(Yicai) March 16 -- Chinese e-commerce giant JD.Com has officially launched its site Joybuy in Europe, aiming to gain users with next-day delivery services provided through its self-operated logistics network.

Joybuy is now available in six European countries -- Belgium, France, Germany, Luxembourg, the Netherlands, and the United Kingdom -- after carrying out nearly one year of trials.

Joybuy offers faster delivery through JD.Com’s self-operated logistics service JoyExpress, which was introduced last month, and lower free shipping thresholds than competitors like Amazon.

The European market has huge room for growth, Zhang Zhouping, executive director of Bense Think Tank and deputy director of the think tank of the Zhejiang Cross-Border E-Commerce Industry Alliance, told Yicai. JD.Com can replicate its mature ‘self-operated + logistics’ model and same-day delivery in Europe, dealing a blow to competitors’ market size, he added.

During a recent blizzard, highways were closed, and all courier services were suspended, but Joybuy still delivered as usual, according to a German blogger. Other European influencers also noticed Joybuy’s services were not affected by external factors, such as transportation strikes.

Joybuy’s delivery efficiency is higher than that of DHL and other logistics service providers, offering nearly same-day delivery for most goods and next-day delivery for fresh products, a German user told Yicai.

Joybuy not only delivers faster than Amazon but also has lower free shipping thresholds and simpler, more convenient return policies, according to another German user.

In Germany, Joybuy’s free-shipping threshold is EUR29.90 (USD33), compared with Amazon’s EUR49. “Amazon previously accounted for 90 percent of my online shopping, but now, Joybuy takes 80 percent, and Amazon only 10 percent,” one of the German users said.

Asset-Heavy Logistics Model

JD.Com is replicating JD Logistics’ heavy-asset model, which was proven successful in China, also across Europe. So far, it operates more than 60 logistics warehouses and courier stations on the continent, providing integrated supply chain, logistics, and delivery services for Joybuy buyers.

JD Logistics opened its first overseas intelligence warehouse system in the UK last December. Covering more than 3,000 square meters, the warehouse is equipped with nearly 200 self-developed logistics robots. With the help of the robots and a smart system, each human warehouse operator can easily pick more than 300 goods per hour, with related picking and outbound efficiency up about four times.

Moreover, JD Logistics closely monitors local social media platforms and strives to improve services based on user suggestions to enhance the buying experience.

To accelerate its expansion in Europe, JD.Com has also been acquiring local assets. For example, the company announced last July that it would invest EUR 2.2 billion (USD2.4 billion) to buy Germany’s Ceconomy, the parent firm of consumer electronics retailers MediaMarkt and Saturn, which operate about 1,000 stores in 11 European countries.

However, the main challenges of heavy-asset business models are high costs and relatively large inventory risks, Zhang Yi, chief executive officer of market research firm iiMedia Research, told Yicai. Moreover, compliance costs for labor, warehousing, and delivery in Europe are much higher than in China, so Joybuy is expected to remain in the red for a long time, he noted.

Europe is more fragmented than China. Improving the utilization of the warehouse and distribution network, bringing unit costs under the heavy-asset model down to a reasonable level, and managing a longer return-on-investment cycle than in China are issues that JD Logistics must solve, Zhang Yi pointed out.

As a new player, Joybuy also faces competitive barriers from local European players, complex regulatory and legal systems, and challenges from trade unions, Zhang Yi added.

Editors: Tang Shihua, Futura Costaglione