BEIJING, Feb. 18 (Xinhuanet) -- China's online retail market is growing rapidly, and hits one of its annual peaks during the Spring Festival. Convenience and fast delivery are an important part of that growth, and so most big B2C e-commerce companies, like JD.COM and Amazon, have built their own delivery services. This makes them less dependent on delivery firms, but it costs them a lot of money.
With Spring Festival around the corner, more and more people are shopping online for New Year items. But the orders are coming so quickly that some Taobao vendors have warned customers that to avoid delivery delays for the Spring Festival, they have to order by this weekend. Many people who would normally shop online are actually going offline for their urgent needs.
Though delivery firms are required to provide all-year-around shipping services, the couriers are mostly migrant works who work in big cities, but go back to their hometowns for the Chinese New Year. Many will stay home for at least 15 days or a whole month, in accord with traditional practice. One courier from the leading delivery firm SF Express told us that even with the offer of higher pay, only one-fifth of the workers at his delivery station will stay on the job.
This creates a problem for online vendors who do not have their own delivery service, such as Taobao. Competitors such as JD.com or yhd.com who do have their own delivery services, are looking for a boost of business during the Chinese New Year traditional shopping season.
"We prepared all the distribution staff we will need, one or two weeks ago. We will be able to deliver goods to customers during spring festival within 3 hours in the downtown areas of Shanghai and Beijing via our special delivery service as long as they order before 4pm." Said Liu Xinyang, director of distribution, YHD.COM
But maintaining these delivery services is neither easy nor cheap. JD.com, for example, spent 2.2 billion yuan on its delivery service during the third quarter of last year, according to the company's financial reports. Liu Jianlin, who has been studying the logistics sector for 8 years, told us that running their own logistic systems involves high costs for e-commerce businesses.
"Warehousing, sub packaging, and distribution costs amount for 90% of the total cost. Integrity of delivered goods determines the online shopping experience. And outsourcing deliveries make it difficult to guarantee that. So the e-commerce giants have established their own delivery services to make sure goods arrive intact, correctly and are paid for promptly." Said Liu Jianlin, associate professor of Shanghai Logistics Institute.
The number of China's online shoppers reached 310 million last year. E-commerce consulting firm iResearch says that represents a 48.7% rise in transaction volume to 2013. That's a lot of deliveries.
(Source: CNTV.cn)
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