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Alibaba’s $1.4 Billion Deal to Digitize Chinese Logistics

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The e-commerce giant Alibaba Group and its logistics arm Cainiao Network have invested US$ 1.38 billion in securing a 10% stake in the Chinese delivery company ZTO Express as part of a digital retail strategy.

Once the companies have closed the deal on an expected date in early June 2018, Cainiao and ZTO will further their collaboration with ‘New Retail’, an Alibaba concept that seamlessly integrates first and last-mile pickup and delivery capabilities, warehouse management, cross-border logistics and technology-driven smart solutions.

Daniel Zhang, CEO of Alibaba Group and Chairman of Cainiao Network, said:  “ZTO has been an important partner to Alibaba Group and Cainiao Network in the development of the new digital economy.

“The continuing expansion of New Retail is catalyzing new opportunities and demands in logistics.

“This strategic investment will strengthen synergies across our mutual businesses to create new value and improved experience for merchants and consumers.”

New Retail links online and offline commerce through deep consumer engagement based on insights drawn from advanced technology and data analytics.

Moving forward, New Retail will require investment in smart supply chains, retail technologies, advanced logistics and mobile payments.

The concept will benefit from Cainiao’s smart logistics network, which is furthering the development of technologies such as e-shipping labels and smart sorting.

Cainiao has the capability to provide same-day and next-day delivery in nearly 1,500 districts and counties in China, and operates Cainiao Post, a network of last-mile stations covering communities in top 100 cities and around 1,800 university campuses across the country.

Read about how e-commerce demands are giving rise to a new era of port technology in a Port Technology technical paper by project44

Lin Wan, President of Cainiao Network, said: “The logistics industry in China is highly competitive with its own unique features and presents plenty of new opportunities ahead.

“This investment will enable Cainiao and ZTO to supercharge joint innovation and development to accelerate digitalization of the industry.

“We will continue to work closely with industry leaders, including ZTO, to enhance our logistics infrastructure and broaden our service offerings to meet the growing demand from New Retail.”

ZTO’s service capabilities across China include line-haul, last-mile, express delivery, in-city delivery, fulfilment and warehousing.

Its recent initiatives have focused on building its logistics eco-system with Less-Than-Truckload (LTL) transportation services and international logistics and supply-chain management.

Meisong Lai, Founder, Chairman and Chief Executive Officer of ZTO, said: “The growth of e-commerce and New Retail in China demands more efficient express delivery and expanded logistics services.

“This partnership will enable us to expand our selection of high-quality service offerings both in China and internationally, and is fully aligned with our common interest in improving logistics efficiency and enhancing customer experience.”

See more: Alibaba is working with a consortium of companies to introduce a food-tracking system into the supply chain that is based on blockchain technology

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