Opinion | Jingdong’s courier wars: more E-commerce chaos

I have been trying to ignore a noisy war of words developing between China’s e-commerce giant Jingdong Mall and one of its key couriers Shentong. I’m finally surrendering and writing about it. I haven’t written for a while about China’s chaotic e-commerce space. This particular issue is part of what looks like a broader growing discord between Jingdong, which also goes by the name 360Buy, and many of the courier companies that deliver the millions of goods that consumers buy online. Such discord is just as much a sign of the chaos that now plagues China’s e-commerce space as it is of the rampant competition that has pushed most major players deeply into the red.

Let’s have a look at this latest flare-up, which has a delivery service named Shentong Express refusing to deliver some goods from merchants to Jingdong’s warehouses. Jingdong typically buys its goods from such third-party merchants, and then stores their products at its own warehouses for eventual delivery to customers. Jingdong was apparently implying that Shentong was slowing or halting some of its deliveries to show its displeasure after Jingdong itself got a license to operate its own rival courier service.

A number of China’s other e-commerce firms have also eyed the delivery business. Many complain that smaller delivery companies are unreliable and offer poor customer service, which ultimately tarnishes their own reputation. In response to Jingdong’s insinuations, Shentong fired back that its refusal to deliver some goods to Jingdong warehouses is purely due to logistical reasons. It said its deliverymen frequently had to wait for long periods for a Jingdong representative to sign for their goods. This created significant delays for the company.  It also complained that some of Jingdong’s orders were simply too big.

This new tiff is apparently just the latest in a series between Jingdong and its couriers, who are reportedly unhappy at Jingdong’s decision to enter the parcel delivery business. I understand the desire of Jingdong and its rivals to improve their delivery service, but I do also think this blow-up will only sow further chaos in an already chaotic e-commerce sector where Jingdong is battling with domestic rivals like Alibaba and Suning.com (Shenzhen: 002024), as well as international players like Amazon (Nasdaq: AMZN) for market share.

All these initiatives, including this latest one in the courier business, have caused Jingdong to rapidly burn through its big cash pile, even after it raised a record of more than $1 billion last year. It is reportedly seeking to find new investors now, following its failure to drum up interest in an IPO earlier this year.