Executive Briefings

Chinese Retailer JD.com’s Latest Gig: Supplying Restaurants

Most Chinese consumers go to JD.com to buy electronic gadgets and other items. Restaurant operator Zhang Zong uses China’s No. 2 e-commerce company to deliver 400 million pounds of carp heads.

By outsourcing delivery of the fish heads and other kitchen essentials to JD.com, Zhang said she no longer has to rely on 200 different suppliers for the 33-outlet restaurant chain she runs. She added that she was also saving on delivery expenses.

As one of China’s fastest-growing online retailers, JD.com built an in-house delivery and logistics operation to serve its primary business. It is now turning that know-how into a business delivering goods to restaurants and other merchants.

“The tough part was building our huge logistics capabilities for our own use,” said Song Chunzheng, vice president of JD.com’s enterprise department. “Implementing them to help other industries is the easy part. That’s what we’re doing now.”

JD.com has been adding new lines of business to capture growth in China’s fiercely competitive e-commerce market. Adding a food-procurement business is one potential way to gain an edge over the country’s largest online retailer Alibaba Group Holding Ltd., which doesn’t have an in-house delivery operation.

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By outsourcing delivery of the fish heads and other kitchen essentials to JD.com, Zhang said she no longer has to rely on 200 different suppliers for the 33-outlet restaurant chain she runs. She added that she was also saving on delivery expenses.

As one of China’s fastest-growing online retailers, JD.com built an in-house delivery and logistics operation to serve its primary business. It is now turning that know-how into a business delivering goods to restaurants and other merchants.

“The tough part was building our huge logistics capabilities for our own use,” said Song Chunzheng, vice president of JD.com’s enterprise department. “Implementing them to help other industries is the easy part. That’s what we’re doing now.”

JD.com has been adding new lines of business to capture growth in China’s fiercely competitive e-commerce market. Adding a food-procurement business is one potential way to gain an edge over the country’s largest online retailer Alibaba Group Holding Ltd., which doesn’t have an in-house delivery operation.

Read Full Article