In July this year (2021), we touched upon J&T’s leading position in Indonesia ecommerce logistics in our Blooming ecommerce in Indonesia Part 2.2 – Logistics and Enablers report.
J&T has since made multiple moves, in headlines or not: expansion into Latin America and the Middle East, as well as its recent acquisition of Best’s express business in China.
In Momentum Works’s community app Impulso, we see discussions around J&T’s strategies amidst the growing control of ecommerce platforms.
With that, following Who is Shopee and Who is Nubank reports, in the latest installment of Momentum Works’ company anatomy series, we unpack some of the market attention and connect the underlying logic of Who is J&T.
This report will answer fundamental questions:
- What are J&T success factors?
- What’s next for J&T after Latam and the Middle East?
- Will J&T be the next UPS or FedEx of the ecommerce age?
J&T’s strong root in Oppo ecosystem plays big part in its success
J&T founder Jet Lee’s background as Oppo distributor in China and later on in Indonesia gave him not only the experience in leading teams and building networks, but also the deeply-ingrained culture of fighting and perseverance.
Oppo is also part of the BBK ecosystem, which also includes Oppo, Vivo, OnePlus and Realme companies/brands. The founder of BBK, Duan Yongping is an avid investor who has angel-invested and mentored the founder of Pinduoduo, J&T also benefited from the network’s support on funding, people and distribution network.
Underlying J&T’s successes is a combination of three factors: Right timing, at the right place, with right people, coupled with strong execution focus.
Ride on right timing
With booming Chinese cross border ecommerce exports and Shopee’s global expansion, many investors, having exhausted high growth opportunities in more mature markets (i.e.: China and the United States) are starting to look into companies from emerging markets.
Going global beyond its Asian core presents a good growth story for J&T in its current trajectory.
2. Ride on key partners relationships and resources
Ecommerce competitive tension in China has paved the way for J&T’s quick entry.
Alibaba (which contributes 54% of ecommerce parcel volume in the country) outsourced its logistics mainly to the ‘Tongda group of 5’ companies, all of which it has invested in;
JD took a different approach, delivering through in-house logistics arm – JD Logistics (separately listed on Hong Kong Exchange);
J&T rode on this gap by delivering for Pinduoduo, which was fast growing but did not have any express delivery affiliate. The Duan Yongping and BBK connection probably played a part in this de facto partnership.
3. Ruthless execution
Supporting J&T’s ambition is its risk appetite. We see that in its move to launch the most aggressive price war in the history, “¥1 to deliver nationwide from Yiwu”.
With the acquisition of BEST’s domestic express business, J&T would achieve a combined market share of 17% in China’s express logistic market . This will place J&T as the country’s third largest player in terms of delivery volume.
While success is not guaranteed, J&T has shown great momentum in its expansion. Defending and succeeding in China, will be the key to J&T’s global strategy, plans and valuation.
Will J&T be the UPS or FedEx of the ecommerce age?
J&T will continue to expand globally, tapping into more markets, as well as more parts of the commerce logistics value chain; Europe and North America could be targets too.
In parallel, it will invest into companies along the value chain, which provide solutions / services to complement J&T’s own capabilities, to eventually become the UPS of the ecommerce age.
Ultimately, J&T’s combination of operational aggressiveness and strategic patience is a virtue, especially in the rough and highly competitive ecommerce logistics market.