A network of warehouses, robots and “supply chain solutions” ensure that large e-commerce sites get goods to you faster.
Photo from CFP
By BAI Fan
Ads for this year’s 6.18 shopping festival have arrived earlier and more intensely than ever before, but warehouses have been busy for the event for even longer. Next-day headlines often compare overall sales, but the race is as much about sales gimmicks as behind-the-scenes logistics.
The annual June 18 shopping spree is now the second biggest in China, only after Single’s Day, the 24-hour spending blitz held on November 11.
Past sales festivals had jammed delivery routes and overwhelmed warehouses. But now, speed is more of a must-have than a wow factor. More than twice as many sellers on the e-commerce website Alibaba have paid for the platform’s “speedy delivery” option for the shopping bonanza, this year.
This allows them to move sales items from central warehouses on the city outskirts to centrally located dispatch stations days ahead of the big event so that goods can arrive at doorsteps hours or even minutes after people click the buy button.
Alibaba’s logistics company Cainiao says it offers same-day and next-day guarantees in over 300 cities, and 70 percent of sellers choose the same-day service.
Warehouses that used to operate independently now talk to one another, said a spokesperson for the JD website so that sellers can now reach their customers faster by storing goods in different locations.
The company’s network – consisting mainly of 43 mega warehouses and 1,400 smaller ones – allows sellers to go online and zoom in and out to check what is happening in each warehouse and how much inventory is left.
Storing goods in multiple locations has significantly improved inventory availability and delivery time, which is great for sales, said Song Shuyan, who oversees online sales of home electronics maker Haier.
His company tripled its nationwide warehouse square footage in the past two years. Now it has dedicated warehouse space at all major e-commerce sites, including 22 locations with JD alone.
Haier uses a proprietary digital system to decide which warehouse to ship goods from, when to replenish inventory, and whether to move goods between warehouses.
Song concedes that the cost of storage has gone up. Sellers on JD can now borrow from the company, using their inventory as pledges.
Another buzzword this year is RaaS (Robot as a Service). GLP, which sells robotics technology to subscribers, said it is working with a footwear company for this year’s sale. The warehouses don’t have to be remodeled and can process orders 30 percent faster.
Logistics companies today love to emphasize that they are more than just about storage and shipping but are “supply chain solution providers.” This means taking care of everything between sales and delivery, such as inventory tracking, financial management and even customer service.
The market is potentially massive. JD attributed its 16-percent Q1 growth to high demand for its supply chain services. Cainiao also reported a 30 percent sales increase for such services on its platform.
A notable case study is SF Express, the epitome of a delivery-guy-on-a-bike shipping company. Its management vowed to become a “digital supply chain solution provider” after the bread-and-butter delivery business lost more than 1 billion yuan in Q1 last year.
Now it has three supply chain subsidies, one that works mainly with domestic clients, one that specializes in the cold chain, and Kerry Logistics, in which SF acquired a majority stake last September, which focuses on overseas clients.
The three subsidies combined reported 200 percent revenue growth last year (partly due to the Kerry acquisition), and sales have remained strong this year despite the disruption caused by the pandemic.