Logistics is a "bottleneck" that e-commerce companies cannot bypass. Currently, in the logistics and distribution process of e-commerce, there are two models: third-party and self-built. The third-party model refers to e-commerce companies using third-party express companies (such as STO Express and YTO Express) to deliver orders, while the self-built model involves e-commerce companies using their own employees to deliver orders within their self-established distribution coverage areas.
Just recently, VIP.com announced its plan to invest $200 million annually in logistics infrastructure, reigniting a debate on the pros and cons of e-commerce companies building their own logistics systems versus integrating third-party logistics. In the outgoing year of 2014, the logistics industry saw rapid growth. E-commerce logistics faced the major test of "Singles' Day," with both self-built systems and third-party services experiencing significant advancements. Perhaps the most suitable model for corporate development is the **** model.
The logistics development is not keeping pace with the e-commerce boom.
"Currently, China's social logistics service supply capacity is insufficient." Wei Jigang, a researcher at the Industrial Economy Research Department of the Development Research Center of the State Council, told the reporter, "While e-commerce is experiencing explosive growth, the scale and service of logistics are not keeping pace with the speed of e-commerce development, thus becoming a bottleneck that hinders the rapid growth of e-commerce."
Wei Jigang believes that the growth of our national economy, the change in consumption structure, and the rapid development of e-commerce have all placed high demands on the logistics industry. However, China's logistics system lags behind the development needs of e-commerce, is limited in capacity, and exhibits significant imbalances. It is expected that in the future, more e-commerce companies will establish their own logistics companies or seek appropriate courier or logistics firms for various degrees of collaboration.
The "China Procurement Development Report 2014" released by the China Federation of Logistics and Purchasing shows that in 2013, the total social logistics cost in China exceeded 10 trillion yuan, accounting for 18.0% of GDP. This is more than double the 8.5% ratio in the U.S., indicating significantly higher logistics costs.
E-commerce logistics has frequently fallen into the embarrassing situation of "overstocking," with a lack of overall quality among professionals and safety issues occurring intermittently. The relatively backward development of e-commerce logistics has become prominent, with policy bottlenecks such as land, taxes, and passage needing to be broken through. The varying levels of logistics service quality among enterprises have affected consumer experiences, with high urban distribution costs and low operational efficiency.
Self-established logistics: the only option for e-commerce companies.
"Logistics is indispensable for the development of e-commerce, and the self-built logistics by e-commerce companies stems from the fact that current social logistics services fail to meet the demands of e-commerce growth." Professor Wang Jian, from the University of International Business and Economics, also mentioned during an interview with journalists that logistics distribution has always been a critical aspect and constraint for the development of e-commerce enterprises. In the current domestic environment, establishing self-owned logistics is a method for e-commerce to enhance delivery experiences.
Wang Jian pointed out, "E-commerce can also make money by mastering logistics, and on the other hand, e-commerce businesses generally lack physical assets. Engaging in logistics brings about 'heavy assets,' especially in logistics real estate."
Express Logistics Consulting Network Chief Advisor Xu Yong told the reporter that self-established logistics is primarily considered for e-commerce due to the quicker recovery of payments, which promotes their sales. Because throughout the customer's experience, from online shopping to payment, and then to the post-delivery service, these three aspects are the main components of the customer experience. The quicker payment recovery brings less financial pressure.
JD.com builds logistics system to provide customers with superior experience and reduce logistics costs. JD CEO Liu Qiangdong has stated in many occasions, "JD's self-built logistics is based on the following three reasons: first, China lacks UPS and FedEx; second, the logistics costs in China are incredibly high; and third, the quality of courier services is relatively low."
Currently, in addition to the "Asia No.1" projects under construction in Guangzhou, Shenyang, and Wuhan, JD.com is also planning and preparing to build "Asia No.1" projects in multiple cities such as Beijing and Chengdu, Xi'an.
Third-party logistics are indispensable.
Despite the growing trend of e-commerce giants like JD.com choosing to establish their own logistics, the current market landscape in the e-commerce sector, where a few players dominate, the difficulty in acquiring land for self-owned logistics, the capital investment and time costs involved, the knowledge and resources required for self-owned logistics, and the human resources of the enterprise, have all become barriers for medium and small e-commerce companies to establish their own logistics.
Wang Jian confessed, "Establishing our own logistics does not mean that constructing logistics will become a 'standard' for large-scale e-commerce platforms in the future. Due to the diverse nature of e-commerce models, building logistics is merely a choice for companies like JD.com that compete on service and price. The development of the e-commerce industry still requires third-party logistics."
Xu Yong believes that building an in-house logistics system incurs high costs, significantly impacting the competitiveness of the entire industry. Prices for third-party services are relatively low and the services are becoming increasingly comprehensive. In the short term, in-house logistics will continue to expand, with companies like JD.com, Suning Easy Buy, and 1号店's automatic delivery services expanding. "However, in three to five years, they will gradually shift to third-party services or exit the market."
In September this year, the Ministry of Commerce issued the "Implementation Opinions on Promoting the Development of Commercial and Logistics," continuing to encourage production and commercial circulation enterprises to spin off or outsource logistics functions, supporting the specialization and scaling of commercial logistics enterprises, and strengthening the service capacity of third-party logistics.
