An unmanned JD.com robot delivers packages to customers at Guizhou Jiaotong College in June 2018 in Guiyang, ChinaCredits : Qu Honglun/China News Service/VCG via Getty Images
As JD.com pushes into Western markets, with drones, robots and luxury brands, it's time for Amazon to sit up and pay attention.
Employees uses the gym during lunch hours at JD.com's headquarters in Beijing, ChinaCredits: Qilai Shen/In Pictures via Getty Images
The main reason Pu stays in a dorm on site, and away from his family, is to ensure he can meet key performance indicators set by the firm. Sometimes, especially during JD.com’s annual shopping event, he has to work late into the night.
But the future of these dorms is uncertain. Many traditional warehouse jobs like stacking shelves and packing boxes at JD are likely to go to robots in the coming years, as the company starts to automate everything that can sensibly be automated. The tech giant is now busy retraining some staff to take on new roles that machines can’t yet do. Pu’s warehouses have some of the firm’s most advanced robotics – and he gets really excited talking about the autonomous forklift trucks and delivery drones.
These drones have been in the news a lot lately. Remember when Amazon’s boss Jeff Bezos made claims that his firm would soon drop parcels off at your doorstep? Well, that was in 2013 – and, some small-scale trials aside, it’s still not happening. But it’s very much happening at JD – since March 2016, its drones have been delivering products across China, having clocked over 300,000 minutes of flight time. “Today we have over 200 people working on our drone programme,” says Zheng Cui, director of the firm’s drone R&D centre in Xi’an.
A JD.com delivery drone arrives in Xi'An, Shaanxi Province. The drone took about five minutes to cover the 2.3 kilometre routeCredits: Getty Images/VCG
The drones come in various shapes and sizes, but the quickest ones can fly up to 100km/h and have a range of 100km. So far though, the furthest delivery has been 15km and that drone flew much slower than 100km/h – but you have to start somewhere. What the drones can’t do yet, JD does with its 65,000 van drivers and couriers.
The drone efforts haven’t gone unnoticed though, and other companies are keen to replicate JD’s air delivery success. Cui says more and more firms are getting in touch to buy their drones. “We’ve just got an order for 1,000 at the beginning of this year,” he adds.
Those drones are still fairly small, but JD is busy developing larger ones that can carry up to five tonnes. “They'll transfer inventory from one warehouse to another,” says Cui. "Within three years we're looking at having a couple of thousand,” he says – and they will take off right from existing small airports near the company’s warehouses.
It’s not just the drones that make the Chinese behemoth different from Western e-commerce stores, though. Robots at JD are everywhere. In the warehouse I visit, machines stack tens of thousands of products on 24-metre-high shelves. Over the road from where I am, another fully automated warehouse can pack and ship 200,000 products a day. Robots are not alone yet, though: the fully automated warehouse has four human helpers.
Automation, growth, scale – the mega but still relatively unknown giant seems unlikely to slow down. Its revenues are growing 40 per cent a year, up to $55.7 billion in 2017. The company’s spokespeople tell us proudly the firm is the third largest “internet company” in the world by revenue after Google and Amazon, but ahead of companies like Facebook, eBay and Alibaba, its biggest rival.
It has major backers such as Tencent — the largest internet company in China by market cap and the owner of WeChat. Other investors are Walmart, which has a ten per cent stake, and even Google, which last month announced it was investing $550 million into JD to help it expand further outside China.
And the e-commerce giant is busy doing just that. In January, it opened its first European office, in Paris. It now aims to open another one in Milan, and is actively partnering with Spanish and other European brands - especially luxury ones. In 2017, Chinese made up 32 per cent of the worldwide luxury market.
JD's response: last October, it launched Toplife, a platform for luxury buyers that can benefit from same-day deliveries and premium services, such as ultra-clean and secure warehouses with special air filters. Over just a few months, Toplife has already signed up 20 brands, including Saint Laurent and Alexander McQueen. Amazon beware.