The seed logistics challenge: can JD.com solve it?

In mid-October, the Beijing Seed Conference, now in its 23rd edition, opened as scheduled. Many attendees told reporters that this year's conference was somewhat different from previous years.

The difference, on the one hand, was that this year's Beijing Seed Conference was jointly showcasing crop seed industry achievements for the first time by Beijing, Tianjin, Hebei, Shanghai and Chongqing; on the other hand, and more importantly, cooperation between several seed companies and e-commerce giants became a major highlight of this year's conference. In the words of attendees, "e-commerce has set its sights on seed companies."

On October 16, several seed companies in Beijing signed strategic cooperation agreements with JD.com Group. Reporters learned from JD.com's public relations department that these seed companies include Beijing Golden Nonghua Seed Technology Co., Ltd., Beijing Clover Grass Technology Development Center, Beijing Kaifurui Agricultural Technology Development Co., Ltd., Beijing Luguan Grass Industry Co., Ltd., and Beijing Dongsheng Seed Industry Co., Ltd.

Judging from the content of the agreements, the reason seed companies chose JD.com is that they value JD.com's resources in capital, manpower, technology, hardware facilities, brand influence and other aspects. The scope of cooperation between the two sides includes products, operations, finance and logistics. After the cooperation is reached, traditional seed companies are expected to achieve integrated online and offline development, thereby gaining the initiative to rapidly expand emerging markets.

A head of a contracted seed company who declined to be named told reporters: "At present, the seed market conditions are not particularly good. Cooperating with e-commerce is also a way out for companies." And the reason it is JD.com is based on two major advantages of JD Mall that differ from platform-type e-commerce: first, a strong self-operated procurement system that can guarantee seed quality from the source, which is the foundation of seed industry e-commerce; second, JD.com's complete self-operated logistics system, which makes it easy for companies to establish a complete quality traceability system.

Just how important is JD.com's logistics system to seed companies?

At present, agricultural materials e-commerce platforms such as Aizhongwang, Agehui and Yun Nongchang are all involved in seed industry e-commerce, but companies that register on these platforms still need to rely on distributors for delivery. "There is always no escaping distributors, which means no escaping traditional sales channels, causing many seed companies to be unwilling to put good products online," Han Gengrui, chairman of Agehui, told reporters.

"Unwilling to put good products online" results in farmers still choosing the seeds sold by distributors, thus forming a vicious cycle in seed industry e-commerce. After all, compared with the price advantage of e-commerce platforms, quality and service are more important.

On the same day that several Beijing seed companies signed strategic cooperation agreements with JD.com, Liu Qiangdong, chairman of the board and chief executive officer of JD.com Group, was in Mianyang, Sichuan, attending the "2015 China (Sichuan) E-commerce Development Summit."

"Over the past decade or so, Chinese e-commerce has actually had a major flaw, namely sacrificing quality to purely pursue low prices, ignoring quality and taste, and blindly seeking cheapness." In a speech of less than ten minutes, the most important point Liu Qiangdong conveyed was: "The future way out for Chinese e-commerce is to take the path of quality and branding, and put quality first."

This view is also what all parties in seed industry e-commerce most need to put into practice.

But at least for now, it is difficult for seed companies to put good-quality seeds online for sale, and one important reason is that the vast majority of seed companies and e-commerce platforms must rely on distributors to achieve delivery.

In this way, it is not hard to understand why the cooperation between several seed companies and JD.com Group has attracted widespread attention. What differs from most platform-type e-commerce is that JD.com has always been committed to self-operated logistics and has firmly grasped the initiative in delivery.

Renshou County in Sichuan is abundant in loquats. On May 11 this year, JD.com's online mall coordinated with the "Renshou Loquat Festival" to hold an online festival, fully demonstrating the "impressiveness" of JD.com's logistics. "Based on the ripening period of loquats in previous years, the event was planned for May 11. But this year the loquats ripened earlier and could already be picked on May 6," Lu Yuanguo, president of the Renshou County E-commerce Association, told reporters.

"When the loquats ripen, if you don't pick them for two days, the fruit falls. We waited until May 9, really could not wait any longer, and hurried to pick them." Xu Youkun, chairman of the Feiyue Cooperative in Wengong Town, Renshou County, described the "tense situation" at the time to reporters: on May 9 they picked the fruit, trucks painted with JD.com's large red logo waited at the village entrance, and after picking the fruit was immediately loaded. According to the allocation of JD.com's delivery system, it was delivered to consumers in Beijing, Shanghai and other places within 36 hours.

In this major logistics test of agricultural products entering the city, JD.com gave a beautiful answer in the Renshou examination room. And in the test of agricultural materials entering the village, JD.com's performance was equally impressive.

Since the beginning of this year, JD.com has accelerated the advancement of its 3F strategy for rural e-commerce. After more than 10 months of effort, nearly 600 county-level service centers and 1,000 "JD Bang" service stores have now opened, nearly 100,000 rural promoters have been recruited, and JD Bang service stores with sales exceeding 10 million yuan have emerged, as well as rural promoters with monthly commission income exceeding 10,000 yuan.

In 2009, "post-90s" Xia Lei became a delivery worker at JD.com. Now, he is already the rural supervisor of the JD.com county-level service center in Renshou County, Sichuan Province. "In less than a year, 297 rural promoters were developed," he told reporters. Rural promoters, on the one hand, "as the name implies," do rural promotion for JD.com, and on the other hand, also cooperate with professional delivery workers at county-level service centers and village-level service stations to do last-mile delivery work.

The structure of "county-level service center + village-level service station + rural promoter" laid the foundation for JD.com to do agricultural materials e-commerce. On August 11 this year, JD.com's agricultural materials e-commerce channel was officially launched. In order to promote the implementation of JD.com's agricultural materials e-commerce strategy and accelerate the pace of business development, JD.com integrated relevant social agricultural service resources and explored the model of JD.com agricultural materials e-commerce demonstration zones in "South China," "East China" and "Central China" respectively. Today, the number of agriculture-related enterprises carrying out e-commerce cooperation with JD.com has reached 145.