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Co-evolution between etailing and parcel

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DOI: 10.1016/j.jtrangeo.2015.05.005

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Contents lists available at ScienceDirect

Journal of Transport Geography

journal homepage: www.elsevier.com/locate/jtrangeo

Co-evolution between etailing and parcel express industry and its

geographical imprints: The case of China
James J. Wang , Zuopeng Xiao
Department of Geography, University of Hong Kong, Hong Kong Special Administrative Region, China

a r t i c l e i n f o a b s t r a c t

Article history: This study conceptualizes the relationship between etailing (e-retailing) and the parcel express industry
Received 19 July 2014 (PEI) and analyzes their co-evolution in China. Four operational models of etailing are discussed in the
Revised 5 May 2015 context of their intertwining relations with different forms of parcel express services. This co-
Accepted 5 May 2015
evolution generated compound outcomes because of the late start of PEI and the fast growth of online
Available online 15 May 2015
shopping in China. These four models coexist, with two standing out as major types that suggest future
directions. Two major geographical imprints of this process are explained and conceptualized: (1) the
Keywords:
zonal delivery strategy by supply-chain-based e-merchants, which is conceptualized into a choice model
Etailing
China
of order-fulfilling locations to strengthen timely delivery; and (2) the Baoyou strategy advocated by
Parcel express industry e-market-based retailers and their logistic support for a slower, low-cost market of larger geographical
Logistics geography coverage compared to the first strategy. Both strategies demonstrate that co-evolution is not only a
Co-evolution path-dependent process but is also associated with place-dependent institutions.
2015 Elsevier Ltd. All rights reserved.

1. Introduction 2009; Gevaers et al., 2011) and relocation of logistics distribution

E-retailing underwent rapid development worldwide in the last
two decades. The introduction of online shopping as an alternative
to conventional shopping has caused the fragmentation of
purchasing activities by minimizing space and time constraints,
as well as by reconfiguring them in a more flexible way for shop-
pers (Couclelis, 2004). The popularity of e-retailing or etailing
(we shall use this term from hereafter) has reshaped the shopping
behavior of consumers. On one hand, the large amount of products
and product information facilitates price comparison and provides
inventories that may be unavailable to buyers at local shops
(Mokhtarian, 2004). On the other hand, the application of elec-
tronic transactions does not require any physical travel to stores,
making online shopping a potential substitute for traditional shop-
ping media, especially for certain products such as digital assets
(Cao and Mokhtarian, 2005; Cao, 2009). Furthermore, e-shopping
has brought spatial changes in the form of more goods being deliv-
ered to consumers instead of consumers making the trip to actual
stores. Two major issues have captured geographers attention
because of these changes, namely, last-mile delivery (Jiang and
Prater, 2002; Anderson et al., 2003; Boyer et al., 2009; Murphy,
Corresponding author at: Department of Geography, University of Hong Kong,
Pokfulam Road, Hong Kong Special Administrative Region, China.
E-mail addresses: jwang@hku.hk (J.J. Wang), tacxzp@hku.hk (Z. Xiao).
centers (DCs) (Hesse and Rodrigue, 2004; OConnor, 2010; Hesse,
2008, 2013; Hall and Hesse, 2012). Although these changes did
not necessarily result from e-commerce, etailing has triggered sev-
eral structural changes in the logistics network, as demonstrated
by the growing need for large DCs and warehousing facilities that
are sensitive to space and time (Hesse, 2002, 2004).
The geographical effects of etailing are not limited to these two
issues. As technologies and societies progress, albeit at different
paces, some countries can experience an advanced e-commerce
made possible by different causes, such as their supporting sectors
for money transaction, physical distribution of goods, and IT indus-
try. E-commerce adoption is also associated with several social
spatial dimensions, including population density, mode of
transport, and cultural attributes (Aoyama, 2003), all of which lead
to the variety of e-commerce in different countries. Wang (2010)
observed that the lack of a parcel express industry (PEI) and a
widely used credit card system are the two key reasons online
shoppers in China prefer cash-on-delivery (COD) as mode of pay-
ment. The current paper discusses how these two factors shaped
the development trajectory of co-evolution between e-commerce
and logistics.
The intertwining growth of etailing and PEI in China is different
from that in other countries, and has been overlooked in current
academic literature. The PEI has been well established prior to
the e-commerce era in many developed economies, such the

