$JD logistics
$JD logistics is arguably $JD's BIGGEST MOAT. This thread will cover everything about $JD logistics that you need to know as a $JD or $JD logistics investor.
Let’s get started 👇👇
$JD logistics is arguably $JD's BIGGEST MOAT. This thread will cover everything about $JD logistics that you need to know as a $JD or $JD logistics investor.
Let’s get started 👇👇
2. Problem
In 2007, Richard Liu, the founder of $JD, realized that to provide the best customer experience, $JD must have their own logistics network, because unlike the US, China did not have mature logistics companies that provide consistent speedy deliveries.
In 2007, Richard Liu, the founder of $JD, realized that to provide the best customer experience, $JD must have their own logistics network, because unlike the US, China did not have mature logistics companies that provide consistent speedy deliveries.
3. Solution
$JD logistics were established in 2007 to provide better experience for $JD customers. The establishment of $JD logistics was highly controversial back then; as the business model was unproven. Fast forward to 2021, $JD logistics has already become $JD’s biggest moat
$JD logistics were established in 2007 to provide better experience for $JD customers. The establishment of $JD logistics was highly controversial back then; as the business model was unproven. Fast forward to 2021, $JD logistics has already become $JD’s biggest moat
4. History
From 2007-2017, $JD logistics only serves $JD orders. After 2017, $JD logistics started operating independently, taking orders from 3rd party customers. $JD logistics is transitioning into an independent logistics company, rather than a logistic company solely for $JD
From 2007-2017, $JD logistics only serves $JD orders. After 2017, $JD logistics started operating independently, taking orders from 3rd party customers. $JD logistics is transitioning into an independent logistics company, rather than a logistic company solely for $JD
5. Total Addressable Market
According to China Insights Consultancy, the China logistics market has grown at an CAGR of 6.5% from 2015 to 2020, and is expected to grow at a CAGR of 5.3% from 2020 to 2025 to 19.3 trillion RMB (3 trillion USD).
According to China Insights Consultancy, the China logistics market has grown at an CAGR of 6.5% from 2015 to 2020, and is expected to grow at a CAGR of 5.3% from 2020 to 2025 to 19.3 trillion RMB (3 trillion USD).
6. Nationwide Network
$JD logistics have THE BEST nationwide warehouse logistics network. $JD logistics’s fulfilment capacity covers more than 99%+ cities of China. $JD logistics owns more than 1000+ warehouses, with a total storage area of over 21 million square meters
$JD logistics have THE BEST nationwide warehouse logistics network. $JD logistics’s fulfilment capacity covers more than 99%+ cities of China. $JD logistics owns more than 1000+ warehouses, with a total storage area of over 21 million square meters
7. Comparison
The most well-known Chinese logistics company, SF express ($2352.HK), only have around 2 million square meters of storage area, 1/10 of what $JD logistics possesses.
The most well-known Chinese logistics company, SF express ($2352.HK), only have around 2 million square meters of storage area, 1/10 of what $JD logistics possesses.
8. Asia One Warehouse
$JD logistics has started to build their Asia One Warehouses in 2014, which aims to be (and arguably is) the most automated and biggest warehouse in Asia. The most advance part of an Asia one warehouse allows 90% of the fulfilment process to be automated.
$JD logistics has started to build their Asia One Warehouses in 2014, which aims to be (and arguably is) the most automated and biggest warehouse in Asia. The most advance part of an Asia one warehouse allows 90% of the fulfilment process to be automated.
9. On average, the Asia one warehouse increases the efficiency of the fulfilment process by 100% while decreasing the storage and delivery cost by 40% compare to regular $JD’s warehouses.
10.Autonomous Couriers and Drones
$JD logistics has established team X, which focuses on developing autonomous delivery vehicles, drones, and fulfilment centers. Albeit a very small amount, $JD already have L4 autonomous delivery vehicles and drones operating.
$JD logistics has established team X, which focuses on developing autonomous delivery vehicles, drones, and fulfilment centers. Albeit a very small amount, $JD already have L4 autonomous delivery vehicles and drones operating.
11. Last Mile Delivery
$JD logistics has 7000+ distribution stations that covers ~450 cities in China. $JD logistics employs 190k+ couriers, ensuring $JD’s ‘last mile delivery’. However, note that $SF express have even more couriers at 390k people.
$JD logistics has 7000+ distribution stations that covers ~450 cities in China. $JD logistics employs 190k+ couriers, ensuring $JD’s ‘last mile delivery’. However, note that $SF express have even more couriers at 390k people.
12. Cold Chain and Big Item Logistics
$JD logistics have the BEST-in-class cold chain and big item delivery (closely followed by SF express). These two services allow $JD logistics to offer a complete logistics solution fitting all kinds of logistics needs.
