JD.com, China’s second largest online retailer, is set to expand its drone delivery routes to reach a growing network of rural villages following a successful program launch last year.
The retailer, China’s closest rival to online giant Alibaba, has been using drones to deliver goods across four Chinese provinces including Jiangsu, rural Beijing, Sichuan and Guangxi since last year.
The company currently runs about 20 fixed delivery routes, but plans to expand its reach to more than 100 routes across the countryside by the end of 2017. To do so it will need approval from local governments across China, on top of the regulatory approval it secured last year.
Reducing supply chain costs
According to reports in Bloomberg, JD.com operates much of the logistics pieces needed to transport its goods. Managing this supply chain is expensive and has led JD to search for cheaper alternatives, and drones could be the answer in rural areas where deliveries can cost up to six times more than a city delivery.
The company has developed an initial batch of five drones that are all pre-programmed to suit delivery for different parcel sizes and delivery distances.
When a customer places an order, typically via a smartphone, a package is sent from a warehouse or distribution point to a delivery station. From there, workers will attach the package to one of the five drone types which then flies to a rural village contractor, who will make the final delivery to the customer’s home.
This differs from Amazon’s delivery system in the U.K., which uses drones to deliver products directly to a customer’s front door.
JD.com says it has a network of around 300,000 contractors to cover an estimated 600,000 villages.
JD.com seeking to rival Alibaba
Drone deliveries are not uncommon these days, with Amazon, Alibaba and 7-Eleven examples of those who have trialed the technology at some point, but for now deliveries are limited to rural areas with large open spaces due to safety regulation around drone flight.
Nevertheless, the opportunity to tap into commerce from the rural villages of China presents a huge business opportunity and the chance for JD.com to become even more of a threat to rival Alibaba.
Chen Zhang, JD.com’s chief technology officer, told Bloomberg: “This is something we look at as a long-term project. The benefits are tremendous if we get it into the most expensive areas of China.”
“In some places, the villagers place an order and get the delivery in a few weeks. Now maybe it’ll come in a few days,” he said.
Zhang believes that drones will form a crucial link between rural consumers and urban producers, saying “We’re not just playing around with technologies. We’re making social impacts.”
Limitations at home and abroad
Richard Gill, CEO of Drone Defence, believes JD.com’s approach will be effective in rural areas, but a downside is the fact that manual effort is still required to complete the delivery.
He also noted that “the drones used by JD.com do not appear have any other sensors to help them position themselves meaning they likely rely on a single locating method, GPS.”
“This may be fine for rural China but more robust communications, navigation and command links would be required before this drone delivery method could be adopted in the US or UK. In my view Amazon don’t have anything to worry about yet but it is good that more people are finding useful commercial applications for drone technology.”
However, in terms of replicating this system across other parts of the world, Bob Tarzey, an analyst at Quocirca, told Internet of Business that “The Chinese model is easier to achieve as it uses fixed destinations with a delivery person receiving goods and delivering on to the intended recipient.”
“Of course, this means the drone can land away from crowded places, houses etc,” he said.
“Delivering to each individual premises will be much more challenging technically. I don’t know about the USA, but in the UK, until rules about VLOS (visual line of sight) are changed, then there will be no delivery by drones in the near future operating over distance as the operator has to be able to see the drone at all times.”