http://dx.doi.org/10.1016/j.jtrangeo.2015.05.005
0966-6923/ 2015 Elsevier Ltd. All rights reserved.
 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034
United States, Japan, and some European countries. The first door-
to-door small parcel delivery service in Japan, TA-Q-BIN, was
launched by Yamato Transport in 1976. Today, it is the largest
express delivery company in Japan; in 2013, it handled 1.5 billion
of the 3.5 billion total parcel volume in the country (a market share
of 42.7%) (Yamato Holdings, 2014). The domestic parcel delivery
industry in the United States is mainly dominated by three players:
United Parcel Service (UPS) founded in 1907, Fedex established in
1971, and the United States Postal Services (USPS), whose prede-
cessor is the post office system and began operations in 1971.
UPS, one of the largest shipment and logistics service companies
in the world, could deliver to every address in 48 contiguous states
through ground service and cover all 50 states through air service
by 1978 (UPS, 2014). In contrast, no single firm (except for China
Postal) could cover parcel delivery nationwide during the
business-to-consumer (B2C) retail boom in China in 2006. At that
time, no national legislation regulated the parcel delivery industry,
which had a 36% average annual growth rate from 2006 to 2013.
The burgeoning online retailing industry drove this explosive
growth in parcel delivery. These data indicate that total etailing
transactions in China reached 1.84 trillion RMB ($296 billion
USD) in 2013, which allowed it to surpass the United States as
the world leader in the industry (DRCSPB and Deloitte, 2014).
However, the rapid growth of etailing with a newly established
PEI has caused a serious spatial imbalance in terms of distribution
of both etailers and express delivery firms and their coverage. For
example, the e-commerce giant Taobao emerged in 2003 in
Zhejiang Province, where the market-oriented business environ-
ment has flourished with more small-sized enterprises than any-
where in the country. This regional cluster of etailers has taken
the lead and the largest proportion of the business in China based
on highly cumulative first-mover advantages. The majority of
private-owned parcel express firms have also emerged from sev-
eral coastal provinces, mainly Zhejiang and Guangdong. E-retailer
and courier companies have largely contributed to the co-
evolution promotion of these two sectors in these coastal metropo-
lises. At the same time, the insufficiency of online demand density
in inland provinces and the high cost of delivery have made etail-
ing less attractive to logistics service providers as their counter-
parts in coastal regions. Parcel distribution in inland provinces,
except for a few provincial capital cities, still generally rely on
state-owned postal systems and numerous small local distribution
partners to fulfill e-purchase orders. The uneven development of
etailing and PEI not only generates the spatial co-evolution
between these two sectors, but also leads to the variety and com-
plexity of co-evolution models at the national level. As a result of
the uneven spatial distribution of both etailers and firms in the
PEI, there are over 8000 parcel delivery companies in China and
the top 10 brands control more than 87% of the market share with
a geographical focus on the coastal region (China E-Commerce
Research Center or CECRC, 2014b). This observation contrasts with
that of the three major integrated couriers that dominate the entire
national market of the United States (DRCSPB and Deloitte, 2014).
Our present study attempts to understand the co-evolution
between etailing and PEI development in China and their dynam-
ics. We will also portray the spacetime course and its geographi-
cal imprints on the co-evolution between these two sectors.
This paper is organized into five sections. The B2C e-commerce
business, its geographical nature, and its relationship with PEI are
conceptualized in Section 2. Section 3 presents the longitudinal co-
evolution course with four typical stages according to the struc-
tural features of the etailing supply chain (SC). Section 4 discusses
the spatial strategies of the two major models identified, which
present the co-evolution geographical imprints. Section 5 high-
lights the current implications of the co-evolution and points out
several development trends of etailing and its logistic support that
21
can shape transport and economic geography at large. Two future
research directions are also suggested.
Methodologically, as a study of an ongoing co-evolution case,
we chose a combination of second-hand data search and
in-depth interviews of key stakeholders. Through collection of
information from government documents, firms annual reports,
and third party reports and analyses, we identified a chronological
relationship between etailing and PEI development, and then con-
ceptualized and classified several major business models. We also
visited 12 representative e-commerce and PEI firms in six Chinese
cities, including Beijing, Shanghai, Ningbo, Shenzhen, Wuhan, and
Tianjin where we conducted intensive interviews of their mid-
level operators. We do not list the names of the firms here because
of our confidentiality agreement with the visited parties. Through
these visits, we were able to confirm or revise our model classifica-
tion. We also obtained a better understanding of the real problems
these firms and stakeholders are facing, along with the changing
environment of each locality which reflects the huge geographical
variation in China today, for future development of etailing and its
logistics support.
2. Conceptualization of E-retailing, PEI, and their co-evolution
framework in China
2.1. Brief overview of E-retailing and PEI in China
The PEI in China can be traced back to the emerging fast deliv-
ery services for business mails or documents rather than to online
shopping. China Postal initiated the Express Mail Service (EMS) in
1985 and established this monopoly for more than a decade
(Fig. 1). Along with the continuous economic reforms and opening
up to the global economy, the rapid growth of delivery demand in
main metropolises offered significant opportunities for private
couriers that can provide better services. Shunfeng Express (SF),
launched in Shunde, Guangdong Province in 1993, initiatively pro-
vided one-day business mail delivery service between Hong Kong
and Shunde. That same year, STO Express was established in
Shanghai and focused mainly on the delivery of customs paper-
work between Shanghai and Hangzhou, the provincial capital of
Zhejiang Province. These two pioneers attracted many followers,
with inter-city or intra-city delivery companies sprouting in vari-
ous metropolises. The more popular companies, including Daily
Express established in 1994 and YTO Express in 1999, adopted
the franchise business model similar to STO Express to expand
their geographical coverage. Although these companies were lar-
gely successful as private express firms over a decade, their deliv-
ery capacities were limited and covered only the region they
initially started in, such as Yangtze and Pearl River Deltas.
However, these courier companies all operated in the informal sec-
tor given the lack of formal laws and regulations in this business.
The situation did not change until they started to serve as a major
sector of etailing in about 2010.
E-commerce in China encountered fewer barriers in its early
stage than the PEI. For instance, Dangdang.com started operations
in 1999 as the first online bookstore in China after its American
counterpart Amazon.com was established in 1995. Joyo.com,
established the following year, was then purchased by
Amazon.com in 2004 and renamed Amazon China. In the same
year, 360buy.com, which was the precursor of JD.com, was
founded in Beijing and mainly sold electronic devices online.
These etailers usually employed local delivery companies in
Shanghai and Beijing to fulfill online orders, and used the China
Postal system for customers from other cities. Local distribution
partners (LDP) served as subcontractors for last-mile deliveries in
a faster way than China Postal in the cities connected by China
22 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034

Fig. 1. Historical overview of etailing and PEI in China.

