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Deeply dig the family background of Jingdong Logistics

The following is the Deeply dig the family background of Jingdong Logistics recommended by recordtrend.com. And this article belongs to the classification: logistics, Electronic Commerce, Online shopping.

On February 16, 2020 (the sixth day of the first month of the lunar calendar), Jingdong Logistics submitted an application for offering shares to the Hong Kong stock exchange.

Since the independent operation of Jingdong Logistics, many people believe that it will have a war with Shunfeng, because both adopt the direct marketing mode and are oriented to high-end users.

After studying the prospectus, tiger sniff found that 80% of Jingdong’s logistics revenue comes from the “integrated supply chain service” launched around the Jingdong e-commerce platform, which is basically different from Shunfeng. However, the scale of Jingdong Zhongyou is still small, facing the sinking market and focusing on the “cost performance” business. Its main intention is to compress the existence of “Tongda system” in the Jingdong e-commerce ecosystem, and it adopts the franchise system, which can be roughly considered to be different from Shunfeng fengmanau.

Although the business situation of close combat will not appear for the time being, in the capital market, Jingdong Logistics and Shunfeng will still be regarded as “a couple” to comment. #It is said that SF will be listed twice on the Hong Kong stock exchange#


“Storage instead of transportation” mode

In 2007, Jingdong began to build its own logistics company; in 2012, it officially registered a logistics company; on April 25, 2017, it officially established Jingdong Logistics Group.

In 2019, the revenue of Jingdong Logistics was 49.85 billion yuan, with a year-on-year growth of 31.6%. In the first three quarters of 2020, the revenue of Jingdong Logistics was 49.5 billion yuan, with a year-on-year growth rate of 43.2%; in the same period, the revenue of Shunfeng logistics was 109.6 billion yuan, with a year-on-year growth rate of 39.1%.

In 2019, Jingdong’s logistics revenue is equivalent to 44.4% of Shunfeng’s. in the first three quarters of 2020, this proportion will rise slightly to 45.2%. According to this trend, in the next two or three years, the revenue scale of Jingdong Logistics will remain at half of that of Shunfeng, but it is totally different from other logistics companies, including Shunfeng.

1) Integrated warehouse distribution

On the basis of supply chain logistics service, Jingdong Logistics has developed a unique “integrated warehouse distribution service”——

The first step is from the manufacturer to Jingdong Logistics Warehouse. Goods are sent from the factory to Jingdong Logistics Warehouse through trunk logistics or branch logistics. The manufacturer / distributor can deliver the goods by himself or make an appointment with JD logistics to collect the “first journey transportation service”. Note that there is no consumer order at this time.

The second step is warehouse distribution service. After acceptance, LCL / palletization and other procedures, the goods are transferred among the multi-level warehouses of Jingdong Logistics across the country. Based on rich operation experience and algorithm optimization, JD logistics allocates all kinds of goods to the most ideal “regional distribution center” (RDC) or “front-end logistics center” (FDC) according to the prediction of consumer demand.

As early as 2015, Jingdong launched the “buy it now” service. If a beer brand with many factories and dealers in the country accepts the logistics service of Jingdong, it can deliver the goods to one or more of its most convenient warehouses. In turn, the goods are delivered to a warehouse “on standby” near a market that is expected to generate a lot of demand.

The third step is fast delivery. According to the offering document of JD logistics, 90% of the orders of JD mall can be delivered on the same day or the next day, relying on the world-class intelligent warehousing network: as soon as consumers place an order, the goods will be delivered to one of the 7280 distribution stations (stores) at the RDC / FDC nearest to TA, and one of the 190000 JD brothers will complete the “last kilometer delivery”.

Other express companies are people waiting for goods, that is, consumers and other goods are transported; Jingdong Logistics is people waiting for goods, that is, consumers and other goods to choose. Therefore, Jingdong Logistics needs so many warehouses.

