22 March 2019

Alibaba goes the last mile to face off with couriers

When he spearheaded the establishment of Cai Niao, a national smart logistics network, earlier this year, Alibaba Group founder Jack Ma {馬雲} had assured the nation’s courier companies that the multibillion dollar project would help their operations rather than grab their business.

Under the roadmap, Cai Niao would be a first-level cargo distribution network that allows over 30 billion yuan (US$4.93 billion) worth of goods to be processed every day through the help of precise cloud computing and handy warehouses. “The last mile delivery” will, however, be left to the express services firms.

But now Alibaba’s announcement of a massive investment in Haier Electronics Group (01169.HK) suggests that the verbal assurance given to courier firms earlier may not really be upheld. The partnership with a major home appliance maker shows that Alibaba is interested in obtaining its own “last mile” connection with customers, putting it in head-to-head competition with courier operators.

Alibaba agreed to invest HK$2.82 billion (US$362 million) in the Hong Kong-listed Haier. If all the conversion rights are exercised, the group will finally get about 4.59 percent of the enlarged share base of Haier Electronics. The main part of the deal will give Alibaba a say in Qingdao Haier Logistics, an end-to-end distribution arm of the white goods company.

Under the brand Goodaymart, Qingdao Haier Logistics has nine large-scale distribution centers and nearly 40,000 sales points across the country, offering third-party home appliance brands a vertically-integrated channel from just-in-time storage, distribution and doorstep delivery to after-sales services across the country.

Alibaba has taken a fancy to Qingdao Haier Logistics probably because the latter is one of the few express companies in China that deliver large goods with one-stop coverage to almost all the counties in the country, and more importantly, having sprawling last-mile delivery capacity at village level.

Given its dominance in online shopping market, Alibaba’s ecommerce platforms generate about 70 percent of the package delivery demand in the country. The synergy that Haier Electronics will bring in is evident. It will serve as a perfect last-mile extension of Cai Niao’s backbone network going forward, taking Alibaba one step closer to forging its own complete ecosystem in its ecommerce empire.

– Contact the writer at [email protected]



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