Postal (see more discussion later as Model 1). However, multi-layer Table 1
subcontracting or outsourcing soon became unacceptable Market share in B2C online retailing trade by major etailers in China in 2013. Source:
CECRC (2014a).
because of low service quality for several major etailers such as
360buy.com. These companies decided to invest in building their E-retailer Market share (%)
own integrated system to deal with the entire SC, from taking Tmall.com 50.1
orders to warehousing, national, and local distributions (Model 2 JD.com 22.4
to be discussed in the next section in detail). Suning.com 4.9
Tecent B2C 3.1
Another possible evolution was to develop nationwide express Amazon China 2.7
delivery firms or third-party logistics (3PL) providers that can han- Yihaodian 2.6
dle all delivery steps, from the inventory of etailers to the final con- Vipshop 2.3
sumers. The establishment of Taobao.com in 2003 and of Alipay in Dangdang 1.4
Gome 0.4
2004 provided a critical platform for this approach. The framework
of Taobao.com, which is similar to that of eBay.com, allows individ-
ual customers and e-stores in this open transaction platform to rely
on 3PL providers to send online-ordered parcels to e-shoppers relationship between etailing and logistics was reinforced
nationwide. Taobao.com endeavored to cooperate with select par- by a robust growth of online commerce after Tmall.com was
cel express companies to deal with the difficulty of parcel delivery established.
and to ensure that this e-marketplace efficiently works. The two models mentioned above constitute two basic
Taobao.com and YTO Express signed an official cooperation agree- typologies of coupling e-commerce and parcel express, namely,
ment in 2005. This collaboration framework recommends YTO self-operated and outsourced. Established in 2008, YHD.com
Express as the preferred logistics service providers for all e-stores combines the two models with self-operated warehouses in main
in the platform of Taobao.com. Logistics information can also be urban markets and outsourced local delivery. This model was also
monitored by any stakeholder. After receiving the right parcel, embraced by VIPshop.com, which was established in 2008 and is
the end customers can conclude their purchase through the pay- one of the largest discount etailers in China mainly for brand name
ment instrument Alipay. The boom of etailing in Taobao.com trig- imports. Conventional electronic appliance chain stores such as
gered other 3PL providers, such as STO Express, Yunda Express, and Suning and Gome also actively adopted e-commerce and built
ZTO Express, to join this delivery collaboration (Model 3). These self-owned etailing malls Suning.com and Gome.com.cn. These
firms form the Si-Tong-Yi-Da group in the Chinese PEI. Their companies captured ongoing opportunities of online/offline
founders not only come from the same township, but they have e-commerce (O2O) in 2012 and moved themselves to a mixed
also adopted similar franchise business models. Approximately retailer with a self-operated logistics network grounded on their
60% of their business is also derived from Taobao.com. Tmall.com self-owned chain stores.
split from Taobao.com in 2008, and soon became the largest open The remarkable advancement of PEI boosted by etailing exerted
portal for etailers and end consumers with an approximately 50% inevitably diverse impacts that demand a regulated market envi-
share of the Chinese etailing market (Table 1). The intertwining ronment. Consequently, the Parcel Express Service Standards was
 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034
issued by the State Postal Bureau in 2007 as the first legal docu-
ment to regulate PEI in China, followed by a new Postal Act issued
in 2009. As these regulations concern only the entry qualifications
and behavior of firms in PEI, they do not alter the diverse trajecto-
ries of interplays and intertwining processes between PEI and
etailing nor do they harm the rapid growth of PEI. Fig. 2 shows that
the PEI had a much faster growth from 2008 to 2014 than the con-
ventional postal courier services. The same time period underwent
a similar trend for e-commerce.
2.2. Co-evolution framework for etailing and PEI
The co-evolution concept was drawn from biology but already
has more applications in geography studies. It was originally pro-
posed to reveal the joint evolution of butterflies and flowering
plants (Ehrlich and Raven, 1964), which denotes that evolutionary
changes in a species are a response to changes in other species it
interacts with (Strickberger, 1990). This theoretical concept has
been increasingly embraced by other disciplines. Social science
generally states that an evolutionary analysis may well take
the role of institutions into account, but in a co-evolutionary per-
spective (Boschma and Frenken, 2006). This idea indicates that
institutions are not pre-given and fixed, but instead co-evolve
with technologies and markets. Numerous scholars use this theo-
retical instrument in evolutionary economic geography (EEG) to
argue that territorial differences stem from the differences in
the history of firms and industries residing in a territory
(Boschma and Martin, 2010). co-evolution has also been used to
illustrate the innovation research and cluster of high-tech firms
(Schamp, 2010).
Although co-evolution analysis is rarely seen in transport
geography per se, it has been applied from the perspective of
SC management. For example, Mohdzain et al. (2012) used the
co-evolution approach to examine the interrelationship and co-
evolution between SC strategies and technologies. They showed
the effect of information technologies on the selection of lean/
agile SCs proposed by Christopher (2000) and how SCM evolution
(Ballou, 2007) affects the evolution of information technologies
that supports it. Similarly, Palmer and Wong (2008) analyzed
the process of marketing and SC integration as a co-evolution
because as business practice evolve from an inside-out to an
Number of
mails/parcels
12.0
10.0
8.0
6.0 5.5
4.0
2.0
1.1
0.0
2008 2009 2010
online shopping expenses per capita
Fig. 2. PEI growth against conventional postal services and the growth of E-commerce from 2008 to 2014. Source: Compiled by author, with data from China Postal, Taobao,
and JD websites.
23
outside-in and co-creation view, marketing and supply chain
practices have to be re-combined to adapt to the changing
social-economic environment. These studies that appear in EEG
and SC management literature demonstrate the power of the
co-evolution framework to provide in-depth interpretation of
processes that lead to business- or territory-specific changes
and its suitability to investigate timespace intertwining
processes. We believe that the rapid growth of etailing and the
fast expansion of PEI in China have generated an interesting
timespace co-evolution process.
This process has three essential elements, namely, payment,
logistics, and order generation, all of which comprise the
structure among etailers, transport/logistics service providers, and
e-shoppers/consumers. They formulate a triad of ordercashgoods
that constitutes the core driving factors contributing to the
co-evolution of parcel express and etailing (Fig. 3). The etailing
business has three distinct differences compared with
conventional retailing: (1) online interface between retailers
and consumers which leads to order generation online; (2) pay-
ment system that must be of a certain credit type in nature, but
not necessarily through a credit card; it allows the monetary
transaction to be sufficiently flexible as long as it can be com-
pleted at the end of the order delivery to any location within
the market coverage; and (3) B2C chain-based delivery system,
which differs in essence from conventional retail because it
attempts to replace the shopping trips made by consumers as
much as possible.
E-retailing is a new type of retailing that stemmed from con-
ventional retailing and trade business, while the PEI developed in
China during the same period as a new type of postal/delivery
industry at the national level. Similar to the shoppers side, not
all shoppers in a conventional sense become e-shoppers, and most
can shop both online and offline. E-retailing and PEI are new types
in their own sector and are highly dependent on each others
growth. Their co-evolution as a timespace intertwining process
has its own geographical imprints that affect the dynamics of their
further evolution as a whole. E-shopping generates fewer trips
compared with conventional shopping and most of these trips
are replaced by parcel delivery when shifting from conventional
shopping to e-shopping. Our paper focuses only on the spatial
implications of etailing and PEI.
(RMB)
9000
8000
10.3
7000
6000
5000
4000
4.1
3000
2000
1000
0
2011 2012 2013 2014
express mails per capita post mails per capita
24 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034
Fig. 3. Conceptual framework of the co-evolution between etailing and PEI.
3. The co-evolution of E-retailing and PEI in China
Even with its very short development time, we can already
identify four models that indicate a staged co-evolutionary process
based on the level of involvement, form, and maturity of PEI in
etailing.
3.1. Stage 1: CODLDP-based etailing
The first stage is the domination of CODLDP-based etailing,
where COD stands for cash-on-delivery and LDP stands for local
distribution partner (or luo-di-pai () in Chinese). During
the early operation of Taobao in 20032008, COD was the most
popular form of payment for online purchases as most Chinese
consumers did not own credit cards. At that time, PEI had minimal
presence at the national level so e-purchases were delivered
through the mechanism illustrated in Fig. 4.
 Once an order is made online from any city, the etailer forwards
the order to one of its warehouses located in major cities such
as Beijing, Shanghai, and Guangzhou.
 The etailers warehouse operator sends the purchased goods to
a railway station or airport, and the shipment is made by con-
ventional transport without any help from 3PL providers.
 An LDP is designated to pick up and deliver the shipment to the
buyer. LDPs in various cities are selected and contracted, and a
deposit is paid by each LDP prior to delivery for a fixed contract
period. The COD mechanism is carried out by the LDP. Once the
cash payment is collected and the order is delivered, the LDP
informs the etailer, who then deducts an appropriate amount
from the LDPs deposit as revenue.
The model is critical in understanding co-evolution at the
infancy stage. For etailers, establishing sales offices or delivery
branches in as many as 600 cities in the country was impossible.
As no single 3PL firm in the EPI could cover all these cities then,
except for the conventional postal system, CODLDP was the most
practical delivery process when e-marketplaces (mainly Taobao)
dominated and chain-based e-merchants were not yet well
established.
A few years into the model gave LDPs time to innovate and
expand their services, though they still lacked integration along
the entire SC. They were no longer just last-mile deliverers and
cash collectors. Their duties began to include product checking,
returns, transshipment, exchange of shipments, and nighttime
and other time-window deliveries. These services prepared some
LDPs for the new business models that appeared later.
3.2. Stage 2: E-retailing with multi-level contracted express 3PL
The second stage of the co-evolution process, etailing with
multi-level contracted express 3PL, began in 2008. The model, as
illustrated in Fig. 5, is different in two aspects. In terms of delivery
process, as express 3PL providers such as Si-Tong-Yi-Da could
cover the national market, they began to go to the warehouses
themselves to pick up shipments and deliver them all the way
to consumers homes. In terms of payment procedure, Alipay
(), an online payment tool similar to PayPal, had a key
feature of associating online payment with personal banking
accounts rather than with credit cards, which were still unpopular
with the Chinese. At that time, consumers were still wary of using
their credit cards, especially online.
Two issues are worthy of our attention. First, the use of 3PLs
makes shipment more transparent to the buyers. Not only do they
know who the designated delivery service provider is, in some
occasions they can also even choose the 3PL provider according
to their own needs, such as the rate and the quality of service
(including speed of delivery). On one hand, this transparency
intensified competition among 3PL providers. On the other hand,
the lack of choice in a delivery partner gave the impression that
either the area of the buyer is barely covered by one 3PL provider
or the demand for the specific etailers products is limited, random,
or infrequent. Second, as AliPay eliminated COD and simplified the
role of 3PLs at the city level, last-mile delivery could be carried out
by literally anyone. As a result, multi-level subcontracting grew
rapidly along the chain as a major low-cost strategy for most
nationwide 3PL firms. Consequently, the service quality was incon-
sistent from place to place.
3.3. Stage 3: Supply-chain-based etailing
As increasingly more purchases were made through this model,
a sophisticated model was gradually established and gained
popularity, namely, the supply-chain-based (SC-based) etailing,
as represented by Jingdong (JD), Yihaodian (YHD), and Amazon
(China). Although only a few years younger than Taobao,
SC-based e-merchants did not gain market share until their exten-
sive and continuous investment in the entire chain began achieving
overall efficiency. Fig. 6 illustrates that typical firms in this category
(JD and YHD) have similar national development strategies even
though they sell different products. First, they select one metropolis
where they begin their major business (Beijing for JD and Shanghai
for YHD) by selling selected brand name products at prices lower
than those of national chain stores, with guaranteed home delivery
from their own warehouse through their own delivery network sys-
tem. This concept works well in high-density demand areas where
advanced management and technologies in SCM can be carried
out better than in dispersed demand areas. One such management
is the optimization of last-mile delivery.
Although these etailers have the most integrated retailing and
parcel express delivery, they have conservative strategies on the
development of their market coverage. They first focus on rela-
tively small, high-demand density city-regions and continuously
improve their integrated services to the selected areas. The 3PLs
in this model become sub-contractors, and their role is to cover
the regions that SC-based etailers do not want to cover because
of the slim demand. In this situation, extra delivery charges may
be added and the delivery quality may not be as high as the
 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034 25

