Dive Brief:
- Unilever will work with Chinese online retailer JD.com to move goods between its warehouses in China, according to Reuters.
- Unilever CEO Rohit Jawa mentioned in his statement announcing the deal that JD.com would be able to help bring the company's products to China's "hard-to-reach communities."
- The company behind brands like Lipton Tea, Knorr, Axe, and Lux Soap was exclusively working with DHL for its Chinese distribution before this deal.
Dive Insight:
Western companies are discovering that in a country with the size and complexity of China, local partners are essential. This deal is the latest case of Chinese e-commerce players providing pure logistics services.
After signing a similar deal with France's Danone last year, JD.com is continuing to play the dual roles of retailer and logistics provider. A major differentiator for the 14-year-old company is providing all of its own logistics, but as e-commerce competitors saturate China's denser urban markets, they too are looking to logistics as a source of growth.
Earlier this year, China's second-place e-retailer invested $2.5 billion in its logistics subsidiary JD Logistics to ramp up its supply chain and e-commerce presence in China. And in June JD.com, which is partially owned by Walmart, raised $500 million in investment from Google in what is shaping up to be a logistics arms race between China's e-commerce players.
In May, Alibaba acquired Chinese courier ZTO and newer player Pinduoduo, founded in 2015, raised $1.6 billion in an IPO in June. Unilever has also been working with Alibaba, JD.com's stiffest competition in e-commerce, to improve its online marketing and digital advertising
All this fierce competition is hitting the Chinese companies' revenue as they expand capacity — JD.com's revenue, announced this morning, missed expectations for the first half of 2018.
