What’s the Story?

In our monthly countdown to Singles’ Day, also known as the 11.11 Global Shopping Festival, we help brands and retailers to prepare for the event and make the most of the huge opportunities it represents.

We discuss how Alibaba and JD.com, China’s e-commerce titans, have prepared for this year’s event in terms of technological improvements in shipping processes, expansion of logistics capabilities both domestically and internationally, and the implementation of sustainability initiatives in light of China’s latest five-year plan (2021–2025).

Why It Matters

China is the world’s largest logistics market, with total revenue amounting to an estimated $2.3 trillion in 2020 and forecast to reach $3 trillion by 2025, according to China Insights Consultancy. The number of parcels delivered has been increasing at a steady rate in recent years, growing 31.3% last year to reach 83.4 billion, according to the State Post Bureau and Huaan.com (see Figure 1).

Indicating the scale of Singles’ Day in China, the event saw a record 675 million packages handled on November 11 alone, according to the State Post Bureau—up 26.2% over Singles’ Day 2019. To prepare for this year’s shopping festival, Chinese e-commerce giants are continuing to invest in initiatives to upgrade logistics technologies, trade routes and warehouse spaces.

Figure 1. China’s Package Annual Parcel Deliveries (in Billions of Parcels)

One Month to Singles’ Day: In Detail

Worldwide Logistics Expansion

Alibaba and JD.com have invested in their respective logistics arms, Cainiao Smart Logistics Network and JD Logistics Group, to enhance and secure both domestic and international trade routes and warehouse capabilities. As the trend of increasing international demand for goods shipped from China has led to corresponding investments in international logistics, we expect Singles’ Day 2021 to have a greater international focus than prior shopping festivals.

Alibaba

Alibaba’s Cainiao has taken several steps to expand its international networks, which focus on shortening delivery times and strengthening international cargo routes:

• Cainiao has quadrupled its fleet of chartered flights from 260 to 1,250 since June 2020, as part of efforts to shorten its delivery times to 24 hours within China and 72 hours globally, according to Alibaba’s news arm Alizila.
• Cainiao also announced plans last year to double the floor space of its overseas warehouses to more than 2.1 million square foot to expedite the 30 million China-bound goods that are processed by the logistics platform daily.
• In May 2021, Cainiao launched an East-Central air cargo service, operating five times per week service between Budapest (Hungary) and Zhengzhou (China).
• In June 2021, Cainiao launched an Africa air cargo route, operating a service six times per week between Lagos (Nigeria) and Hong Kong, six times a week—cutting transit times from 60 days to 20 days.

We expect that these changes will be essential in facilitating international package delivery for Singles’ Day 2021.

JD.com

JD.com also purchased a controlling stake in China Logistics Property Holdings Co. in September 2021. The deal valued the logistics firm at about $2.1 billion, and is another step toward the company’s goal “to become the world's… most trusted supply chain solutions and logistics services provider.”

To expand its logistics networks and meet the pandemic-accelerated demands of e-commerce, JD.com has increased the number of its warehouses to 1,200 this year from 750 in 2020, which is an increase of 56 million square feet, according to the company’s latest earnings report. JD Logistics is also focused on its establishing cold-chain logistics capabilities in over 100 Chinese cities. This development in logistics infrastructure opens opportunities for the sale of perishable goods during Singles’ Day 2021, which require speedy and often refrigerated deliveries.

Investment into Automation

Cainiao and JD Logistics have both shown strong growth in 2021 and continued to invest in cutting-edge autonomous robots, big data and AI technologies. Although these innovations are not yet developed to a point that they can replace human labor, we expect that they will be used during Singles’ Day 2021 to facilitate logistics and cut labor costs.