$JD logistics have the BEST-in-class cold chain and big item delivery (closely followed by SF express). These two services allow $JD logistics to offer a complete logistics solution fitting all kinds of logistics needs.
13. Speed
$JD logistic and SF set the gold standard of delivery speed. In 95% of the Chinese cities, a customer can receive their $JD order within 24 hours. The scale and delivery speed of $JD logistics makes the delivery experience of $JD orders unmatched by $JD’s competitors.
$JD logistic and SF set the gold standard of delivery speed. In 95% of the Chinese cities, a customer can receive their $JD order within 24 hours. The scale and delivery speed of $JD logistics makes the delivery experience of $JD orders unmatched by $JD’s competitors.
14. The Speedy 211 program
In 2010, $JD logistics, launched their 211 programs, which provides same day delivery for orders submitted prior to 11AM and next day delivery (before 3PM) for orders submitted before 11PM in 6 cities. Currently, the 211 program covers 23 cities.
In 2010, $JD logistics, launched their 211 programs, which provides same day delivery for orders submitted prior to 11AM and next day delivery (before 3PM) for orders submitted before 11PM in 6 cities. Currently, the 211 program covers 23 cities.
15. Comparison
$JD logistics is not the only one who can deliver within 24 hours in China. $SF express is also capable. However, not many E-commerce platforms use $SF express because $SF express is expensive ($SF has a base price that is 5-6 dollars higher than $JD logistics)
$JD logistics is not the only one who can deliver within 24 hours in China. $SF express is also capable. However, not many E-commerce platforms use $SF express because $SF express is expensive ($SF has a base price that is 5-6 dollars higher than $JD logistics)
15.1 $SF is also 10+ dollars more expensive than most Chinese logistic companies’ (Yunda, YT, ZTO, STO and HT expresses. These companies are within the ‘Cai Niao Alliance’, which is $BABA’s effort to aggregate logistics companies to combat $JD logistics).
15.2 Although $JD logistics and SF express are both fast, they are fast in different ways. $JD logistics is the fastest for delivering an online order (same region), whereas $SF express is the fastest when delivering a product from point A to B (cross region).
15.3 This is because $JD logistics leverages their large amount of fulfilment centers, by putting the ‘right products’ at the right ‘fulfilment centers’, allowing products to travel a short distance to reach their customers.
15.4 Whereas SF express leverages their larger delivery fleet with more couriers, trucks, planes, and railroads (almost double or more in all these compare to $JD logistics), to have a ‘faster raw delivery power’.
16. Customer Experience
Put simply, most Chinese people categorizes logistics companies into (1) SF express and $JD logistics and (2) all other companies. $JD logistics ranked second, behind SF express, in terms of customer experience surveyed by the China post office.
Put simply, most Chinese people categorizes logistics companies into (1) SF express and $JD logistics and (2) all other companies. $JD logistics ranked second, behind SF express, in terms of customer experience surveyed by the China post office.
16.1 SF express has a slight edge because many Chinese recognises SF express as the ‘premium delivery brand’.
16.2 The recognition between $JD logistics and SF express is not caused by $JD logistics’ service failure, but because $JD logistics has only been opened to the public for around 5 years, whereas SF express 20+ years. With more time, the reputation gap should close.
16.3 $JD logistics’ customer experience is still significantly ahead of other logistics companies, thanks to $JD logistics’ vertical integration, $JD's focus on customer experience and higher courier salary, all enabling $JD's couriers to provide better customer service.
17. Chinese Government’s Recognition
During Covid-19, the Chinese government highly recommend $JD logistics, because of its ability to operate without interruption, alongside SF express and EMS as the three-logistics companies that all Chinese should use.
During Covid-19, the Chinese government highly recommend $JD logistics, because of its ability to operate without interruption, alongside SF express and EMS as the three-logistics companies that all Chinese should use.
17.1 $JD logistics gained a lot of respect in China during Covid, when $JD logistics delivered 100 oxygen ventilators donated by the Chinese virologist, Zhong Nanshan, under 1 day to Wuhan, during the most critical phrase of Covid 19.
18. Supply Chain Solution
$JD logistics is the biggest integrated supply chain solution provider in China. With the use of AI/big data, $JD logistics helps their customers to shorten the time required to deliver their products, save costs, and lower inventory turnover time.
$JD logistics is the biggest integrated supply chain solution provider in China. With the use of AI/big data, $JD logistics helps their customers to shorten the time required to deliver their products, save costs, and lower inventory turnover time.
18.1 Supply chain solution is the most unique selling points of $JD logistics to 3rd party businesses. Although SF offer similar services, SF and Cai Niao Alliance simply do not have enough fulfilment centers and vertical integrated system to match $JD logistics’ offers.
