Alibaba to build 100 billion yuan logistics network

Online retailer's network intended to deliver parcels anywhere on mainland within 24 hours

PUBLISHED : Saturday, 26 January, 2013, 12:00am
UPDATED : Saturday, 26 January, 2013, 5:02am

Alibaba, the mainland's largest e-commerce firm, said it would lead a group of mainland investors, including private equity firms and major express delivery firms, in investing 100 billion yuan (HK$124.6 billion) in the first phase of a logistics network.

Jack Ma Yun, who announced last week that he will step down as Alibaba's chief executive in May, will be chairman of the logistics venture.

The plan is to build, in the next eight to 10 years, a network that will allow products to be delivered to any corner of the mainland within 24 hours.

Li Zhi, an analyst at market research firm Analysys International, said more details were needed before one could tell if the objectives could be reached.

"I think Alibaba wants to improve the whole environment of the e-commerce world and help enterprises working in this business do better," Li said.

Alibaba spokeswoman Florence Shih said the firm was spearheading the project in co-operation with industry partners with a common goal of enhancing the mainland's existing logistics network, "whether it be on the IT or physical delivery and warehousing levels".

"This is consistent with what we've said in the past, that logistics is a key industry bottleneck for e-commerce growth in China, and that everyone involved in this sector needs to work together to drive rapid development," Shih said.

Other e-commerce firms have set up their own logistics arms, but what Alibaba has in mind is a gargantuan network that will be able to support annual online sales of 10 trillion yuan.

One of the top mainland online retailers, Jingdong Mall, has a platform called 360buy that has worked with its own logistics network since 2007.

Alibaba's TMall and Taobao Marketplace, the mainland's leading online-shopping sites, reported 1 trillion yuan in sales for the first 11 months of last year.

The two platforms generated more than 12 million parcels on an average day and during a promotion in November reached a record 72 million parcels in a single day.

The network, when completed, would support daily sales of 30 billion yuan, Alibaba said.

Li said: "The record single-day sales is 19.1 billion yuan. With current express delivery capacity, it takes up to three weeks for buyers to receive their orders."