Supply Chain Matters highlights a side panel announcement regarding this weekend’s kickoff of the 2019 Singles Day Global Shopping Festival, primarily orchestrated by China’s dominant retail online platform provider, Alibaba, with today’s announcement that the Chinese online platform provider is increasing its ownership stake in its logistics unit Cainaio.
The Chinese online platform provider announced today that it will increase the equity stake in its logistics arm Cainaio to 63 percent, with a reported $3.3 billion additional investment. In 2017, Alibaba had increased its stake to 51 percent in the logistics entity. Other investors in the logistics arm are department store owners Intime Group and conglomerate Fosun Group.
We have often noted the critical importance for having coordinated and synchronized logistics and last-mile customer fulfillment to make same-day or one-day delivery commitments meaningful for online customers in receiving the goods as-promised. That is what is differentiating global online retail providers.
The same notions take on even more meaning with such a huge one-day 24-hour shopping event, such as Singles Day with literally multi-millions of parcels flooding logistics entities at the same time.
In reporting on today’s announcement, TechCrunch pointed out that in addition to its now majority equity stake in Cainaio, the online shopping platform provider has additionally purchased nearly a 15 percent stake in STO Express, upwards of a 10 percent stake in ZTO, 11 percent stake at YTO and 27.9 percent of Best Logistics.
Indeed, these are meaningful evidence of a Chinese online provider having skin in the game for ensuring reliable on-time delivery performance. Similar to Amazon, having access to your own logistics and customer last-mile fulfillment resources are indeed the table stakes to today’s online shopping experience.
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