Chinese consumers and businesses are ordering more online and that’s driving parcel delivery volume higher each year.
That growth continued in the first half of 2017 when parcel deliveries in China totaled 17.32 billion units, a 30.7% increase from a year ago, according to China’s State Post Bureau, the agency that governs postal deliveries in the country.
While 98% of those deliveries originated in China, there were 360 million international parcels delivered in the first half, a 29.2% increase over the same period a year earlier. China’s growing middle class covets imported goods, and the country’s leading e-commerce operators have responded by creating special sections of their e-commerce sites where consumers can order goods from abroad that enter China under relaxed cross-border e-commerce rules. Those rules don’t require the certifications demanded when retailers bring goods into China in bulk.
For example, Alibaba Group Holding Ltd., whose Taobao and Tmall online marketplaces account for roughly 70% of Chinese online retail sales, has created the Tmall Global marketplace featuring goods from 14,500 international brands. JD.com Inc. operates the JD Worldwide marketplace with some 10 million items from abroad, and the Amazon China unit of Amazon.com Inc. has a special area called Haiwaiguo, which means “shop from abroad” in Chinese.
JD.com is No. 1 in the Internet Retailer 2016 China 500, which ranks retailers by online sales of goods they own, and Amazon China is No. 4. Alibaba is not ranked in the China 500 because it is not the merchant of record for goods sold by the millions of merchants selling on its marketplaces.
The growth in online orders is driving up revenue for delivery service firms; revenue increased 27.2% to 218.12 billion yuan ($32 billion) in the first half of 2017 compared with the prior-year period, the State Post Bureau reports. Those delivery services increasingly are investing in so-called cold chain transport facilities that allow them to deliver fresh food orders online.
Shipping service appears to be improving in quality, according to the report. The agency says customer complaints decreased to 6.6 per 10,000 deliveries in the first six months of this year compared with 10.5 a year ago.
An example of a firm benefiting from the delivery boom is local shipping company New Dada . The company, backed by JD.com and Wal-Mart Stores Inc., which owns about a 12% stake in JD.com, is providing one-hour delivery service in 350 Chinese cities.
New Dada relies on an Uber-like crowd-sourcing business model, and 3 million people have registered as delivery workers, either part-time or full-time, to help deliver grocery products to some 30 million consumers from 800,000 merchants, including JD.com and Walmart.
China’s National Bureau of Statistics separately has reported that Chinese consumers purchased 3.11 trillion RMB ($463 billion) worth of goods online in the first six months of 2017, up 33.4% from a year earlier.