Drones take flight on Singles’ Day
JD.com launches new service, and plans to expand its airborne capabilities with regular drone deliveries to more than 100 routes across mainland China by the first half of 2017
The Singles’ Day shopping festival in China has raised the bar sky high for online retail events across the globe not only with another period of record sales by major e-commerce players, but also with the launch of an ambitious new drone delivery programme.
Following Alibaba Group’s announcement of a 32 per cent growth in gross merchandise volume to a record 120 billion yuan (US$17.6 billion) for its 24-hour 11.11 promotion last Friday, online shopping rival JD.com on Saturday reported that its total transaction volume increased 59 per cent year on year that same day and 60 per cent over its longer promotions from November 1 to 11, without disclosing figures.
Nasdaq-listed JD.com also took the opportunity of launching what is likely to be the world’s first commercial drone delivery programme for e-commerce in rural locations outside of Beijing, as well as those in the provinces of Jiangsu, Shaanxi and Sichuan.
JD has a fleet of more than 30 custom-built drones in operation, which can transport and deliver packages weighing between five to 15 kilos and cover distances as far as 50 kilometres.
Its service has been launched ahead of the planned Amazon Prime Air unmanned aerial delivery system that Amazon.com chief executive Jeff Bezos first revealed in 2013. That plan has remained in the testing stage as Amazon tries to comply with US Federal Aviation Administration rules.
JD spokesman Josh Gartner told the South China Morning Post, which is owned by Alibaba, that the company has obtained government permission for its drone delivery programme, and now plans to regularly operate in more than 100 routes across the mainland by the first half of next year.
“I don’t think anyone else is doing this [drone delivery service],” Gartner said.
Beijing-based JD is China’s second largest online retail services provider by sales. It directly sells products from its own inventory, like Amazon, and operates online marketplaces where major brands and retailers sell their merchandise.
Hong Kong-listed Tencent Holdings, which runs mobile messaging service WeChat and social network QQ, bought a 15 per cent stake in JD.com for US$214.7 million in 2014.
American retail titan Wal-Mart Stores last month increased its holding in JD to 10.8 per cent, up from 5.9 per cent, according to a United States regulatory filing.
According to JD, its research and logistics innovation laboratory, JDX, developed its drone programme for rural China to make the delivery of goods from warehouses to customers quicker, cheaper and more efficient.
The programme works by dispatching orders from regional delivery stations to JD’s network of dedicated “village promoters”, who distribute orders directly to customers. JD currently has more than 300,000 village promoters across the country.
“E-commerce is bringing goods to consumers in a more convenient and cost-effective way, and is a very meaningful channel to increase domestic consumption,” Jessie Qian, partner-in-charge for consumer markets at consultancy KPMG China, said in a report on Friday.
JD said its drones are controlled by a proprietary system, connected to its logistics network, that allows the devices to take off automatically and follow a pre-determined route to a village and the designated drop-off points where JD’s local village promoter pick up goods.