Fig. 4. First stage model: LDPCOD-based etailing. Source: Created by the author.

Fig. 5. E-retailers that work with multi-level contracted express 3PLs. Source: Created by the author.

standard set for core, dense-demand regions covered by SC-based
etailers.
3.4. Stage 4: O2O strategy
Another model appeared in 2010. National conventional retail
chains, such as Suning, GoMe, and Haier, adapted the O2O strategy
(Fig. 7). The model differs from the previous ones in the following
aspects: (1) At least in the beginning, they do not rely on any 3PL
provider as they have their own networks and DCs. (2) They have
already penetrated a large number of cities, including third- and
fourth-tier ones, before deciding to pursue an O2O strategy
through their chain stores and branches.
For conventional retail chains, the two major difficulties in pur-
suing O2O are (1) new investment and labor for online operation
and marketing; and (2) repositioning and reorganizing store spaces
and manpower because etailing demands different logistic
support, such as fewer regional fulfillment centers to replace a
26 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034

Fig. 6. SC-based etailing with its own distribution system. Source: Created by the author.

Fig. 7. Conventional retail chains that adapt the O2O strategy. Source: Created by the author.

large number of city-level DCs and warehouses. The firms them asset-heavy with low capital returns, and they faced high risk
mentioned earlier specialized in home appliances and electronic when competing with SC-based e-merchants such as JD. However,
consumer goods. The changes caused by the O2O strategy made their delivery networks, if commercialized, could give the old
 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034
sector new life. In 2014, Alibaba announced a merge with Ririshun,
Haiers logistics and transport division, hinting at the possibility of
turning an internal distribution network into a commercial EP
service provider to serve Taobao or TMall, the largest open
e-marketplace.
The four business models appeared in China in the same
sequence as our discussion. As the first-stage model gradually
faded out and was replaced by the second model because of the
advancement of 3PL in the PEI, the third and fourth models co-
existed with the second model. Fig. 8 shows that the models differ
from one another in their online forms and the complexity in their
delivery systems when viewed from the SC perspective, and they
are more complicated than any conceptualized classification seen
before (Rodgue et al., 2013).
The leftmost type of online shops in Fig. 8 shows stand-alone
websites run by independent etailers, some of whom operate as
Model 1 before the national/regional 3PLs expanded. They have
their own (owned or rented) warehouses as fulfillment centers.
Once an order is placed, a 3PL provider takes the ordered goods
to their own DC and then distributes them either directly to a
buyers home or to the LDP at the destination city for the last-
mile dispatch. The most popular SC type in China today is individ-
ual e-shops that opened in a large e-marketplace, such as Taobao
and Tmall. An open online e-marketplace can have any product
expected from online purchasing, similar to eBay. However, it pro-
vides no physical distribution system for its clients or individual
etailers, except for warehouses located in the geographical clusters
either in the manufacturing region or in existing wholesale
Fig. 8. E-retailer classification based on online forms and delivery systems.
27
locations, such as Yiwu City in Zhejiang Province. The
e-marketplace operator provides a matching service between
etailers and 3PL service providers so that individual customers
can select a preferred 3PL provider and a delivery address.
The third type is identified as a restricted online
e-marketplace/mall. It differs from the two types discussed earlier
because an online mall is set up by the operator who sells selected
product categories and uses their own multilevel distribution
system to deliver the ordered products to buyers homes or pickup
points (shown as DIYP in the figure). These firms are called
SC-based etailers. Areas outside of their own systems coverage
are contracted out to other 3PL firms by a separate entry online.
JD, which is based in Beijing, is an example of this type. The right-
most side of Fig. 8 shows existing conventional retail chains that
decided to set up an online service and form an O2O system.
They maximize their existing networks by not only using an online
purchasing interface, but also by adjusting their DCs because their
online markets and those of other etailers (i.e., SC-based firms) can
change the trade pattern substantially.
4. Geographical imprints as outcomes of the co-evolution
between PEI and E-retailing
The rapid growth of etailing has extensive impacts on conven-
tional retailing. The most significant change in a geographical
sense is that the shipments of goods from order fulfilling points
(OFPs) to buyers homes skip the retail shops, a change that leads
to retail-related activities being polarized to the DC and buyers
28 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034
homes. This effect generates three major geographical imprints:
(re)location of DC and fulfillment centers, possible downsizing of
real stores and malls, and intensified last-mile deliveries. Massive
problems caused by last-mile deliveries and an oversupply of
spaces for real stores in newly built shopping malls are seen today
in China. Nevertheless, this study opts to focus on the (re)location
of DC and fulfillment centers of SC-based e-merchants and the
strategy of spatial coverage of other etailers who rely on the 3PL
delivery because they are largely affected by the co-evolution
between etailing and PEI.
4.1. Spatial structure and location choice of SC-based merchants a
partial reality
The choice of SC-based merchants to establish their own distri-
bution networks was brought on by the lack of appropriate express
3PL when firms such as JD and YHD started their business. They
could not copy the Amazon.com model in the United State, which
have fulfillment centers that rely on 3PL to handle transport and
last-mile delivery. Nevertheless, their own delivery systems
enabled them to improve, warrant, and optimize the quality of
delivery and to secure consumer loyalty, particularly when regio-
nal 3PLs vary significantly from place to place in their service qual-
ity. Their goal was to achieve customer satisfaction by providing
reliable, time-sensitive, and diversified delivery services so they
could have direct control over the entire chains and distribution
network. To a certain extent, these firms established their etailing
competitiveness through a lean delivery strategy by optimizing
distribution in key high-demand markets and contracting out
deliveries in other markets.
Forced to rely on their own distribution networks, JD and YHD
started their businesses from their respective home cities of
Beijing and Shanghai respectively. They then improved their ser-
vice quality efficiently in several large cities only, although their
products are always available online nationwide. The rest of the
market was partly covered by other logistics service providers.
Let us examine JD in further detail. This firm competes in the
delivery time front by setting a time-warrant zone of delivery
(TWZD). The 211 delivery program JD launched in 2010 warrants
that any online goods ordered by 11 am (10 am in some cities) will
arrive on the same day, whereas orders made by 11 pm will be
delivered by 2 pm the next day. TWZD delimitation is equivalent
to core trade area delimitation in conventional retail: the former
sets a zone where the etailer warrants delivery time through its
own logistics system, whereas the latter individualizes certain cus-
tomer levels (e.g., 80% penetration) within a specific travel dis-
