Pinduoduo, China’s third largest e-commerce company, plans to establish its own logistics data network to speed up deliveries as it competes with market leaders Alibaba Group Holding and JD.com.
Supported by artificial intelligence (AI) and big data technologies, the new operation will offer services including route planning, automated warehousing, parcel sorting and specific systems to improve fresh produce deliveries, according to Shanghai-based Pinduoduo.
“Before we started to fulfil our own logistics, a bulk of our merchants were using our competitor’s system, so we had no visibility between when the merchant ships the goods and when our users receive the goods,” said David Liu, vice-president of strategy at Pinduoduo, in an interview. He said the company received customer complaints about those deliveries.
Its latest initiative would directly challenge the more established Cainiao Network, Alibaba’s logistics arm that was set up in 2013. Alibaba is the parent company of the South China Morning Post.
Founded by Alibaba and a consortium of Chinese logistics companies, Cainiao does not directly employ drivers but operates a logistics information platform that links to network of contractors, warehouse operators and distribution centres that supports both domestic and international shipments. Orders on Alibaba’s Tmall and Taobao Marketplace platforms use Cainiao’s electronic delivery information system.
Pinduoduo’s plan to compete in that field comes at a time when customers in China’s e-commerce market are expecting fast and reliable delivery on top of competitive prices and wide selection of goods.
“It became clear that we needed to have better access and do a better job to give our users transparency [on the delivery of goods],” Liu said. “We want to leverage the data we have about demand and supply, and invest in logistics technology [to provide more value to our users and partners].”
Early this year, Pinduoduo launched its own electronic waybill – a digital document that travels with a shipment describing its origin, destination and contents.
To be sure, Cainiao remains ahead. The Alibaba unit already has plans to open electronic logistics hubs around the world; uses AI to score more than 98 per cent classification accuracy in customs clearance; established a courier service rating system; invested in delivery robots; has an on-demand delivery network covering more than 200 cities in China; and formed a joint venture behind a US$1.5 billion logistics centre at the Hong Kong International Airport that will start operations in 2023
Pinduoduo’s Liu says that the Nasdaq-listed company is not emulating its larger rivals. For example, the company has no plans to operate warehouses or build its own delivery fleet like JD.com, the country’s second biggest e-commerce player.
“There’s a lot of excess capacity in China that can be better leveraged [for logistics],” he said.
The company prefers an “asset-light” business model focused on helping merchants improve their understanding and participation in the retail supply chain, he said. Pinduoduo, which is now China’s largest online retail platform for fresh produce, would use big data analysis to help farmers determine when to plant certain fruits, harvest, package and ship fresh produce so that it gets to consumers with minimal spoilage.
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This article Pinduoduo targets greater logistics support for merchants, rivalling Alibaba’s Cainiao first appeared on South China Morning Post