Alibaba Invests In Logistics As It Eyes Global Growth

Alibaba is on the fast track to expand its footprint, and a strategic investment announced yesterday (May 14) showed — logistically speaking — just how the eCommerce company plans to do so.

Alibaba announced it has invested in Shanghai YTO Express, one of China’s top logistics companies, to help Alibaba increase its operational efficiencies, while working with the company to develop its solutions across China. Delivery logistics across the region have been a struggle for many eCommerce companies as the postal delivery in China has lagged.

According to Alibaba, YTO Express will work with Cainiao, the logistics affiliate of Alibaba Group to “enhance the industry’s logistics management capabilities and international and rural delivery services,” which is one of the areas the delivery issues have impacted most. Alibaba and YTO Express hope the partnership will help bring better service to merchants, consumers and logistic companies.

“As a leading player in China’s logistics industry, our collaboration with Alibaba Group and Cainiao will boost our strategic product and service offerings to catalyze a breakthrough in efficiency within China’s logistic sector,” said YTO Express Chairman Yu Wei Jiao.

From Alibaba’s perspective, it will help the company strengthen its own eCommerce footprint as improvements across China’s logistical industry should have a trickle down impact on the companies like Alibaba who are trying to deliver a massive amount of goods across greater China — including the rural areas that have sometimes been a struggle to deliver to.

“The strategic investment in YTO Express reflects our commitment to improving quality and service standards in China’s logistics industry. As a platform, we look forward to working closely with partners who share our vision in developing an efficient logistics infrastructure and solutions that will drive development of China’s logistics sector in order to fully satisfy our customers’ needs,” said Judy Tong, Senior Vice President of Alibaba Group and President of Cainiao.

On the same day Alibaba announced its investment in YTO Express, its newly appointed CEO Daniel Zhang spoke about the need for Alibaba to continue to grow its presence internationally. This includes investing more of its company resources — and people — toward helping Alibaba achieve this goal.

“We must absolutely globalize,” Zhang said during a company-wide strategy session yesterday, according to an Alibaba Group news release. “We will organize a global team and adopt global thinking to manage the business, and achieve the goal of ‘global buy and global sell,’” he said.

Zhang also noted that Alibaba will continue to invest in its overseas operations, including AliExpress — Alibaba’s cross-border online marketplace, along with Tmall Global.

“Today, you can say Alibaba is in the process of achieving globalization,” he said. “Over the next five, 10 years, 30 years, this is the journey. We must absolutely globalize and it must be a successful effort—if not Alibaba won’t be able to last” for more than 100 years, one of Alibaba Executive Chairman Jack Ma’s loftiest corporate goals.

While promoting Ma’s “lofty goals,” like hitting $1 trillion annual GMV across all of Alibaba’s marketplaces by 2020, Zhang also shared his thoughts on the challenges that Alibaba faces as it continues to grow. This includes recent issues Alibaba has faced, like accusations of fake goods being sold on its marketplaces.

“Can we still create entrepreneurs and new original brands, or build Chinese brands selling quality products on ‘almighty Taobao,’ and can this platform continue to grow? These are our concerns,” Zhang said. “When we face issues like counterfeit goods and brushing, are we able to step up and improve our market-monitoring mechanisms and to perfect them in order to effectively combat these harmful products on our platforms? In order to reach our goal of $1 trillion in GMV, we need to transform our platform into a high-quality, thriving platform.”