tance. Fig. 9 shows that JD practices its zonal delivery strategy in
three cities from different levels in Central China, namely,
Wuhan (the largest metropolis in the region), Changsha (a provin-
cial capital city), and Yueyang (a mid-sized city between two larger
cities connected by a railway). An etailer can cover a secondary
zone or trade area with the same delivery price but without the
time-warrant promise beyond the 211-TWZD or the primary trade
area. JD can increase its delivery prices, stop serving, or find
another 3PL provider with low delivery quality (e.g., less reliability
in delivery time) for orders farther from the fulfillment center (a
city DC) or areas with low-density total demand.
Firms use this model to differentiate the nationwide market,
that is, the market served by their own network (first- and
second-tier cities) from the market served by 3PL firms. Using
the latter market, they can still proclaim themselves as national
retailers but can disassociate themselves from less profitable,
low-demand density regions and avoid overinvestment. This
delivery divide and zonal delivery strategy should be understood
as the SC cost minimization rationale based on order quantity
(Ballou, 2007, pp. 342343).
The case JD discussed above demonstrates that an SC-based
e-merchant with controlling power over the entire chain considers
the location choice of the fulfillment center and standalone
warehouse as part of their overall development strategy, along
with outsourcing a slim market to 3PL providers to minimize their
market uncertainty.
4.2. Conceptualization of location choice of a fulfillment center and DC
for SC-based etailers
The key difference between buying online and buying in-store
is where the order is fulfilled. If we define the OFP as the starting
point of etailing delivery for goods ordered, then the OFP location
is a suitable spatial indicator of the characteristics of an
e-merchant in terms of its controlling power over its SC and the
market uncertainty it faces. We adopt a conceptual model of SC
decoupling by Christopher and Towill (2001) to demonstrate the
decoupling processes of OFPs (Fig. 10). If an etailer has little control
over the entire SC and has geographically random, sometimes
infrequent demands over a large country, it tends to locate its
products somewhere near the production place or a wholesale
cluster of similar products where supply-side-focused 3PLs tend
to be available. The other extreme is the case of conventional retail
chains. These firms not only have full control over their own supply
chain, but also assume less market uncertainty and have chain
stores that are physically located near potential buyers. Orders
can be fulfilled just a mile away from the buyers home. The OFP
for popular products is normally the city-level DCs of JD and
YHD. For less popular goods, the OFP is in regional fulfillment
centers, which reflect market uncertainty rather than control over
the supply chain.
Two key factors can help SC-based e-merchants make this
system work effectively. The first factor is the quality information
on consumers. Similar to or better than conventional retail chains,
SC-based e-merchants can have comprehensive information about
their customers by knowing not only their purchasing habits and
expenditure profiles, but also their locations and residence types.
The second factor is the adoption of proper distribution technolo-
gies that help the lean door-to-door operation of the chain from
their regional distribution hub to consumers homes. SC-based
e-merchants can build up their advantage through these two key
factors, particularly because of their strategy of controlling the
quality and effective last-mile deliveries. However, such strategy
may not work for areas or cities that have low density of total
demand. An evidence of such a lean chain is that JD achieved the
lowest inventory and fastest turnover velocity at their regional ful-
fillment centers and city DCs among all major etailers in China in
2014 (21X Lab, 2015). This feat was achieved through 86
city-level warehouses strategically located in 36 major cities of
high-demand regions and through optimizing the inventory con-
trol of its DCs, warehouses, and seven regional fulfillment centers.
In addition to these two factors, a prerequisite for an effective
decoupling model for the co-location of fulfillment centers and
DCs with demand density is that they do not handle transportation
prior to their warehouses, or the first mile issue. Indeed, the first
mile can be expensive and technically difficult. For example, a
supply chain of agricultural goods from a remote region can be
difficult to operate effectively at low costs.
4.3. Choice of 3PLs the other part of reality
The decoupling conceptual model discussed above does not
seem to work properly with individual etailers whose deliveries
are largely based on 3PLs regardless of their use of
e-marketplace. Table 2 compares how the major etailers
(Table 1) perform different logistics and delivery components.
 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034
Density of daily
delivery per km2
100
50
25
0 Wuhan
Fulfillment Center
211 Delivery
Fig. 9. Illustration of the zonal delivery strategy of JD practiced in Central China. Source: Drawn by author based on the information provided at www.JD.com.
Producer
Factory
Control over supply chain
Regional
Fulfillment
Center
Fig. 10. Order fulfilling points (OFPs) and the two determinant drives. Source: Created by the author.
From top to bottom, the firms listed in the table are ranked from
fully relying on their own logistics and transportation to fully rely-
ing on 3PL or LDPs for delivery. Considering that 50% of purchases
are made through Taobao/Tmall, we list how independent etailers
are typically supported by 3PLs or LDPs in the last row. These etail-
ers generally provide consumers with options in terms of shipping
and delivery: waived shipment charge if they opt for a low-end 3PL
provider or delivery through SF for a fee. The two options reveal
that marketing has a hierarchy of etailing, partly because of the
available logistics options generated during the co-evolution
process.
Once the distribution of ordered products is mainly in the con-
trol of the 3PL provider, the location choice of a DC becomes the
decision of the provider rather than that of the etailer. Three major
factors largely affect the location of a 3PL providers DCs: (1) deliv-
ery proportion for etailers [e.g., SF only has 30% of their business in
B2C, whereas the 70% is business-to-business (B2B)]; (2) geograph-
ical coverage of delivery; and (3) demand (orders) composition
from different etailers/e-marketplaces. Given that most 3PL firms
29
Yueyang Changsha
Standalone Warehouse Delivery Density
Next Day Delivery or
Scheduled Time Delivery 3PL Delivery
Market Uncertainty
City
DC
B&M
in China have a loose organizational structure and are disaggre-
gated in nature (i.e., with geographical multi-level subcontracting),
obtaining a clear picture of the last two determining factors of any
3PL is extremely difficult, if not impossible. The disaggregate
nature reflects that the costing of the entire delivery is also
disaggregated. This condition means that studying their rational
or optimal location of fulfillment centers or regional DCs cannot
help our understanding of these 3PL firms role in the entire etail-
ing market unlike that of SC-based e-merchants. Given JDs zonal
strategy to differentiate their own delivery coverage and that
covered by 3PL, the focus should be on a 3PL providers spatial
strategy to compete with firms such as JD and among themselves.
4.4. Free delivery (Baoyou) as a spatial strategy for e-marketplace-
based etailers
A common and popular strategy used by e-marketplace-based
etailers to attract buyers is to waive the delivery cost or Baoyou
(). Although buyers can consider this option as a salesmans
30 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034

