JD.com‘s logistics arm is delivering, reporting 30 billion yuan ($4.5 billion) in annualized revenue. In April, China’s second-largest online retailer spun off its in-house delivery platform into a subsidiary – JD Logistics. Skeptics questioned the necessity of such a move and whether the unit could turn a profit in China’s competitive delivery landscape, according to Caixin.
Compared with rival Alibaba‘s Tmall and Taobao – which rely on third parties to offer parcel-delivery services – JD.com has long run its own distribution network. It uses JD Logistics for the delivery of products sold in-house, which account for more than half of the merchandise it sells on its platform. But “these independent merchants are also increasingly shifting to JD Logistics, which significantly contributed to the increase in revenue,” said Wang Zhenhui, CEO of JD Logistics. “We hope to elevate our total revenues to reach more than 100 billion yuan, with more than 50% of orders coming from independent merchants and even from other companies,” he added.