18.2 An Example of how $JD logistics solution works
Imagine you run a business that sell fruits. $JD logistics can store all your fruits in all parts of China because $JD logistics have many fulfilment centers. Therefore, if a Beijing customers order fruits from you, your fruits
Imagine you run a business that sell fruits. $JD logistics can store all your fruits in all parts of China because $JD logistics have many fulfilment centers. Therefore, if a Beijing customers order fruits from you, your fruits
18.3 can be delivered quickly by instantly sent out from $JD logistics’ Beijing warehouse.
$JD logistics can analyze your sales data and help you decide where to store your different fruits. For example, if people in Beijing likes watermelon more and pineapples less, more
$JD logistics can analyze your sales data and help you decide where to store your different fruits. For example, if people in Beijing likes watermelon more and pineapples less, more
18.4 watermelon and less pineapples will be stored in Beijing. This decreases storage costs and increases delivery efficiency.
19. Market Size
The China integrated supply chain solution market has grown at a CAGR of 11.1% from 2015 to 2020 and is expected to grow at CAGR of 9.5% to 2025 to 3.19 trillion RMB (490 billion USD). Penetration rate is expected to growth from 28.0% to 34.6% from 2015 to 2025.
The China integrated supply chain solution market has grown at a CAGR of 11.1% from 2015 to 2020 and is expected to grow at CAGR of 9.5% to 2025 to 3.19 trillion RMB (490 billion USD). Penetration rate is expected to growth from 28.0% to 34.6% from 2015 to 2025.
20.Revenue
$JD logistics’s revenue has experienced rapid growth over the past three years, with a YoY growth rate of 31.6% for 2019, 47.2% for 2020, and 64.1% for 2021 Q1 YoY.
$JD logistics’s revenue has experienced rapid growth over the past three years, with a YoY growth rate of 31.6% for 2019, 47.2% for 2020, and 64.1% for 2021 Q1 YoY.
21. $JD logistics’ integrated supply chain solution makes up 75.8% of $JD logistics revenue. $JD logistics supply chain solution has grown by 23% and 34% YoY for 2019 and 2020, with +190 thousand business customers (noticeable examples: Amway, Nestle, Xiaomi, Skechers and Mengniu
22. Revenue outside $JD logistics’ solution has grown by a staggering 115% and 95% YoY for 2019 and 2020 respectively. All these indicates $JD logistics’ potential as $JD logistics continue to gain recognition from customers.
23.Margins
As shown below, $JD logistics have improved both their gross and net margins steadily from 2018 to 2020. Nonetheless, it should be noted that the logistics market is an low margin high volume one.
As shown below, $JD logistics have improved both their gross and net margins steadily from 2018 to 2020. Nonetheless, it should be noted that the logistics market is an low margin high volume one.
24.Valuation
$JD logistics ($2618.HK) has recently IPOed on May 28th on HKEX. $JD currently still owns more than 50% of $JD logistics. $JD logistics is currently valued at a market cap of 251.6 billion HKD (32.42 billion USD), with a P/E ratio of 48.82, EBIT/EV of 2.19,
$JD logistics ($2618.HK) has recently IPOed on May 28th on HKEX. $JD currently still owns more than 50% of $JD logistics. $JD logistics is currently valued at a market cap of 251.6 billion HKD (32.42 billion USD), with a P/E ratio of 48.82, EBIT/EV of 2.19,
P/S ratio of 3.43. Whether this valuation is expensive will highly depend on $JD logistics ability to continue growing at a rapid rate.
25. Conclusion
$JD logistics is $JD’s biggest moat and what makes $JD successful today. $JD by spinning off $JD logistics allows $JD logistics to attract more 3rd party customers, thereby growing into a Chinese logistics powerhouse. $JD by maintaining 50%+ of $JD logistics’
$JD logistics is $JD’s biggest moat and what makes $JD successful today. $JD by spinning off $JD logistics allows $JD logistics to attract more 3rd party customers, thereby growing into a Chinese logistics powerhouse. $JD by maintaining 50%+ of $JD logistics’
25.1 shares also directly profit from $JD logistics’ growth. $JD has well positioned $JD logistics in a position to strive with the continuous growth of the Chinese E-commerce and logistic market.
26. Thank you for reading this thread! I hope you have learnt one or two things more about $JD and $JD logistics ($2618.HK). If you like this thread, please consider liking it and retweeting it, it really does help me out a lot! I really appreciate you all!
27. Tagging $JD investors or people who may be interested in this thread! @Matematikern3 @daniel_toloko @jablamsky @TanArrowz @EugeneNg_VCap @mukund @DennisHong17 @BuyandHoldd @JeffreyTowson @FinanceGhost @Krevix @joehas @Buguisim @thotbx @Gambiste1 @TomInvesting @Innovestor_
Would really appreciate any feedback, comments, inputs from you all! Thank you all for your support very much! 🙏🙏
P.S. I am going to publish a deep dive comparison between $JD health and $BABA health in the next few days, stay tuned!
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