CHINA – Chinese ecommerce firm JD.com has agreed a deal with Unilever to move products like Lipton’s tea and Lux soap between warehouses across China as the consumer goods firm looks to expand sales in more remote parts of the country.
According to Reuters, this deal is the latest move by an ecommerce company to muscle into the territory of logistics companies by leveraging the expertise and supply chains they have built up for their own retail business to offer those services to others.
JD.com said in a statement that Unilever, which previously worked exclusively with logistics firms such as Deutsche Post’s DHL for its China distribution, will use its network to shift goods destined for stores between warehouses.
The move comes as many Western brands are pushing to expand sales to consumers beyond Chinese cities, both online and offline. JD.com agreed a similar partnership with the water subsidiary of France’s Danone last year.
“JD will now help us bring our most popular products to the most hard-to-reach communities in China, securely and quickly,” Rohit Jawa, executive vice president of Unilever North Asia, said in the statement.
JD.com has sought to differentiate itself from bigger rival Alibaba by running all its own logistics, operating over 500 warehouses, and fleets of vehicles, promising it can deliver over 90% of orders on the same or next day.
“JD.com knows that they need to increase the density of shipments within their network and they know it is a way to create a strategic and competitive advantage,” said supply chain consultant Brittain Ladd.
“Once a brand is available in China and customers are buying their products, the big challenge is replenishment and warehouses.”
Unilever signed a strategic partnership with Alibaba in 2015, including using data from its online marketing unit and its cloud business, to improve its digital advertising strategy and expand its distribution channels for rural consumers.
The firms gave no financial details.