E-commerce

Nestlé’s Hsu Fu Chi collaborates with JD.com to improve logistical efficiency in China

By Douglas Yu contact

- Last updated on GMT

Hsu Fu Chi's 'unbounded plant' built through partnership with JD.com. Pic: Nestlé China
Hsu Fu Chi's 'unbounded plant' built through partnership with JD.com. Pic: Nestlé China

Related tags: Nestle

Candy and snacks company Hsu Fu Chi has struck a deal with China’s second largest e-commerce channel JD.com to improve its logistical efficiency by building an 'unbounded plant' in South China.

The collaboration came a few months after the Nestlé-owned brand opened a KitKat-inspired brick and mortar retailer “taste workshop”​ in Dongguan City, offering freshly made products such as short cakes, biscuits and crispy candies.

By adopting JD’s logistics network, these products now don’t need to be distributed through warehouses but enter an express delivery system so customers ordering online can receive them within a day. 

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Hsu Fu Chi opened 'taste workshop' in South China last year

Alexandre Villela, chief marketing officer at Hsu Fu Chi, told China Daily​, “orders before 5pm will be finished right away, the cakes will be beautifully packaged and taken by JD couriers by 5:30pm. Now, in the South China region, consumers can get the product within 24 hours."

She added the service will be available to the rest of China in the coming months.

“With the advent of the era of ‘unbounded retail,’ consumer demand has become increasingly fragmented, and demand scenarios have become more instant,”​ said Chen Yanlei, VP of JD. “Therefore, the industry needs to change the previous distribution channel, so the distance between the production and consumer end is as narrow as possible.”

‘E-collaborative forecasting and replenishment’

Nancy He, corporate affairs director at Nestlé China, told ConfectioneryNews the partnership is part of a project Nestlé and JD jointly initiated last year, called “e-collaborative forecasting and replenishment.”

She said: “The cross-company supply chain team built up a collaboration platform covering data sharing, forecasting, stock replenishment, goods supply and deep distribution to monitor end-to-end supply chain.”

“To improve logistical efficiency, Nestlé and JD have so far implemented DC (distribution center) to DC direct delivery for our food and beverage business, pallet delivery and self-picking delivery model,”​ added He.

As a result, “total delivery efficiency, service level and freshness are highly improved by the streamlined logistics. Out-of-stock is dramatically eliminated and on-line availability nearly doubled,”​ she said.

Nestlé acquired a majority stake (60%) of Hsu Fu Chi in 2011 for $1.7bn. The Guangdong-based confectioner has been holding a flat 0.9% share of China’s total chocolate confectionery market over the past three years.

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