JD.com offers US$15m prize to find top drone-delivery experts and solutions

Online retail giant JD.com has put up an offer of 100 million yuan (US$15.1 million) to the winners of a unique competition to find the best solutions for conducting widespread drone delivery services across China.

The Nasdaq-listed company’s current drone deliveries are limited to a number of rural areas, but the Amazon-like Chinese online retailer said it is now looking for the world’s top drone talent to design and create a more sophisticated service.

The novel logistics initiative was launched by JD.com officials in the northwest city of Xi’an, where it had also signed cooperation contracts with China West Airport Group, and Northwestern Polytechnical University to cultivate the next stage in drone delivery.

Ahead of launching the competition and achieving what are expected to be considerable logistics cost savings, JD.com still faces airspace restrictions, and will have to meet strict safety conditions before being allowed a license to operate its drones in the country’s larger cities.

The company was recently denied permission to conduct trial drone deliveries anywhere within Beijing’s outermost sixth ring road.

Richard Liu Qiangdong, JD.com's founder and chief executive, said the company has initially applied for drone deliveries in some of China’s smaller cities and in countryside locations, where its logistics costs expect to be cut by as much as 70 per cent compared with services by car, van or motorbike.

The crux of its future plans will be designing and making drones that can fly further, and are capable of carrying heavier loads.

JD.com’s drone research and development centre is based in Xi’an, the capital of Shaanxi province, where the focus is on developing “heavy-lift drones”, said Xiao Jun, a vice-president at the company.

Xiao said the Xi’an research and development operation expects to have 100 staff by the end of this year. JD.com currently has 34 staff in that centre developing the company’s next-generation delivery service.

Across Shaanxi, JD.com plans to build a low-altitude drone logistics network that will cover a 300-kilometre radius and include hundreds of routes and drone airbases to handle e-commerce shipments.

The company is also developing another “drone centre” at its headquarters in Beijing, mainly focused on smaller machines.

JD.com is already testing longer, stronger delivery flights in Sichuan province, in the southwest of the country near Shaanxi, which can carry as much as a tonne in weight after successfully trialling 5 to 30 kilogram packages. Those bigger loads should be possible by the end of this year, company officials said.

“Drone deliveries are reducing costs and improving the efficiency of online shopping service, offering huge potential growth,” said Wan Guangbo, an analyst at Changjiang Securities. “I believe JD will lead the global market in drone delivery service.”

Of course, JD.com is not alone in its drone delivery ambitions, as China’s other e-commerce giants frantically build and develop their own networks and expertise.

Those include the likes of Amazon and Alibaba Group Holding, the owner of the South China Morning Post, that are already holding extensive drone delivery trials.

Shenzhen-based courier SF Express, meanwhile, has started commercial drone deliveries after receiving the country’s first drone airspace license.