September 16, 2013, 9:54 AM

How a Chinese e-retailer delivers the goods in one hour

Kuaishubao aims to be the online equivalent of a convenience store.

Lead Photo

A Kuaishubao.com courier.

Online retailer Kuaishubao.com promises one-hour delivery in seven of China’s largest cities, including Beijing, Shanghai and Shenzhen. But its couriers often arrive in only 30 minutes, says Zhiming Xu, founder and CEO.

It can deliver that fast by building many small warehouses in each city it serves, and keeping the products it offers to about 1,000 SKUs, mainly popular books, magazines, instant beverages and gifts. The retailer employs its own couriers on motorbikes to deliver items to customers, many of them office workers in the towering high-rise buildings of modern China.

Xu, who also owns a chain of bookstores, says he was inspired by the fast pace at the McDonald’s hamburger chain. “I can easily find shopping malls on the Internet, but I could never find an online convenience store,” he tells Internet Retailer. “I founded Kuaishubao to build an online convenient store with the fastest delivery in China.” He founded the company in 2010.

A typical warehouse serves an area of about 25 square kilometers, or a square five kilometers (3.1 miles) on each side. A driver on a motorbike can usually reach any address within that area in 20 minutes, Xu says. He says he has 10 warehouses in Beijing. He plans to expand his sales to three more cities this year, he adds.

Kuaishubao.com, which means “fast bookbag” in Mandarin, has 100,000 registered users and expects its sales will exceed 15 million yuan ($2.5 million) this year. Xu emphasizes that his warehouses are all very small—only about 1,000 square feet—and that he’s done little advertising, which partly accounts for the slow growth of the online business. 40% of his revenue comes from sales of books and magazines, and 20% comes from ready-to-mix foods and beverages. The average ticket is more than 100 yuan ($16.3) and its gross margin is 20%, the company says.

Kuaishubao promotes its brands mainly through social media, which is. Xu and other senior executives at Kuaishubao each have more than 100,000 followers in Sina Weibo, a Twitter-like social network with 500 million registered users. For example, to promote a book from a famous Hong Kong film director, Kuaishubao worked with the author to post promotional messages on Sina Weibo.  With many followers who frequently forward messages, the posts led to 300 sales in three days. Consumers can place orders directly through a private message feature in Sina Weibo.

Currently, 40% of sales of Kuaishubao come from Weibo. Sina Weibo invested 9 million yuan ($1.5 million) in Kuaishubao in 2012.

 

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