2) Storage instead of transportation

Serving e-commerce is the core business of almost all logistics companies. However, Jingdong Logistics takes the lead in purchasing goods and consumer orders; other logistics companies take the lead in purchasing goods and purchasing goods. After the seller accepts the order, he will inform the logistics company to collect the goods.

Jingdong Logistics has 800 warehouses with an area of about 20 million square meters. In addition, there are 1400 “cloud warehouses” operated by partners, with 17 million square meters of leased property. By the end of 2019, SF has only 175 warehouses, covering an area of nearly 2.28 million square meters, less than one sixteenth of Jingdong Logistics!

In fact, Jingdong Logistics is the performance tool of Jingdong e-commerce platform. Self built logistics is the core of the differentiated competition between Jingdong and Alibaba, and “storage instead of transportation” is the best solution. It is not only conducive to the centralized investment of limited resources in the warehousing network, but also can improve the user experience and earn reputation for Jingdong.

Customers place orders on other platforms, and logistics companies pick up items from sellers thousands of miles away, and then transport them to the target city day and night. In order to place an order in Jingdong, the goods are transferred from the nearest front warehouse to the distribution point, and the little brother of Jingdong, who drives the electric tricycle, easily takes the lead.

There are two advantages of “storage instead of transportation”. It’s not convenient to say on the table: first, to restrain suppliers, I don’t mention “two choices”, but if your company has hundreds of millions of goods in our warehouse, you need to “think clearly”; second, suppliers whose funds are occupied by inventory may choose Jingdong financial services. They are all high-quality customers – Jingdong financial has little risk in lending, because the borrower’s goods are in the warehouse Jingdong Logistics Warehouse. If the goods are sold, the payment for goods becomes the accounts payable of Jingdong Mall, and the supplier can get the money in 40 or 50 days, which is fast.

“Storage instead of transportation” is not only the characteristic of Jingdong Logistics, but also the cornerstone of Jingdong business empire.

In contrast, the transportation strength of Jingdong Logistics trunk line is weak and explosive.

By the end of 2020, the self operated transport fleet of Jingdong Logistics has 7500 trucks and other vehicles (the number of stores in Jingdong is 7280, with an average of one store and one vehicle). Shunfeng has 100000 trunk / branch transportation vehicles and 43000 terminal receiving and dispatching vehicles. The storage area of Shunfeng is less than one sixteenth of that of Jingdong Logistics, and the total number of vehicles exceeds 19 times that of Jingdong Logistics!

Aviation is the strength of SF. By the end of 2019, Shunfeng has 58 self operated full freighters, 13 leased full freighters, 73 routes, 2102 air routes, 4234 daily flights and 1.35 million tons of annual total shipment.

The trunk line transportation capacity of Jingdong “logistics” is a bit “indescribable”. In August 2020, Jingdong Logistics purchased trans express for a consideration of 5.4 billion, aiming to make up for the shortcomings of air and land transportation. Close to listing, Jingdong Logistics has 620 air cargo routes, most of which come from the just acquired trans express.

3) Can’t other logistics companies learn?

It is difficult for real logistics companies to engage in “storage instead of transportation”——

First, the accuracy of consumer demand forecasting is far less than that of Jingdong;

Secondly, Jingdong has a strong sales capacity. In 2020, the sales volume of H1’s self operated business will reach 331.1 billion, and there will be no worry about selling tens of billions of goods in the warehouse. The real logistics company fills up the warehouse with tens of billions of inventory, who can’t sell it?

Finally, the suppliers bear the financial pressure and send the goods to the warehouse of Jingdong Logistics, which shows the sales volume of Jingdong Mall. By the end of June 2020, the net inventory value of Jingdong group has reached 54.8 billion. This is only the self operated inventory of Jingdong. If the third-party seller uses the logistics service of Jingdong, the inventory will not be recorded in the account of Jingdong group. Why do other logistics companies persuade manufacturers to pile tens of billions of goods into your warehouse?


