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China e-commerce giants eye hi-tech fulfilment

News, 24 May 2017
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BEIJING: Chinese e-commerce site JD.com has announced plans to build drones capable of carrying a one-tonne payload for long-distance deliveries.

JD.com said it would test the machines on a network in the northern province of Shaanxi – with a 300km radius – with the purpose of trialling a system to carry consumer goods to remote rural areas while bringing farm produce back to cities, the Japan Times reported.

"We envision a network that will be able to efficiently transport goods between cities, and even between provinces, in the future," Wang Zhenhui, CEO of JD's logistics business group, said in a statement.

JD has been delivering with drones since last November, when it gained permission to operate drones capable of delivering packages weighing 5-15kg over a distance of 50km. But an operational one-tonne capacity drone is probably two to three years away, Recode noted.

In January, a report from Citigroup suggested that China's "light regulatory touch" was one of the "magic ingredients" spurring digital disruption, with the effect of accelerating the adoption of drone technology.

JD's delivery system works quite differently from Amazon's drone trials. In an interview with Recode in late 2016, CEO Richard Liu told the site that the drones were designed for city to countryside delivery, rather than last-mile fulfilment.

Also, and unlike Amazon, which is currently trialling direct-to-customer delivery in Cambridge (UK), JD will have a dedicated delivery man  in every village to receive parcels and take them to different houses.

According to Liu, delivering by drone to rural areas can be at least 70% cheaper than delivery by road, a reduction that has helped JD expand into rural areas without enormous cost.

As the total number of parcel deliveries in China grew to around 31.3bn in 2016, Alibaba, the largest Chinese e-commerce site, has reacted with plans to optimise its courier network using artificial intelligence, according to the South China Morning Post.

"In the next five to eight years, the number of parcels in China may surge to 1 bn per day," said Alibaba founder and chairman, Jack Ma. "That will bring with it huge challenges to every logistics company.

"The only solution to this challenge is to invest in cutting-edge technology."

Data sourced from the Japan Times, Recode, Citi Group, Ars Technica, China Daily News, South China Morning Post; additional content by WARC staff

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