Alibaba warehouse network plan

PUBLISHED : Thursday, 20 January, 2011, 12:00am
UPDATED : Thursday, 20 January, 2011, 12:00am

Alibaba Group, China's largest e-commerce company, and undisclosed partners plan to invest as much as 30 billion yuan (HK$35.44 billion) to build a network of warehouses across the mainland to expedite delivery of goods by online merchants.

The Hangzhou-based firm, which controls internet trading giants Taobao and Hong Kong-listed, will initially develop this nationwide infrastructure close to major population centres in the Beijing/Tianjin area, the Yangtze River Delta and the Pearl River Delta regions.

'Hopefully within 10 years, anyone placing an order online from anywhere in China will receive their goods within eight hours, allowing for the virtual urbanisation of every village across the country,' the Alibaba Group's chairman and chief executive Jack Ma Yun said yesterday in Beijing. Ma, in an open invitation to partner with other interested parties, said everyone involved in the mainland's e-commerce sector 'needs to work together to accomplish this'.

Rolling out a modern logistics network capable of handling a large chunk of the nationwide storage, trunk transport and delivery requirements of the country's online merchants is expected to necessitate a total capital outlay of more than 100 billion yuan.

'Creating a network of warehouse facilities is a key tactic in our strategy to resolve the bottleneck facing the logistics industry in China,' Zhang Wei, a senior vice-president at Alibaba Group and head of its strategic investment team, said.

Alibaba Group intends to co-ordinate closely with working partners in all sectors of the logistics industry to establish a national network of warehouses to service business-to-consumer e-commerce players across the country, including independent operators that compete with Taobao.

The initial facilities to be built over the next five to seven years will have a total storage space of three million square metres, or the equivalent of 356 soccer pitches.

A report published last year by Deutsche Bank analysts in Hong Kong described the mainland's warehousing market as 'underdeveloped' and 'unable to meet the demand from growing e-commerce platforms'.

Although Taobao remains the mainland's online-shopping market leader, with total transactions worth 400 billion yuan last year, an internet retail joint venture between Hutchison Whampoa's Tom Group and China Post already provides a highly developed, nationwide logistics infrastructure.