Alibaba Funnels $3.3 Billion Into Logistics Arm As E-commerce Demands Intensify

Alibaba Group Holding Ltd (NYSE: BABA), the world’s largest online and mobile commerce company, announced a further investment of $3.3 billion in its logistics affiliate, Cainiao. 

By funneling another $3.3 billion into Cainiao, Alibaba now owns 63% equity in the company. This percentage grew from 51% after paying $807 million for the majority stake in 2017. 

Cainiao, a privately owned Chinese logistics company, was founded in 2013 by Alibaba and eight other companies. The company is currently valued at $20 billion. 

“Logistics is a key pillar of the Alibaba business operating system,” said Daniel Zhang, Alibaba Group executive chairman and chief executive. “It allows us to offer the best service to customers and to effectively advance our new retail strategy. Cainiao strives to enhance service and user experience for merchants and consumers through superior technology and digital solutions, both within China and around the world.” 

Some 50.7 billion parcels were delivered through Alibaba’s online platforms in the past year.

Alibaba’s growing investment in Cainiao shows its strengthening reliance on logistics to meet the ever-intensifying demands of e-commerce and express delivery.

Cainiao isn’t the only logistics company the Chinese technology giant has taken stock in. Others include STO Express (15% stake), ZTO (10% stake), YTO (11% stake) and Best Logistics (27.9%). 

“Cainiao will use the money raised to invest in technologies and logistics infrastructure services to strengthen its smart logistics network and enable innovations in business models, services and technological capabilities for the entire industry,” reports South China Morning Post, which Alibaba owns.

Image by Pete Linforth from Pixabay

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