Chinese retail giant JD is pumping $55 million into connected vehicle fleets to further boost its leadership in logistics automation.
JD is the world’s leading company in high-tech and AI delivery through drones, autonomous technology, and robots. The firm possesses the largest drone delivery system, infrastructure, and capability in the world.
According to a filing posted by Jiangsu Xinning Modern Logistics, JD has agreed to invest 376 million yuan (approx. $55 million) into the company in return for an up to 10 percent stake.
A separate filing reveals JD Logistics and Jiangsu Xinning Modern Logistics have signed a strategic partnership to build a big data system designed to increase efficiency while slashing costs by optimising matches between cargo and vehicles.
JD’s biggest competitor is Alibaba. JD differentiates from its rival in having its own logistics arm which it says helps to ensure better control over quality and user experience.
The logistics arm of JD has been loss-making and often criticised by investors, but the company has begun monetising the infrastructure it’s built by allowing other merchants to send packages using it as they would a logistics company like UPS.
In Q1 2019, JD’s fulfilment expenses ratio improved 0.5 percent which chief financial executive Sidney Huang said in an earnings call last week was “driven by “better utilisation of logistics infrastructure and improved unit economics as a result of the third-party logistics service business.”
JD has recently started testing robotic delivery services and building drone delivery airports, as well as operating driverless delivery by unveiling its first autonomous truck.
Further optimising and enhancing its logistics using big data and connected vehicles has the potential to boost the company’s attractiveness in addition to providing a key differentiator from Alibaba.
JD’s revenue increased 20.9 percent to 121.1 billion ($18 billion) which surpassed analysts’ estimates despite a Chinese market slowdown and CEO and founder Richard Liu being embroiled in a lawsuit alleging he raped a Chinese student at the University of Minnesota.
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