JD.com Looks to Lower-Tier Cities across China for Further Growth Post Pandemic

JD.com is looking at ways to better serve lower-tier markets as a major opportunity for post-pandemic economic recovery. Online retail sales of physical goods in lower-tier markets will amount to an estimated ¥8.1 trillion (around $1.25 trillion) in 2025—representing a CAGR of 18.3% from 2018 and accounting for around 45% of total online retail sales in China, according to Xingye Research. These estimates were made before Covid-19, but it could be that following the crisis, lower-tier markets will act as an even more important growth engine for an economy that has slowed.

As part of the upgrade, JD Logistics is linking its 12 highly automated logistics parks to its 13 local warehouses to form an integrated network. The company said that these local warehouses are currently seeing up to 90% of orders come from Tier 4 to Tier 6 cities. The logistics parks, known as “Asia No.1,” are located in provincial capitals including Changchun, Shenyang and Taiyuan. They feature automated sorting machines and a smart warehousing software system, which uses algorithms to perform scheduling, coordination and optimization. The integrated network of logistics parks and warehouses will enable a higher number of marketplace merchants to store merchandise, and ensure a high speed of picking, packing and last-mile delivery to the consumer.