Late on a Monday morning the village of Zhangwei is quiet. Chickens scratch and cluck at the side of the road. Workers use wooden spades to spread grain on the highway to dry, using half its width so that traffic can still pass on the other side.
Yet at the community center at the village’s heart, two objects hint at a feat of ultramodern logistics about to unfold: a circle of green AstroTurf laid down in the central courtyard, and a billboard on the front of the building bearing the logo of JD.com, China’s second-largest online retailer.
A low whir breaks the stillness as a spiky dot appears on the horizon. The drone arrives overhead with a roar, hovers for a moment, then lowers itself toward the green circle like a mantis, three sets of propellers churning the air into whorls of straw and dust. Slung beneath it is a red cardboard box branded with JD’s cheery dog mascot. Just a few feet above the ground, the drone drops the box then zips back up into the sky and disappears. The spectacle is over in 20 seconds.
It is a link in a new kind of logistics chain, the world’s first operational drone-delivery program. While Amazon has put out numerous promotional videos on its drone-delivery plans, it will not start commercial operations until at least 2020. Meanwhile, JD.com has spent the past year building a real drone-delivery network covering 100 villages in rural China with 40 drones.
Zhangwei receives a couple of drops each day, each box containing several packages ordered through JD’s shopping app. Thanks to JD’s drones, which operate autonomously with no human guidance but are monitored remotely, villagers in Zhangwei can expect delivery on the same day that they place an order, like urban shoppers in Beijing, New York or London.
Boom of rural retail sales
The practicalities of drone delivery only make sense in rural settings. Flying in chaotic urban environments is too difficult for existing drone technology. Densely populated cities generate sufficient orders over a small area that they can be aggregated into daily, or even more frequent, deliveries by van.
Some 600 million Chinese live rurally and their shopping habits are encouraging the e-commerce boom, according to official figures. Online retail in rural areas grew by 39 percent in 2017, up to 1.24 trillion yuan ($183 billion). JD sees the upside in providing fast, reliable delivery to the countryside, helping it to take a larger slice of this business.
It is still waiting to earn back its investment in drone-delivery infrastructure, although it said that making a delivery by drone costs a fifth of the price than by man-and-van, once the driver’s labor is taken into account. Liu Qiangdong, JD’s chief executive, said drone delivery will cut costs by 70 percent once it is scaled up across the country. Villagers tend to buy washing powder, accessories for their phones, maternity goods and fresh food. The firm has made 20,000 such deliveries to date.
Suqian, which is near Zhangwei, was chosen as JD’s first drone delivery hub because of the region’s flat terrain, which makes drone flight easier. The city is also Liu’s hometown and he started the program there in an effort to speed its development. The firm runs two drone-dispatch centres. They cover 15 villages between them. There are more drone bases in Shaanxi province, covering a total of 100 villages.
Once the drone’s cargo hits the ground, its contents pass over to the “drone postal worker” for delivery. This is either a local JD promoter, whose primary job is teaching villagers how to use JD’s shopping app, or a worker hired on China’s leading crowdworking platform, Dada.
Financial questions remain
In Zhangwei, JD’s local promoter, Zhang Xiaoyan, takes possession and rings the owners of the packages to see whether they are home. Only one is, so he leaves the other two at the local shop and sets off on foot to the Jiang household. The son, who placed the order, is not at home, so his mother accepts it for him. It is a phone case, ordered the previous day. Jiang said she likes the drone-delivery program because it can get products to her door so quickly, but she would not want there to be many more of them flooding the skies.
JD may have added drones to daily Chinese village life, but whether they will make financial sense for the company over time remains to be seen. Current models of the drones are pricey.
The government approves of operations in rural areas, and is planning to build a new train station in Suqian next to JD’s drone base. If JD can use drone delivery to cut its costs and attract rural shoppers, that will help the firm compete with its archrival in e-commerce, Alibaba, which has not, as yet, seen the value of drone delivery. JD hopes that will prove to be a mistake.