Alibaba

Cainiao has made investments into automated delivery robots. The Xiaomanlv autonomous logistics robot is the company’s most advanced self-driving vehicle. The robot can deliver 50 packages at a time and as many as 500 boxes in one day, covering 100 kilometers on a single charge, according to the company. Cainiao has reported that it currently deploys 200 Xiaomanlv robots across 52 cities and has announced plans to roll out 10,000 robots over the next three years. However, it will be three to five years before Cainiao is able to utilize robots in “faster-speed scenarios and make deliveries over longer distances,” according to Wang Gang, Head of Alibaba’s Damo Autonomous Driving Lab in Hangzhou.

In June 2021, Alibaba announced that it will establish a series of 100,000 Cainiao Post Stations that will operate alongside Xiaomanlv robots to form a network of consumer-facing logistics, and we expect that this system will facilitate high-volume operations during Singles’ Day.

JD.com

JD Logistics relies on AI, big data and automation and offers supply chain solutions including warehousing, transportation, delivery, after-sales service, and smart and cross-border logistics. Despite this, the final leg of the delivery still depends on over 200,000 human couriers, with labor costs accounting for over 40% of total operating expenses and revenue costs for the last three years, JD.com reported in May 2021.

As part of JD.com’s investments in autonomous vehicles and robots, the company has created a fully unmanned warehouse in Shanghai.

Although we expect human labor to primarily facilitate delivery during this year’s Singles’ Day—as automation safety testing is still ongoing—technology developments and investments indicate that future shopping festivals could feature high levels of automation in the last mile.

Sustainability Initiatives and Partnerships

China’s 14th five-year plan (2021–2025), places an emphasis on sustainability, outlining plans to boost plastic recycling and incineration capabilities, promote “green” plastic products, and restrict the overuse of plastic in packaging and agriculture, while incentivizing businesses to minimize waste through a newly created punitive compensation system.

Aligning with China’s sustainability focus, Alibaba and JD.com have taken steps to reduce the volume of packaging waste and rely on greener alternatives, and we expect that they will double down on these initiatives moving forward.

Alibaba Group’s carbon footprint shrank by 18% on a daily basis during China’s mid-year shopping festival (6.18) in 2021, according to the company. We expect the company to be similarly focused on reducing carbon emissions on a year-over-year basis during Singles’ Day.

During Singles’ Day 2020, Cainiao’s smart-packaging algorithm helped to minimize waste from overpacking for over 12 million shipments, the logistics company reported. Following the event, Cainiao confirmed that nearly 100% of the packaging shipped from its warehouses are biodegradable, and close to 50% of the paper packaging are tape-free. We expect that Cainiao will partner with retail businesses to decrease waste and improve sustainability during the 2021 shopping festival—as evidenced by its recent partnership with Nestlé, to make the Swiss food giant’s supply chains in China greener.

JD.com is cutting down on packaging materials. The company’s first ESG (environmental, social and corporate governance) report, published in April 2021, stated that the company achieved a reduction of 180 million disposable foam boxes and 600 million disposable ice packs used in cold chain boxes in 2020. In addition, JD.com reduced in tape usage by 400 million meters through its promotion of “slim” tape, which is 45mm in width compared to the previous width of 60mm.

JD.com is encouraging merchants to apply external drop-shipping to further reduce packing use and waste. We expect the company to continue finding methods to reduce packaging waste and invest in developing sustainable packaging alternatives for Singles’ Day 2021 and beyond.

What We Think

We expect that Singles’ Day 2021 will incur massive logistical challenges given the spike in deliveries during the festival. Alibaba and JD.com have made efforts over the past year to improve their logistics networks in China and worldwide. Given the investments into international trading routes and the expansion of warehouse square footage, we expect that Alibaba and JD.com are preparing for Singles’ Day to have a significant international presence this year, as well as for international logistics challenges to be heightened amid the impacts of the pandemic.

We expect sustainability, particularly in packaging and waste reduction, to be a focus for major e-commerce companies during Singles’ Day and beyond, particularly given the Chinese government’s commitments to reducing waste through the next five years.

We advise both international and China-based retailers to partner with Cainiao or JD Logistics during Singles’ Day to take advantage of the e-commerce giants’ expansive logistics networks, massive warehouse spaces and timely delivery capabilities.