The economic and geographical differences between China and the United States determine that Amazon logistics is more attractive to C-end than Jingdong logistics

(1) The difference in the development status of the manufacturing industry determines that the development space of B2C and C2C models in China and the United States is not the same

Observing the growth path of Amazon, Amazon started with its own model and launched the 3P platform business in 2001. In 2012, the transaction scale of Amazon 3P platform surpassed eBay and completely became the king of e-commerce in the United States. In addition to its own business, Amazon currently provides more FBA (Amazon Delivery) and trading platform services for merchants, and extends AWS cloud computing services beyond e-commerce, and is committed to becoming an infrastructure provider.

Jingdong also started with self-operated e-commerce and self-built logistics, and the starting point of the model is similar to Amazon, but the difference in industrial background, as well as the difference in economic geographical location between China and the United States, resulting in the development path of Jingdong logistics may not be exactly the same as Amazon.

In the past few decades, the United States has gradually experienced the hollowing out of the manufacturing industry, and the main source of goods in the consumer industry has turned to foreign countries, mainly relying on external input and selling through the establishment of giant warehouses. The offline is Walmart and Cosco, and the online is the B2C model of Amazon. While China is a big manufacturing country, with large and small manufacturers all over the country, Taobao C2C or small B2C transaction mode realizes the link optimization from factory to user, the point-to-point diffuse network structure and the demand for e-commerce services form a high coupling, the network effect can be fully exerted.

(2) The differences in economic geography and other endogenous conditions make logistics outsourcing more cost efficient in China

The rise of China's e-commerce is inseparable from the support of the offline logistics system, and at the same time, it has brought huge incremental demand for the express delivery industry in the early stage of development, forming a constantly strengthening positive feedback. The growth rate of e-commerce GMV and the growth rate of China's express delivery business basically match, and the two are coevolutionary. The express delivery industry in the United States has experienced a price war and reached a steady state before the emergence of e-commerce, forming a situation of UPS, FedEx and USPS. The lack of network carrying capacity designed around business parts and the weak supply force restrict the development of e-commerce such as Amazon to a certain extent.

So, why did the US express demand switch from the B end (manufacturing demand) to the C end, and did not give birth to new logistics companies, but gradually through Amazon's self-built way to meet it?

We believe that the deeper reason for this phenomenon lies in the differences in internal conditions such as economic geography between China and the United States. The most typical characteristic of the geographical economy of the United States is the "U-shaped structure", that is, the left side conducts trade with the Pacific Ocean, the right side conducts trade with Europe, and the important economic belt is almost highly distributed in these two regions. The United States is 2,500 to 2,700 kilometers from north to south, and about 4,500 kilometers from east to west. But the average population density of the United States is about 34 people per square kilometer, and the lower population density and labor costs in the United States make the distribution cost far higher at the end of the country than in China.

Due to the coverage of end outlets and the impact of distribution cost factors, UPS and FedEx later launched the service of e-commerce express delivery products, but also through the cooperation with USPS (UPS or FedEx is responsible for transit and transportation, USPS bear the last kilometer of distribution) to complete. For platform merchants in the United States, Amazon's warehouse arrangement model is more cost efficient than network express (FedEx and UPS model). For example, the full cost of using FBA services (delivery to performance center fee + FBA fee) is less than half of the minimum self-performance fee.

To sum up, the hollowing out of the manufacturing industry in the United States makes the retail industry mainly rely on external inputs, and large retailers become industry chain integrators. Low population density and labor costs make Amazon's self-built distribution more efficient than outsourcing. China's world factories and industrial clusters make C2C e-commerce model and network express mutually promote each other. High labor density and low labor cost make third-party outsourcing more cost-effective comparative advantages.

(3) The response of Jingdong Logistics: the formation of Jingxi Express and the construction of a closed-loop ecology of community group buying

Due to the differences in the development structure of the manufacturing industry and economic geography, the B2C model of Jingdong and the corresponding warehousing and distribution model of Jingdong Logistics have failed to replicate the development road of Amazon in China. With reference to the views of Guangfa Retail's previous research report "Competition intensifies, platform expansion enters the deep water zone", pet products, makeup, diapers and other easy-to-transport standard products have achieved a high e-commerce penetration rate; Fresh, packaged beverages, and packaged food are the main categories with large volume and low online rate. Their common characteristics are high performance cost (heavy, blithe, fragile, perishable, etc.). In the future, such consumer goods need to increase scale effect to dilute distribution cost by increasing order volume. It is more likely to be fulfilled by non-B2C express delivery solutions such as same-city retail and community e-commerce; Due to the lack of perfect external infrastructure that can be directly utilized in the new solution, the trading platform may need to invest part of its own/assets to build a new performance system together with social resources, and even transform the production link (fresh is a typical category), and the return period of investment may be significantly extended.