Also on display in JD's booth at the CES show will be showcases of other fulfillment technology such as:

  • virtual realitydemos of the use of drones to deliver consumer goods and medical supplies to remote areas in China,
  • a glimpse of what JD calls "the world's first fully-automated fulfillment center,"
  • plans to use underground urban logistics networksto make shopping more convenient, and reduce urban traffic
  • augmented reality-based fitting and styling software
  • Internet of Things (IoT) technology that enables consumers to remotely control the smart devices in their homes, even from their cars, and
  • an exoskeleton worn by staff in JD warehouses that makes lifting heavy objects easier.

As JD offers its "advanced e-commerce infrastructure" to new clients in its retail-as-a-service approach, the company says it intends to support "boundaryless" shopping that allows consumers everywhere—not just JD.com's customers—to be able to buy whatever they want, whenever and wherever they want it.

"We've spent the last decade building up advanced technology, logistics, supply chain and other capabilities," Kenny Li, a JD vice president, said in a video. "We are now sharing this technology and infrastructure with a broad range of partners... We have worked with thousands of offline store partners to enable them with our technology, logistics, marketing, and other capabilities."

Retailers who subscribe to JD's RaaS offering will be able to tap into supply chain capabilities that "help us achieve unparalleled operational efficiency for our online and brick and mortar operations and deliver a level of customer service that is unmatched globally," Li said.

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