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Oct. 19 (NBD) – The logistics arm of China's e-commerce titan JD.com (NASDAQ: JD) announced Thursday it will launch a package delivery business accessible to non-corporate individuals.

The new services will be first rolled out in Beijing, Shanghai, and Guangzhou, allowing customers there to send items throughout mainland China, and it then be extended to the whole country next year.

JD Logistics has established a huge logistics network with tens of thousands of delivery staffs after years of development. The entity's launch of parcel delivery services for individuals is acknowledged as a natural advance based on mature logistics infrastructure.

The company, of course, is also eyeing the whopping profits in the parcel delivery market. Compared with corporate customers, individual customers are less sensitive to prices, so profits will be bigger.

Individual-oriented logistics will be a basic foundation for JD.com's logistics subsidiary to gain self-renewal and self-development, Yang Daqing, purchasing and supply chain expert with China Federation of Logistics & Purchasing and contributing professor at China Society of Logistics, said to 21st Century Business Herald.

In recent years, China's parcel delivery market has enjoyed booming development. As of October 2016, parcel delivery firms YTO Express, STO Express, Yunda Express, and SF Express have been successively listed, marking a milestone in the capitalization of private express firms in China. 

According to statistics from the State Post Bureau, China's parcel delivery volume exceeded 40 billion pieces in 2017, contributing 662.26 billion yuan (95.44 billion U.S. dollars) in revenue, a year-on-year increase of 23.1 percent. The first half of 2018 saw the domestic delivery volume reach 22.08 billion pieces, generating 274.5 billion yuan (39.56 billion U.S. dollars) in revenue, a rise of 25.8 percent over the previous year. Growing market demand shows great room for development of the industry.

But vigorous market means fierce competition. JD Logistics' move will throw itself into wars against traditional domestic parcel delivery firms especially SF Express with similar positioning.

In experts' view, compared with SF Express, JD Logistics boasts an advantage of low cost since its marginal costs can be cut to a low degree due to large e-commerce business volume.

Yang Daqing also added JD Logistics enjoys tremendous traffic from JD.com and Tencent, but SF Express has built strong brand effect and customer stickiness in the industry, which makes it rather hard for the former to surmount.

More challenges await JD Logistics in the future since its capability of receiving and distributing packages of individuals is yet to be tested by the market. As a new comer, the logistics firm still has a long way to go.

Email: wenqiao@nbd.com.cn