Alibaba logistics unit Cainiao unveils express service to improve e-commerce efficiency, as Tsai sees synergy in delivery and shopping
- The new service, under the brand name Cainiao Express, is based on the original courier operation of Tmall Supermarket
- Alcohol giant Tsingtao Brewery, along with Alibaba-backed retailers Hema and Intime Department Store, have signed up for the new service
Alibaba Group Holding’s logistics arm Cainiao unveiled an express delivery service on Wednesday to facilitate sales from its e-commerce platforms, in Joe Tsai’s first major business move since he was named incoming group chairman last week.
The new service, under the brand name Cainiao Express, is based on the original courier operation of Tmall Supermarket, and promises half-day, same-day and next-day door-to-door delivery across 300 Chinese cities, the Hangzhou-based company said.
Cainiao Logistics, one of the six spin-off units from Alibaba, is seeking an initial public offering in the next 12 to 18 months.
Tsai, the chairman of Cainiao, will also take over the Alibaba chairmanship from Daniel Zhang Yong in September.
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At Cainiao’s Global Smart Logistics Summit, Tsai said via video that logistics has played a vital role in China’s e-commerce development and that Cainiao will seek to improve efficiency through use of artificial intelligence technologies.
“Consumption remains the most important driving force for economic development [and] online retail is one of the main consumption scenarios. Alibaba hopes to continue promoting the economy through consumption,” Tsai said in his first public remarks since returning to the frontlines of the company he co-founded nearly 25 years ago. Alibaba owns the South China Morning Post.
With the express delivery service, Cainiao promises to compensate consumers for any delivery delays or damage caused during shipment. JD.com, a fierce e-commerce rival of Alibaba, is known for its speedy delivery service through its massive in-house logistics arm, which later listed in Hong Kong as JD Logistics.
Cainiao said its new service is available for merchants on Alibaba and other platforms. Local alcohol giant Tsingtao Brewery, along with Alibaba-backed retailers Hema and Intime Department Store, have signed up for the new Cainiao service.
The launch of Cainiao Express also shows Alibaba’s desire to take more market share in online groceries, where timely delivery is key, said Li Chengdong, founder and chief analyst at Beijing-based e-commerce consultancy Dolphin.
Alibaba used to rely on third-parties for grocery deliveries, but it was hard to rely on outside couriers to achieve “half-day delivery”, so an in-house express service made sense, Li added.
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Early this year, Cainiao conducted a trial of the half-day delivery service using Tmall Supermarket in Hangzhou. Orders placed before noon would arrive before 9pm the same day, while those after 12:00 would reach the customer’s door no later than noon the next day. The service is expected to be rolled out to 20 top-tier Chinese cities by year-end.
JD.com said on Monday that it is merging its offline retailing arm 7 Fresh with other business lines in a push to open more online grocery stores and explore new retail models.