Dismantling Jingdong Logistics revenue

The study of Jingdong Logistics can not only look at the amount of revenue, but also dismantle the revenue structure. I don’t know if I don’t tear it down. It’s a big deal.

According to whether customers use JD logistics warehousing / inventory management services, JD logistics divides customers into “integrated supply chain customers” and “other customers”.

In 2019, the revenue from “integrated supply chain customers” was 39.1 billion, accounting for 83.9% of the total revenue; in the first three quarters of 2020, the proportion dropped to 79.1%.

Jingdong group is undoubtedly the largest “integrated supply chain customer”. In 2018 and 2019, Jingdong group contributed 26.5 billion yuan and 30.7 billion yuan respectively, accounting for 77.8% and 73.3% of the “integrated supply chain service” revenue; in the first three quarters of 2020, Jingdong group contributed 28.1 billion yuan, accounting for 73.2% of the “integrated” revenue, accounting for 56.6% of the total revenue.

As for the related party transactions with Jingdong, the upper limit is given in the prospectus: 53.4 billion, 70.7 billion and 93.4 billion in 2021, 2022 and 2023 respectively. The “upper limit” implies that the minimum income is guaranteed. Although it is not specified, investors will tend to think that “the revenue from Jingdong will not be much worse than this number”.

In the first three quarters of 2020, the revenue from “external customers” was 21.5 billion, accounting for 43.4% of the revenue. “External customers” means that they have no equity relationship with Jingdong group, but not no business relationship. In fact, the vast majority of “external customers” are third-party sellers on Jingdong e-commerce platform.

Jingdong’s own suppliers do not need to pay the “integration” service fee, which is part of Jingdong’s “performance expenses”. In 2019, Jingdong’s performance expenditure is 37 billion, of which 30.7 billion is the “integrated supply chain service fee” paid to Jingdong Logistics; in the first three quarters of 2020, Jingdong’s performance expenditure is 33.95 billion, of which 28.1 billion is paid to Jingdong Logistics, with a year-on-year growth of 30.7%.

External “integrated supply chain customers” mainly come from third-party sellers of JD platform. In 2019, the number of external users is close to 40000, and the average annual expenditure of each household is 279000 yuan.

By the end of 2019, there are more than 270000 third-party sellers on JD platform, and only 40000 choose “integrated service”, with an average annual expenditure of less than 280000. In the first three quarters of 2020, the number of users is 46000, and the average household expenditure is 242000.

For the penetration of “integrated services” in the third-party sellers of Jingdong platform, the overall impression is that there is a large space and the progress is slow. The cost level is not the main problem, and the occupation of funds is probably the biggest concern of businesses.

In 2019, the revenue from external non “integrated supply chain customers” reached 8 billion yuan, a year-on-year increase of 114%; in the first three quarters of 2020, it further increased to 10.3 billion yuan, a year-on-year increase of 94.4%. This part of the revenue mainly comes from Zhongyou and cold chain business. It is estimated that the revenue of Zhongyou will be 6 billion yuan in 2019.

Zhongyou is a brand of Jingdong Logistics, which focuses on high cost performance, focusing on sinking market and focusing on small e-commerce packages. In the nearly 50 billion revenue of Jingdong Logistics in 2019, only 6 billion of Zhongyou’s business is “snatched” from Tongda e-commerce.

It is worth noting that Zhongyou adopts the franchise system.

Because of the cost, most of the third-party sellers in Jingdong Mall choose the “Tongda system” invested by Ali, and the direct marketing mode of Jingdong Logistics is difficult to meet the cost performance requirements of these merchants. There’s another reason: these sellers don’t want to hoard.

Not letting “fat water flow out” is the fundamental reason for JD logistics to launch the franchise system of Zhongyou brand.

Yuantong, which also adopts the franchise mode, has a revenue of 31.1 billion yuan in 2019, and the revenue scale of Zhongyou is less than 20% of Yuantong. Yuantong’s non net profit margin is only 5%. After Zhongyou reaches the break even point, its profit margin is just like this, let alone far from it.

