DJI is controlling 70%+ drone civil market

[A chauhan]

Here in India drones ordered from international sites stuck in the custom. Many friends have reported the same. But you can still buy locally.

 

[amoy]

E-commerce giant JD will build tens of thousands delivery drone landing pods

JD.com Bets Big on Robots, Drones, and Driverless Delivery

The Chinese e-commerce site is investing heavily in technology in its titanic battle with Alibaba.

While many view market leader Alibaba (NYSE:BABA) as the Amazon (NASDAQ:AMZN) of China, JD.com (NASDAQ:JD) may be a closer comparison. Unlike Alibaba, which began as a platform upon which third parties bought and sold goods, JD.com began as a full-service e-commerce platform, buying up its own inventory, and investing heavily in its own logistics and delivery system.

That explains the wide gap in profitability between the two companies; Alibaba recently reported 31% operating margins last quarter (down from 39% from a year ago), while JD.com had operating margins of -0.5% in the recent quarter.

While its revenue growth has remained impressive, JD.com stock sold off after the release, largely due to this ongoing lack of profitability. However, I think the market is perhaps being shortsighted, as much of the earnings miss can be attributed to heavy investments in fulfillment centers and technology. That will not only keep JD out ahead of rivals but should also lower its costs in the future. Here are all the ways in which JD is aiming to keep its lead in Chinese e-commerce.

A ROBOT SORTS A PACKAGE AT JD'S FIRST FULLY AUTOMATED WAREHOUSE.

Inside the numbers
The numbers from the quarter reveal the toll of these heavy investments. While JD reported impressive 38.7% revenue growth and 29.1% growth in active customers, these numbers lagged huge increases in both fulfillment expenses and technology investments, which rose 45.7% and 74.5%, respectively.

That sent margins into negative territory, in contrast to the slight profit the company made in the third quarter. Management clarified that the better-than-expected margins of the first three quarters in 2017 allowed the company to spend on new warehouses and logistics in the fourth quarter, along with big customer discounts in an effort to drive volume and take market share. As of the end of last year, JD had seven major fulfillment centers and a whopping 486 warehouses across China.

The fixed costs of warehouses and fulfillment centers create more profit as more volume flows through them, so JD's management is making a bet on bigger (and therefore, more profitable) growth in the future -- a process that it expects to play out over multiple quarters.

Robots, drones, and automation
In addition to investments in land and buildings, management invested heavily in technologies to make this extensive delivery system among the most sophisticated and efficient in the world. These investments include futuristic-sounding innovations on multiple fronts.

First, the company unveiled its first fully automated warehouse in Shanghai. If successful, it could apply the technology to its near 500 warehouses across the country. That would undoubtedly lead to huge future savings in labor costs.

Second, the company expects to receive more delivery-by-drone licenses in 10 provinces by the end of this year. JD began delivering via drone about a year ago in rural areas outside Beijing, and says it will add many more delivery robots "in the near future." Drones have been mentioned as a key element in JD's ambitions to reach more rural populations, and these rural provinces have been much more open to drones filling their skies than their U.S. counterparts. While Amazon has also revealed ambitions for delivery-by-drone, it seems as if JD has beaten Amazon to the punch due to its more inviting regulatory environment.

Finally, management also revealed it had been testing self-driving trucks for the past six months. Self-driving ridesharing apps for consumers are almost here, but one of the more useful cases for self-driving tech could be in trucking and shipping, and it looks as if JD has already been seriously investing on that front.

 

[amoy]

Chinese Drone Maker DJI Seeking At Least $500 Million In Pre-IPO

China’s SZ DJI Technology Co Ltd, the world’s largest maker of non-military drones, is in talks with investors for at least $500 million in funding ahead of a planned stock market debut, people with knowledge of the matter said.

With the funding, set to be obtained via a combination of new equity and debt, the firm would be valued at about $15 billion, nearly double its valuation in 2015, they said.

The move seeks to capitalize on robust investor enthusiasm for Chinese tech stocks which have pushed valuations to heady levels for many firms, as well as on rapid growth in demand for commercial-use drones.


Shenzhen-based DJI plans to expand into drones for sectors such as agriculture, energy, construction as well as drones for use in infrastructure inspection, two of the three people said, declining to be identified as the information was private.

Proceeds from the fundraising could be between $500 million and $800 million, one person said.


DJI, which commands 70 percent of the global commercial and consumer drone market, wants to finalize the deal in the coming months while a stock market listing either in Hong Kong or mainland China would likely take place next year, they added.

But there are also risks to its business, with U.S. President Donald Trump set to announce tariffs on Chinese imports on Thursday.

Drone technology tends to spark extra scrutiny due to concern the unmanned aircraft may be used to capture sensitive information.

DJI made headlines in 2015 when its one of its top-selling consumer drones, the Phantom, crashed into the White House lawn and last August, the U.S. Army ordered its members to stop using DJI drones because of “cyber vulnerabilities”. DJI has since tightened data security on its drones.

A spokeswoman for DJI said in an emailed statement the company had no announcement to make on fundraising and that it was not planning an initial public offering at the moment. She did not elaborate.

DJI was valued at about $8 billion in 2015 when it raised $75 million from Silicon Valley venture capital firm Accel Partners. Its valuation increased to $10 billion last year, said one person.

Founded by Chief Executive Frank Wang in 2006, DJI is also backed by Sequoia Capital China. It is the world’s top consumer drone maker by revenue and in January its president, Roger Luo, was quoted by media as saying that 2017 sales were likely to have exceeded 18 billion yuan ($2.9 billion).

DJI booked about 5 billion yuan in profit last year, said one of the people with knowledge of the fundraising.

Its competitors include China’s Yuneec, which is backed by Intel, France’s Parrot and units of Boeing and Lockheed Martin.

Global spending on drones is likely to reach $9 billion this year and is expected to grow at a compound annual growth rate of 30 percent in the next five years, according to research firm IDC, which estimates more than half of that spending will be on drones for commercial use.