Alibaba’s Logistics Side Delivers New Investors

The logistics affiliate of China’s eCommerce giant Alibaba completed its first funding round, the company announced Monday (March 14).

The funding round for Alibaba Group Holding’s logistics arm, Cainiao, included investor participation from Singapore’s Temasek Holdings and GIC Pte Ltd, Malaysia’s Khazanah Nasional Bhd and China’s Primavera Capital.

While the actual amount of new capital Cainiao received in the round was not disclosed by Alibaba, Reuters reported that, three years ago, when the company launched the logistics firm, it said it would spend 100 billion yuan (approximately $15.4 billion) over the course of five to eight years to establish its national logistics network.

The company did confirm it will continue to work with its investors to grow its “Big Data logistics network,” which reportedly aims to increase its efficiency by processing data ranging from weather patterns to delivery routes and order trends.

Earlier last year, Alibaba announced its own investment in Shanghai YTO Express, one of China’s top logistics companies, to help it 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 works with Cainiao 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.

Investing in logistics has the potential to 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, that are trying to deliver a massive amount of goods across greater China, including rural areas that have sometimes been a struggle to deliver to.

Last September, Cainiao inked a deal with the United States Postal Service to help accelerate delivery speeds for merchandise ordered by U.S. consumers via the company’s eCommerce shopping sites.

The deal was reportedly aimed at making it easier for U.S. consumers to buy (and track) goods from China.

There was a memorandum of understanding put in place wherein Cainiao and the USPS agreed to work on shipping solutions for cross-border eCommerce. The ultimate goal was to help provide more efficient shipping channels to the U.S. for Chinese merchants and others who sell goods across the AliExpress globally oriented shopping network. The USPS also helps Cainiao boost its worldwide shipping capabilities, with a focus on South America.

In a statement detailing the partnership at the time, Cainiao Vice President Wan Lin said: “As cross-border eCommerce grows rapidly, it is critical that we evolve shipping services to the next level, with shorter delivery times and easier methods to track a shipment. The collaboration between Cainiao and USPS will enable us to create new solutions and ultimately improve the overall customer experience.”