AI Industry

Extreme E-Commerce: Shipping 2.8 Billion Singles’ Day Parcels

China’s National Post Bureau forecasts some 2.8 billion parcels will be shipped between November 11-18th. While robots will do much of the heavy lifting, an average human warehouse worker will cover 42 kilometers per day, equivalent to a full, sweaty marathon.

Chinese media is reporting that Alibaba’s “Single’s Day” sales hit US$38.4 billion, surpassing last year’s record of US$30.8 billion for the annual November 11 online shopping extravaganza that dwarfs Black Friday. Alibaba shopping platform Tmall processed over 544,000 transactions during a single peak second, 1,360 times more than the 2009 record. With the shopping done, the next challenge is delivering all these purchases.

Total Gross Merchandise Value (GMV) hit CN¥100 billion (US$14.2 billion) in just 63 minutes and 59 seconds

China’s National Post Bureau forecasts some 2.8 billion parcels will be shipped between November 11-18th. While robots will do much of the heavy lifting, an average human warehouse worker will cover 42 kilometers per day, equivalent to a full, sweaty marathon.

The 2013-2018 compound growth rate for e-commerce delivery parcels was a staggering 46.7 percent. Aside from Singles’ Day, other big online shopping events have sprung up across China, where there is now one almost every month. These are largely supported by a happy marriage between social media and e-commerce on creative platforms such as Pinduoduo and Little Red Book.

Logistics are so integrated in e-commerce that delivery speed is now a huge part of the sales pitch. Next- and same-day delivery options are no longer a luxury, they are expected. According to 2018 Courier Service Punctuality Test about 80 percent of Chinese parcels are delivered within 72 hours.

The distance between major US cities can be over 4,000 kilometers with surface transport time of five days. In China, 96 percent of the population is concentrated in the east, with major cities separated by only about 1,500 kilometers, enabling two day delivery in most cases.

Geek+ is a Beijing-based logistics and warehousing company that raised US$150 million in its B+ round in Q3 2018 to ascend to the level of unicorns like Quicktron, Hikvision that have seized 80+ percent of their markets. Geek+ CTO Hongbo Li says China is now both the world’s largest e-commerce market and manufacturing base, a “spectacular” combination of forces.

Geek+ is one of many Chinese companies to have introduced intelligent robots in their warehouses, backed by more than 30 domestic robotics vendors. At the Geek+ facility in Nanjing, automated bots shaped like giant beetles shuttle back and forth, plucking items from the endless rows of shelves. Staff onsite tells Synced that a robot infused with a QR-code operating system costs about the same as one human warehouse staff’s annual salary, while the SLAM-powered OS bots cost about twice that. In 2018 Geek+ sold nearly 5,000 automated guided vehicle (AGVs) to help with item picking, handling and sorting.

Geek+ Nanjing facility

The main tasks in warehouses include unloading, handling, storage, picking, reviewing, and packaging. Picking goods accounts for more than 20 percent of human labour time and packaging costs another 50 percent. An integrated algorithm-designed Warehouse Management System (WMS) optimizes storage layout and dispatches bots which can perform warehouse tasks three to five times more efficiently than human workers.

Across the Pacific the e-commerce landscape is dominated by Amazon, which owns 49.1 percent of all North American online retail. The company’s same- and next-day delivery options have revolutionized online shopping in the US, while the new Amazon “Prime Day Sales” events also put heavy emphasis on delivery speed. In a bid to slash delivery times, Amazon built its own efficient warehouses and last year acquired robotics company Kiva to populate the spaces with dedicated bots.

Of course, while most shipping is unidirectional, e-commerce companies sometimes also have returned items to deal with. “Returns are not a simple classification, there are many additional operations,” explains a Geek+ logistics expert, noting that impulse purchases and items subject to size and colour variations such as shoes and clothing are among the most frequently returned. And yes, there are robots to handle that.

Driven by increasingly demanding online shoppers, the speed and volume of e-commerce delivery is bound to swell in the near future. In 2013 Alibaba delivered 100 million parcels in an average of 9 days. Four years later, wait time was shortened to 2.8 days, with cost of parcel shipping declining at a compound annual rate of 16.7 percent.

The fear of automation causing job losses meanwhile has not been realized in the Singles’ Day scenario. Each year, China’s courier service providers hire an estimated of 400 thousand temporary workers to meet the demands of Singles’ Day — a number that is likely to stay high in the foreseeable future, even as more robots come on board.

Source: Synced China

Localization: Meghan Han | Editor: Michael Sarazen

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