October 18, 2018 / 5:19 AM / a month ago

JD.com spies profits in China's giant parcel delivery market

SHANGHAI, Oct 18 (Reuters) - Chinese e-commerce firm JD.com Inc said on Thursday it was launching a parcel delivery business, a move which could help the firm leverage its network of warehouses and drivers to bolster flagging profits.

The shift pits JD.com into greater competition with major rival Alibaba Group Holding Ltd’s Cainiao network, as well as dedicated domestic parcel delivery firms such as ZTO Express and YTO Express Group Co Ltd.

China’s second-largest e-commerce firm, which counts Tencent Holdings Ltd, Walmart Inc and Alphabet Inc’s Google as investors, has been looking to squeeze more from its extensive warehousing assets to boost growth.

The firm - which prides itself on owning and controlling its own logistics network - posted a second-quarter net loss of $334.4 million, steeply below what analysts had expected amid rising investment costs and slowing sales.

“This marks the next step in leveraging the nationwide logistics network that JD has built over the past decade,” Zhenhui Wang, CEO of JD Logistics, said in a statement posted on JD.com’s website.

“JD.com is known throughout China for the fastest and most reliable delivery, and we are confident that users will appreciate the convenience of this new service.”

JD.com said the new service would allow businesses and individuals in Beijing, Shanghai and Guangzhou to send parcels to locations around China, using the firm’s app to schedule a pick-up by one of the company’s staff.

The firm “aims to eventually make residential and business deliveries for shippers from anywhere to anywhere within mainland China in the future”, it added in the statement.

China’s express delivery market was worth around 976 billion yuan ($140.7 billion) last year, the State Post Bureau said in January, 32 percent up versus 2016. Delivery firms dispatched about 40 billion parcels last year. ($1 = 6.9352 Chinese yuan renminbi) (Reporting by Adam Jourdan; Editing by Stephen Coates)

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