Table 2
Major B2C E-retailers and their own-operated logistics and delivery components. Source: Compiled from the websites of listed companies as of June 9, 2014.

E-merchant Merchant type Warehousing Last mile delivery Long haul transportation
name
Suning.com Retail chains going 4 national warehouses and 8 regional A delivery team of 6000 people covering 6000 trucks
O2O warehouses top-tier cities; 3PL for the rest
Jingdong (JD) SC-based 7 fulfillment centers, 7 front distribution 1620 delivery stations and 214 self-pickup Own fleet of more than 300 trucks
e-merchant centers, and 86 warehouses in 36 cities; points in 495 cities across the nation;
storage space of 1.3 million m2 delivery team of more than 20,000 people
Yihaodian SC-based 7 fulfillment centers, 280,000 m2 of Delivery teams in more than 40 cities 70% shipments carried by own system
(YHD) e-merchant warehouse space
Amazon SC-based 15 fulfillment centers and over Delivery teams in 19 cities plus 3PL Contract out through bidding
China e-merchant 700,000 m2 warehouse space in total services, 75% shipments carried by own
system
Dangdang Independent 21 warehouses in 11 cities with Mostly uses LDP services and other 3PL Partnership
online merchant 370,000 m2 of space service providers (e.g., SiTong Yi Da and
EMS)
VIP (VipShop) Independent 400,000 m2 warehouse space by the end Mainly uses LDP (98% of orders), the rest Plans to have its own truck fleet for
online merchant of 2013 through 3PL (2%) transport between DCs
Yixun (under Independent 230,000 m2 for warehouse storage Delivery teams in 20 cities Partnership
Tancent) online merchant
Those at Independent Rental, varying in size 3PL or LDP A signed contract with one or two 3PL
Taobao/ online merchant
Tmall

