Making the purchase in the supermarkets of the Hema chain is as easy and quick as ordering a pizza. Simply choose what you want to buy in the mobile app that the company has designed and, in a maximum of half an hour, the order is prepared and a messenger takes it home. The same happens with the food at home. Companies in that sector, such as Meituan or Ele.me, became popular in China long before Glovo or Deliveroo, and their turnover paled that of any other company in the world.
Meituan Dianping, for example, exceeds 400 million users and 5 million affiliated restaurants, manages 20 million orders a day, has almost 600,000 active messengers and the first quarter of the year closed transactions worth 75.6 billion yuan (9.7 billion euros), 38.6% more than the same period of 2018. According to the company, the speed of its service -28 minutes on average- is largely due to the technological advances it has adopted, and underlines one: the artificial intelligence system that determines the best route for a group of orders in 0.55 milliseconds.
Thus, it is not surprising that streets and highways are taken by a swarm of trucks, vans and electric bicycles dedicated to the distribution of all types of products. The madness of home delivery is such that the latest trend is to order a coffee from your mobile. He opened the ban Luckin Coffee, which seeks to compete with Starbucks by minimizing the space of their physical premises and betting on delivery by messenger. Last year it sold 85 million coffees to more than 16 million customers, in March it already had 2,370 establishments -whose function is almost exclusively to make the coffees and distribute them- and aims to reach 4,500 this year. If it succeeds, it will have surpassed Starbucks, which until September of last year did not offer home delivery service.
The business model of these Chinese companies generates many doubts, because the majority is locked in a fratricidal competition that is transferred to the income statement with large red numbers. It is a fact that has scared away large multinationals like Amazon, unable to break through in the minefield that is the Chinese market. Although it is possible that there is a brutal consolidation that has swept dozens of companies in the sector of shared bicycles, it is clear that this war to attract customers and the logistical leap that has given the second world power have changed forever the consumption habits of the Chinese population.
Buy through mobile is now the usual. Especially among young people. And not only do it in Amazon-style e-commerce platforms, such as Taobao or JD, but in shops of all types and sizes. Nor is it an exclusive transformation of the big cities, as is often the case in the West: the Cainiao logistics network, owned by Alibaba, already reaches 40,000 villages. So, in 2018, in China, 50 billion packages were sent, a figure that is expected to grow to 71,000 million next year. Emarketer also foresees that by 2020 e-commerce in China will reach a volume of 2.5 trillion dollars, almost one trillion more than the sum of the rest of the world.
This situation has two important consequences: on the one hand, an unprecedented boom in the demand for warehouses, which last year occupied more than 50 million square meters and which is expected to reach 60 million in 2019; on the other, a technological career to automate them and thus achieve greater efficiency of operations. There is room for improvement, because the cost of logistics in China it is 14.6% of GDP, almost double the 7.7% that it represents in the United States.
Suning, the largest multi-channel retail chain of the Asian giant, which at the end of last month gave the bell by taking over 80% of Carrefour China for 615 million euros, is a good example of how the sector is adapting. It was born with large physical establishments dedicated to the sale of household appliances and electronic devices and already operates more than 11,000, but has evolved towards a hybrid model in which online sales are increasingly more important. And to encourage them, it has launched an ambitious project to adapt its logistics infrastructure.
With current technology, it is very difficult to improve efficiency
Richard Liu, founder of JD
The Yuhua warehouse in Nanjing is one of the most advanced facilities of the company and the goal is to mark the way for the rest. "Operating costs in China, from real estate to labor, have increased considerably. So we can only be competitive if we increase efficiency to the same extent. In this aspect, technology is key, "explains Xue Fanhai, deputy director of the facilities. Suning is not the only one betting on the latest advances in artificial intelligence and automation: one of its main competitors, JD, believes that with these two elements it can absorb an increase in demand of up to ten times the current volume. "With current technology, it is very difficult to improve efficiency", affirmed Richard Liu, founder of JD.
The Yuhua warehouse of Suning employs 400 people, but in the 200,000 square meters of its surface it costs to run into them. In each process there is hardly one or two workers. The rest of the tasks is a matter of robots that go up and down and automatic tapes that come and go. "With this system, which we have developed ourselves, each worker manages around 1,200 products per hour. Ten times more than with traditional stores. And when the 5G network enters service, we hope to substantially increase that figure, "adds Xue. All this affects, without the need for workers to travel dozens of kilometers and make strenuous journeys looking for packages.
He prefers not to refer to the competition by name, but Xue says the Nanjing warehouse, capital of the eastern province of Jiangsu and home to Suning headquarters, is the largest in Asia and one of the five largest in the world. . "We can store up to two million products and ship an average of half a million per day. Our record, the Day of the Singles – the main consumer orgy of Chinese cyberspace, which takes place every November 11 – was 1.8 million, "says Xue while showing the automated lines through which the products run. "It is also one of the most advanced," he says.
A system of bar code readers separates them into different boxes equipped with chips that store all the data of the orders. Most of the products arrive automatically until these yellow plastic crates, but there are some that by their form or size have to be entered manually. "Some people criticize that all this automation destroys jobs, but we are still hiring people to face the huge demand of electronic commerce. In fact, in the warehouse we duplicate the template every year, "reports Xue. This year alone, Suning expects to add 80,000 employees to its workforce. The next step, says the company, will be to start up the fleet of autonomous vehicles: it has already started to experiment with small delivery vans that cover the last five kilometers and with 40-ton trucks.
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