Jingdong Logistics is facing performance pressure after its listing, so it is difficult to burn money freely, and it is not easy to grab business from the powerful “Tongda system”.


The fundamental reason why the gross profit margin of Jingdong Logistics is lower than that of Shunfeng

Jingdong’s logistics revenue is about 45% of Shunfeng’s, but its gross profit margin is far behind. In 2019, the gross profit of Jingdong Logistics will be 3.4 billion, with a gross profit margin of 6.9%; in the same period, the gross profit and gross profit margin of Shunfeng will be 19.5 billion and 17.4% respectively.

In the first three quarters of 2020, the gross profit margin of Jingdong Logistics has increased significantly to 10.9%, but it is still 7 percentage points lower than that of SF, and the gross profit is only 27% of SF.

The top three of SF’s revenue costs are outsourcing, salary and transportation costs, with the amount of 53.8 billion, 11.7 billion and 10.4 billion in 2019 respectively. Outsourcing and compensation accounted for 58% of the total revenue.

In the revenue cost of Jingdong Logistics, the top three are salary, outsourcing and rent (the transportation cost is too low to be disclosed separately), and the amount in 2019 is 19.7 billion, 16.3 billion and 4.7 billion respectively. Outsourcing and compensation accounted for 72% of the total revenue.

Jingdong Logistics “stores instead of transports”. The outsourcing cost of trunk logistics is high. In addition, it needs to purchase more than 1400 “cloud warehouses” services. Therefore, the proportion of outsourcing plus salary in total revenue is 14 percentage points higher than that of SF (in 2019).

Jingdong Logistics has 800 warehouses with a total area of 20 million square meters, so the rental cost ranks in the top three.

Jingdong Logistics gross profit margin lower than SF situation is difficult to easily reverse. The logic lies in: in order to cooperate with the e-commerce business, the storage area of JD logistics is extremely large, the trunk / branch transportation highly relies on outsourcing, and the cost structure determines that its gross profit margin is difficult to surpass that of SF.

Jingdong Logistics is not outstanding, but unique. It is deeply integrated with e-commerce business, so that it has the advantages that other logistics companies do not have, and also carries the “mission” that others do not have.

As far as the current situation is concerned, Jingdong Logistics is a “bonsai” planted in the “ecological flower pot of Jingdong e-commerce”. How large the scale of Jingdong e-commerce is, Jingdong Logistics will grow.

Due to its good reputation and high popularity, Jingdong Logistics will probably be sought after in Hong Kong’s capital market, and its market value after IPO may rise to 60%, 70% or even higher of SF.

Jingdong: 1q20 revenue increased by 21% year on year. During the epidemic period, e-commerce and logistics performed well. Jingdong: 1q18 logistics and R & D investment drag down profits, clothing is still hurt. Jingdong: 2q20 financial report teleconference record: Jingxi user scale grows rapidly, business activity is higher than Jingdong Jingdong: 1q20 revenue is 146.2 billion yuan A year-on-year increase of 20.7% JD: during the outbreak of 1q20 financial report teleconference, 35 ppts were obtained from many new users. What are the Internet companies thinking about decrypting the 100 billion dollar Club of JD logistics distribution and sorting system? Do what? Jingdong: net revenue of 2q20 was RMB 2011 billion, with a year-on-year growth of 33.8%. Which sinking users did pinduoduo’s strategy of Encircling Cities capture? 5 buy: e-commerce data report in October 2013 Yiguan International: sales data summary of DVD player on nine e-commerce platforms in April 2013 Jingdong: net revenue of 3q20 was RMB 174.2 billion, with a year-on-year growth of 29.2%. Jingdong: financial report teleconference record of 3q20 80% of new users come from low tier cities, and the proportion of marketing expenditure is declining. Fgrt: the leading online clothing platform of China’s consumer survey insight into Jingdong, Dangdang, vipshop and Jumei

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