trick, this waiver does not apply in several provinces and regions.
We drew a map (Fig. 11) based on our structured sample of 500
products in two most popular categories (clothing and electronic
goods) displaced online in Taobao/Tmall from retailers home based
in five most e-commerce-active cities to show the most common
cutoff lines of delivery cost waiving or Baoyou.
Fig. 11 shows that Baoyou or free delivery to entire Mainland
China are applied to more than 40% of products we sampled and
only 21% of products are presented without Baoyou. There are
areas in East and South East coastal regions, namely, entire
Jiangsu and Shanghai, part of Zhejiang, part of Fujian, part of
Jiangxi, and entire Guangdong, where all available Baoyou schemes
apply (i.e., those darkest areas inside the black circle on the map).
This means Baoyou schemes apply to 78% of products in the sam-
ple to be delivered free to a relatively limited region in the country.
A flat price indicates large cross-subsidization among potential
consumers living in the Baoyou region, considering that most small
and medium etailers are concentrated in a few coastal provinces,
such as Zhejiang, Fujian, and Guangdong. Theoretically, people
who live far from the etailers warehouses, such as in inland pro-
vinces, can have better deals than buying locally from a real store.
In reality, etailers do not pay a unified fee for each item sold. They
can contract different 3PL firms for different coverage areas and
based on different quantities that are expected to sell in each cov-
ered region. Such a mechanism between e-marketplace-based
etailers and e-marketplace-designated 3PL providers reveals a
mutual dependency between the two. Independent etailers should
find low-cost solutions based on intensive competition among 3PL
providers to support a low-price strategy. The 3PL firms with speci-
fic regional coverage attempt to locate e-shops that have products
favored by their covered region.
Although e-marketplace-based etailers can work with 3PLs to
implement their Baoyou strategy to cover more places with lower
tag prices, this implementation works at the cost of delivery time.
The delivery by these 3PL service providers is normally two to
three days slower than that by JD if within JDs own delivery range,
and most e-shoppers complain about the uncertainty in delivery
time of these 3PL providers. This situation has provided high-end
PEI firms such as SF, which has focused on B2B customers only,
an opportunity to enter the B2C business. Although SF rarely
provides discounts to e-shoppers, it advocates itself on Taobao
and other e-marketplaces as the only one who provides express
services nationwide. Fig. 12 shows that SF has one of the most
comprehensive geographical coverage among all parcel express
delivery companies in China. It is similar to e-marketplaceS, a sub-
sidiary of China Post that extends its express services with a nor-
mal postal system to every corner of China. By examining and
compare the two maps (Figs. 11 and 12), one may find that etailing
in China with the current support of PEI is not a kind of urban
rural leveler by which people living in remote areas can gain access
to the same variety of goods at the same price (because of Baoyou
system) as urbanites. The maps, as well as the JD distribution
strategy discussed earlier, suggest that the distribution system
may actually reinforce the advantage of living in a large city.
5. Further discussion and conclusions
Our conceptualization of etailing and its logistics support
focuses on the fast-paced co-evolution and development of
Chinas etailing business and PEI. Several typical operational mod-
els are identified, which demonstrate how the etailing business in
China has grown rapidly through internal or external parcel
express services. Our paper also discusses how this process defines
the etailing space through (1) the initial establishment of primary
markets in major cities by some SC-based e-merchants; (2) OFP
and fulfillment locations that support SC-based e-merchants to dif-
ferentiate themselves from other etailers through faster and timely
delivery using their own system; and (3) how e-marketplace-based
etailers work with low-cost 3PLs to employ the Baoyou strategy as
their joint competitive advantage to cover as many places in the
country as possible.
Our study demonstrates that the co-evolution of etailing and
the PEI produced compound outcomes that would otherwise be
impossible as both began almost at the same time in
China. These outcomes have led to two major categories of
etailers, namely, e-marketplace-based and SC-based etailers.
Most e-marketplace-based etailers are medium and small
enterprises improperly integrated with their distribution network.
Their strategy is not focused geographically because they cannot
target geographically specific markets. They typically band
together in a location to share the economies of scale obtained
by their logistics service providers (unless they themselves have
a large volume of sales) to address the dispersed and random nat-
ure of their market.
SC-based etailers behave opposite to that of e-marketplace-
based ones. They gradually invest more in logistics infrastructure
 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034 31

Fig. 11. Various Baoyou schemes used by Tmall etailers, January 2015. Source: Own survey, 500 samples from Tmall.com.

