(Yicai) May 8 -- Pinduoduo has secured a license to run courier distribution hubs, that deliver parcels to and pick packages up from customers, through an affiliate in a step that will give the Chinese e-commerce giant greater control over the final link in the logistical chain that connects directly to the buyer.

Pinduoduo Distribution Hubs will be operated by a company called Yucan, whose legal representative is Pinduoduo’s co-chief executive officer Zhao Jiazhen, according to the State Post Bureau website. The Shanghai-based firm, along with its units in eastern Jiangsu and Shandong provinces as well as other parts of the country, has secured a distribution hub license.

Last-mile delivery stations, which are the final logistical link to customers, are crucial to e-commerce platforms such as Shanghai-based Pinduoduo, Gong Fuzhao, chief consultant at consultancy firm Shuangyi, told Yicai. A high-level of service and seamless logistics make a big difference amid intense competition.

The data on e-commerce platforms and that on courier firms’ data bases are not interlinked, Gong said. By entering the last-mile delivery sector, Pinduoduo can have better control over end users’ data, improve the profiling of users and streamline the information chain so as to analyse how to optimize services, he said. Courier stations are also key data assets for e-commerce platforms.

Pinduoduo's grocery arm Duoduo Maicai entered the express delivery sector in 2022 as part of its community group purchase business. The firm linked arms with J&T Express, China Postal Express and Logistics, and other courier companies, to ensure smooth delivery of Duoduo Maicai’s parcels.

There are three different types of distribution hubs in China. Some are directly operated by e-retailers, others are run by express delivery firms and other are third-party stations. Pinduoduo’s main rivals in this sector are Cainiao, JD Logistics, ZTO Express, YTO Express and Xiaobing.

Despite all these different players, there is still plenty of room for growth, said Gong. Now that Pinduoduo has secured a permit, it will expand its footprint by opening stations in more cities. But this should not affect other operators too much due to the size of the market.

In the future, there should be a last-mile delivery station in every residential community, just as there are stores for peddling cigarettes and booze, Gong said. The density of stations is still far from saturation especially in China's middle and west regions.

In March, Alibaba Group Holding halted its plan to spin off and list its logistics arm Cainiao Smart Logistics Network, largely because as key e-commerce infrastructure, Cainiao needs to build closer ties with Alibaba's e-marketplace Taobao.

Editors: Liao Shumin, Kim Taylor