JD Built the Equivalent of Monaco in Warehouse Space in 3 MonthsBloomberg News
The Chinese giant rivals Amazon in adding logistics area
JD has said the costly approach is the key to the longer term
JD.com Inc. added so much warehouse space in three months that the new construction could cover just about every inch of Monaco, a pace of expansion that rivals growth at Amazon.com Inc.
China’s second-largest e-commerce service added 2 million square meters (21.5 million square feet) of warehouse space from July to September, about equal to the span of the city-state famed as a getaway for the rich. It ran 405 warehouses encompassing 9 million square meters at the end of September -- adding about a warehouse every one to two days. December-quarter data won’t be available till JD reports results, which aren’t expected till at least next month.
JD builds and runs its own nationwide logistics chain, a costly approach that’s weighing on profitability but that it believes is crucial to competing against larger arch-foe Alibaba Group Holding Ltd.
To JD, controlling the infrastructure means faster delivery and happier customers, a philosophy it’s taking to new territories such as Indonesia. Alibaba, in contrast, had depended on third party shippers before agreeing to take control of main delivery affiliate Cainiao.
JD’s experience running inventory may give it a leg up as both push into physical retail, opening supermarkets and stores across the country to augment their online dominance. Amazon’s own global leased and owned floor space grew by 3.68 million square meters over all of 2016 -- a figure that also includes an extensive array of data centers.
— With assistance by David Ramli