and distribution operations in targeted cities and regions with
integrated delivery systems, which make them clearly market-
oriented. They are similar to conventional national chains; that is
their assets and manpower are proportional to their sales, espe-
cially e-merchants that sell wide-ranging products such as daily
grocery goods (YHD), books and other general consumer products
(Amazon China), as well as electronic consumers goods and large
home appliances (JD).
This divergent trend or radiation in evolutionary terms,
between SC-based and e-marketplace-based etailers not only con-
firms the bi-directional causality in the initial stage of co-evolution
between etailing business and PEI, but also reveals different geo-
graphical imprints. Given the integration between etailing and its
supportive logistics, the fulfillment and distribution centers of
SC-based etailers are co-located with their demand or consump-
tion density (Fig. 9), and they allow product manufacturers
conduct the first-mile delivery to these centers. Whereas, for the
e-marketplace-based etailers who do not operate their own deliv-
ery system nor have bargaining power to obtain stocks from sup-
pliers without first-mile delivery charge, they have to be close to
either the manufacturing sites or wholesale locations. Mutually
related with this geographical distribution of e-marketplace-
based etailers is the evolution of small- and medium-sized 3PLs
and their service coverage. This mutual relationship is reflected
in the Baoyou pattern on Taobao (Fig. 11). Consumers who gain
most in terms of free delivery are not those who live in a place with
high-demand density, but those who live close to the manufactur-
ing/wholesale locations and better services by 3PLs. In other
words, similar to the co-location issues in production systems
of innovation industry discussed by Schamp (2010), we identified
two different logics in the relationship between co-evolution and
co-location: vertical integration (as in SC-based firms) and disinte-
gration (as in e-marketplace-based firms) between etailing and its
distribution system are keys to determining the physical presence
32 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034
Fig. 12. Geographical coverage of Shunfeng (SF) for e-commerce delivery in Mainland China. Note: Each note on the map represents a county or city-district. The color scheme
represents the number of villages (in a country) or neighborhoods in a district covered by SF. Source: Compiled by author using data from Shunfeng.com.
of etailer assets, which in turn will mutually affect the develop-
ment of related PEI firms in the case of disintegration between
etailers and their logistics support. At this stage, we could not
quantify the threshold of assets or scale of e-marketplace-based
firms in terms of stock keeping units (SKU), which determines
whether to establish multiple DCs over the country because of
large variations among different types of goods.
We observed several trends toward more business sophistica-
tion, which can rapidly reshape the retailing and PEI in this country
in the coming decade. First, e-marketplace operators (i.e., Alibaba
and Tencent) and SC-based e-merchants (i.e., JD and YHD) tend
to open their online marketplace for other retailers, particularly
major brands, to open their own official online stores. This strategy
can blur the line between the two major etailing types and create
direct selling. For example, more OFPs can move from the retailers
regional fulfillment centers to the factorys warehouse for drop
shipping.
Second, new forms of LDPs with better coalition with 3PL and
e-marketplace operators are emerging in response to the challenge
posed by 3PL and SC-based e-merchants. For example, Mail
World (), which was established in Shenzhen City in 2013,
helps 3PL providers to handle intra-city and last-mile deliveries
of TMall purchases. As of May 2014, it is operating a chain of 15
flag stores and 692 community-franchised stores to address DAPs
so buyers can pick up their purchases even when the delivery time
window does not fit. This trend connects China with many existing
studies on the last mile issues over the world (Gevaers et al., 2011;
Ehmke, 2012; Lee and Whang, 2001; Kearney, 2011; Madlberger
and Sester, 2005; McKinnon and Tallam, 2003; McKinsey Global
Institute, 2013; Song et al., 2009; MDS Transmodal Limited,
2012; European Commission DG Internal Market and Services,
2013).
The third trend is further collaboration among e-marketplace
operators and their clients (i.e., etailers and their logistics service
providers). A collective effort to consolidate distribution systems
of logistics service partners was led by Alibaba. On May 28, 2013,
its chairman and CEO Jack Ma announced the establishment of a
100 billion yuan ($16.3 billion) logistics network that will attempt
to provide 48-h domestic deliveries. The project, called China
Smart Logistic Network or Cainiao (), is expected to be built
within 10 years to improve efficiency through streamlined ware-
house and logistics infrastructure. Although the project sounds
impressive, we believe it is too ambitious and idealistic to realize
considering that Alibabas Taobao/Tmall system is not the only e-
marketplace, and e-marketplace plus 3PLs is not the only business
model that works in reality. At least three major causes make this
project unrealistic and difficult to operate. First, firms with integra-
tion between e-shop front and backdoor logistics as an SC-based
operation are already in place, as demonstrated in our analysis.
The further growth of these SC-based operations with more inde-
pendent e-merchants that share the existing logistics systems low-
ers the need for Cainiao. Second, the ability to reach every corner of
China is not limited by information and payment software, but by
hardware such as the physical distribution system. Therefore the
smartness that works in the virtual side of e-commerce will
not provide significant assistance. Third, and probably the most
important point, is that current stakeholders, namely, Alibaba
and all designated 3PL providers, do not seem to have the same
objectives, especially since the latter has different internal struc-
tures and market coverage.
 J.J. Wang, Z. Xiao / Journal of Transport Geography 46 (2015) 2034
The fourth trend is the coexistence of formal and informal sec-
tors in PEI. Although China has been rapidly growing from a devel-
oping economy to a developed economy, the difference in income
between the rich and poor has also enlarged, which is similar to the
regulatory environment and its enforcement among major
metropolitan cities and the rest of China. The regulations on PEI
firms, such as truck type and quality, delivery time and areas, oper-
ation licensing, and even pension scheme of labor force, have been
tightening up in China because of security, environmental, and
social concerns. New regulations are generally enforced much
effectively in major metropolitan cities than in other places, which
does not only help to improve the service quality but also raise the
operational cost. Regulatory environment and reinforcement in
other cities or the countryside (i.e., remote areas) are much relaxed
such that many small firms run their express distribution as infor-
mal businesses with much lower entry requirements in terms of
labor and equipment costs. At the same time, the major PEI firms
hesitate in covering these areas with a slim demand and high
delivery cost. Notably, these informal firms and individuals in the
PEI match well with a large demand of etailing for low-priced imi-
tated products of brand names or Shanzhai () goods. The best
domestic and imported products online and related parcel express
services with excellent quality have served developed cities such
as Shanghai and Beijing for a relatively long time. Nevertheless, a
large market outside these cities for low-priced products of accept-
able quality and delivered by low-cost multi-level subcontracted
firms or individuals in the informal part of PEI still exists. This
coexistence between the formal and informal sectors in the PEI
demonstrates that the co-evolution discussed in this paper is not
only a path-dependent process but is also associated with place-
dependent institutions.
Finally, the internationalization trend of etailing with cross-
border small parcel express delivery (CBSPED) should be consid-
ered. Buying an e-book from Amazon is common because it does
not generate physical movement of cargo. However, many
Chinese have began to buy milk powders directly from Australia
or Germany using the CBSPED services through online gateways
such as Ymatou.com () or Haitao.com () because etail-
ing and PEI has become more mature. This trend is not a part or the
next stage of co-evolution but a revolution in etailing and global
logistics. It will trigger a series of fundamental changes in both
retailing and global trade. The major barriers to this trend are
not in either retailing or PEI, but in (1) international laws, regula-
tions, and trade regimes that govern the process of trade such as
tariffs, as well as (2) non-tariff institutions set at borders such as
entryexit inspection and quarantine.
Considering the trends summarized above, several key and
interesting extensions of our current work are noted. First is to fur-
ther our investigation on the spatial strategy implemented by SC-
based firms against that by e-marketplace-based retailers. These
two firm types and their strategies are still in an ongoing process
of overlapping each other in a competitive manner to provide com-
plementary retail services to a large country with polarized
demands. The transport geography perspective notes a related geo-
graphical issue to further explore: the last-mile delivery issue in
Chinese cities with high density development, particularly in cities
with numerous gated neighborhoods. Another research direction
that can be further explored is the CBSPED, which can bring in sub-
stantial reformation in economic geography both domestically and
internationally.
Acknowledgements
This research is partly supported by the National Science
Foundation Committee (NSFC) (Project Number: 71390335). Our
33
appreciation also goes to Ms. Jing Li and Ms. Tina Tsang for their
research assistance and technical support.
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