Chen Zhang, Chief Technology Officer, JD.com

Drones, Autonomous Vehicles and Automated Warehouses

Not the future; today – in China – with JD.com

Chen Zhang is JD.com’s CTO, overseeing the company’s R&D capabilities with a focus on addressing the ecommerce industry’s biggest technological challenges. At JD.com, he also leads the company’s programmes to develop innovative and cutting- edge technologies, its external collaboration programs, and its development of international talent. The company recently started testing robotic delivery services and building drone delivery airports, as well as operating driverless delivery by unveiling its first autonomous truck, so we asked Mr Chen to tell us more.

We now have daily operations for drone delivery in several locations in China. We use drone delivery to lower logistics costs and increase efficiency in areas where complex terrain and poor infrastructure make “last mile” logistics challenging.

JD.com is also building out fullyautomated warehouses, including the first fully automated business-to-consumer warehouse in the world, which has already begun operations in Shanghai. Meanwhile, we are leveraging AI, deep learning and image recognition technologies to develop smart logistics solutions.

We’ve been testing autonomous delivery vehicles in a few university campuses in China. In the long term we expect these vehicles to make urban deliveries in locations like corporate campuses and office buildings.

Moreover, we are researching autonomous light electric vans with industrial partners for the delivery of goods from JD’s distribution centres to delivery stations in the future.

How is big data helping put your company compete in the market?

JD.com’s advanced big data analytics are increasingly providing brands and consumers an enhanced shopping experience.

For example, our predictive system uses big data analysis to enable us to dispatch goods more effectively – using this, we delivered an iPhone to a consumer 10 minutes after it went on sale. Our dynamic pricing initiatives maximise efficiency through sophisticated algorithms that provide real-time pricing for 4 million products stored in JD warehouses.

JD.com has joined forces with Tencent, Baidu and other internet giants in China. The partnerships give JD the most complete data set of user habits of anyone in China’s Internet space – extending JD.com’s leadership in offering brands unrivalled insights to help retailers reach the right target consumers quickly and effectively, providing outstanding ROI.

Please tell us a little more about your presentation at the TCG summit this year.

We have cultivated a reputation that is synonymous with high standards of quality, and deserving of our customers’ expectations and trust. We are also working with the most advanced technologies, across all industries to build the future of retail. I’ll introduce how JD.com is leveraging AI, big data, robotics, drones, and other advanced technologies for logistics, supply chain and marketing innovations to set the global standard for e-commerce customer experience.

What do you see as being the key trends in the evolution of consumer demand in China?

The Chinese e-commerce landscape is already one of the most developed in the world, but continues to see tremendous changes. About 18% of retail takes place online in China, about double that of the US. By 2020, Chinese online purchases are expected to exceed those of the US, UK, France, Germany and Japan combined.

China is a mobile-first commerce market and Chinese consumers look for the best consumer experience. On JD.com, about 80% of our orders come from mobile and for our users in many parts of China, same- day delivery is seen as a standard.

Another key evolution is that Chinese consumers are becoming more and more discerning. They look for quality products and therefore, the demand for imported goods is rising sharply. The rapid growth of our cross-border e-commerce platform JD Worldwide is an illustration of this trend.

What are the key factors of differentiation between JD.com and your main competitors in the market?

Unlike pure-marketplace models, we offer a retail model which gains efficiencies from scale. Our nationwide delivery network offers same-day delivery standard, which others in the market cannot compete with.

Through our partnership with Tencent, we have also access to 950+ million active WeChat users, providing us a tremendously powerful channel for reaching new customers and helping brands build name recognition.

Unfortunately, counterfeit products are all too common in the Chinese e-commerce system. Our unique zero-tolerance policy toward counterfeits and our tight control over the fulfilment process and logistics system ensures that we can guarantee our customers authentic products. E-commerce supply chains have become so high-tech and efficient that we believe they will disrupt industries beyond our own. Because of our superior network and technology, we are also increasingly offering our infrastructure and capabilities to companies and industries that aren’t on JD.com, something we call “retail as a service.”

Thoughts on omni-channel?

Today, reaching Chinese customers means for brands developing an omni-channel strategy using online social media channels, CRM & omni channel strategies.

JD.com has been a global leader in the shift to omnichannel.

For instance, we have jointly deployed with Walmart a supply chain and backend system to integrate inventory management. When a customer places an order on JD.com, our order management system will determine whether a JD.com warehouse or Walmart store is closer to the customer, and dispatch a courier accordingly. We also launched JD-Tencent Retail Marketing Solution. We co-develop a secure database of shopping data that will give brands the ability to better understand user preferences and target potential consumers, regardless of whether consumers choose to shop online or in-store.

We are also rolling out offline “JD Retail Experience Shops”, where customers can touch and feel products sourced from JD.com. JD’s technology, powered by predictive analytics using big data, will keep offline stores stocked with recommended categories and suggested amounts of products, while localizing the selection depending on consumer buying preferences in each location.