Growth path: Shift from cost center to profit center

(2) Actively cut into the business outside the system to lay the foundation for Jingdong's retail infrastructure road

For Jingdong Logistics, the positive impact of increasing the proportion of customers outside the system is mainly reflected in the following three aspects.

First, in the early stage, when JD obtained relatively abundant cash flow through financing, it is understandable that R&D expenses and logistics-related capital expenditures were relatively aggressive. However, for a long time, the increase of logistics labor costs along with the expansion of scale and the rising of marketing expenses have a great impact on JD's net profit, and the emergence of scale effects of logistics is expected to bring about improvement of marginal benefits.

Second, the "storage and transportation" mode requires third-party merchants to ship goods to Jingdong warehouse in advance, which on the one hand can continuously strengthen consumers' logistics distribution experience of Jingdong, and on the other hand, Jingdong can carry out logistics timeliness for suppliers. Individualized packaging, supply chain finance and other diversified capacity output to further empower suppliers. In this regard, Amazon's 3P seller realization process is worth learning from: as of the first half of 2019, nearly 6 million merchants have settled on Amazon, and 41% of sellers are active (with active sales). In addition, the head trend is reflected in any e-commerce: about 3% of Amazon's three-party sellers have annual sales of more than $100,000, and 1% of merchants have annual sales of more than $1 million. The commission mode of Amazon 3P business determines that 3P business can earn more service fees, including but not limited to: platform usage fee (professional version seller), single product sale deduction fee of 0.99 US dollars (personal version seller), different categories of product sales deduction points, digital media product sales deduction points, FBA performance service fees (under the premise of using FBA; 83% of Amazon's global third-party sellers already use FBA. Since 2017, Amazon's tripartite service revenue has remained stable at about 18%. In 2019, Amazon achieved $53.762 billion in third-party merchant logistics-related revenue, contributing 19.2% of its operating income.

Third, dilute the cost of single piece logistics. In 2019, the cost of single piece storage of Jingdong Logistics was 5.45 yuan, and the cost of single piece delivery was 7.18 yuan. We believe that with the penetration of Jingdong's logistics network in the sinking market and the further opening of the outsourcing business, the order density will be further deepened, or bring about a further decline in the average cost per unit.

In addition, we believe that other factors affecting the cost of Jingdong Logistics downward include:

(1) The logistics timeliness has basically reached the relatively insensitive zone of users, and it is expected that there is little room for further capital expenditure to improve the timeliness. At present, the cities covered by Jingdong "211" service achieve 2-3 times a day (goods out of the warehouse), and 4-5 times or even more in the promotion node; In addition, the time requirement of "ultra-fast arrival" service is more stringent (delivery within 3 hours, users need to pay extra); We believe that the current improvement of Jingdong's logistics timeliness has entered the relatively insensitive area of users, and the marginal improvement space spent on continuing to improve the timeliness is not large.

(2) Other part-time capacity brings the balance of capacity cost. During the "Double 11" in 2020, Dada Express, the local instant delivery platform of Dada Group, delivered more than 1.1 million orders during 10-11 o 'clock, breaking the peak record of one-hour delivery orders in the same period. Since 2016, Dada Express has launched a comprehensive strategic cooperation with Jingdong Logistics, and during the annual promotion period, Dada will supplement the crowdsourcing capacity of Jingdong Logistics. With the further increase in order density, the adjustment of the ratio of part-time to full-time employees can cushion the increase in personnel costs.

(3) Technological automation brings long-term improvement in human efficiency. In 2019, Jingdong logistics delivery efficiency/year was about 21,000 orders, which changed little compared with the previous two years; Jingdong has begun to vigorously layout unmanned logistics facilities, warehouse automation facilities have been applied in most central warehouses in the country, the automation level of Shanghai Yayi warehouse has reached 90%, Shanghai Yayi warehouse can process more than 1.3 million orders per day in the peak season, Jingdong Logistics all Yayi single warehouse orders per day processing capacity of more than 100,000 orders. Guangzhou, Wuhan, Kunshan and other high automation warehouse daily processing capacity of millions of orders. With the landing of unmanned distribution facilities in the future and the development of personal express business, the reduction of distribution costs and the improvement of human efficiency will bring about a pull.