Within the past few weeks and months, there have been rather large sums of logistics investments flowing into the Asia online retailing sector, with a special emphasis on improving logistics efficiency and unique customer fulfillment needs
When observing the ever more dynamic trends of parcel transportation and last mile delivery related to online commerce, those residing in the United States sometimes tend to concentrate on news related to Amazon, Wal-Mart, and other major U.S. online retailers. But there are even more dynamic trends occurring in Asia based online commerce last-mile delivery, with a lot of money and attention that goes with that interest. By some accounts, China alone is viewed as the largest logistics market with upwards of $1.6 trillion in revenues. China presents unique logistics challenges in needs for delivering packages in either high density urban cities or vast rural areas of the country.
Supply Chain Matters has previously highlighted the scope and scale of the Singles’ Day shopping festival that occurs in China in November. The event was conceived by students in the 1990’s as a mock celebration for people not in relationships, with a desire to give something to oneself. It traditionally occurs on the 11th day of the 11th month or Double Eleven, since when written numerically, November 11th represents “bare branches”, a Chinese expression for bachelors and singles.
The reality for Singles Day is that online shopping volumes exceed that of the Black Friday or Cyber Monday shopping events that occur right after the Thanksgiving Holiday in the United States. In last year’s event, Alibaba alone reported the equivalent of $17.7 billion in online sales being processed during this year’s 24-hour event.
This week, the South China Morning Post reported that China’s two largest online retailers are investing upwards of $330 million to strengthen their parcel delivery capabilities to prepare for this year’s Singles’ Day shopping festival. Cainiao Network, the logistics arm of Alibaba, is offering upwards of $228 million among its Chinese merchandisers and logistics partners to build added warehouses and improve logistics and efficiencies. Further reported is that investments will also be made in the latest artificial intelligence and big data technologies. Second-ranked JD.com earlier announced upwards of a $100 million investment to assist merchants’ investment needs in warehousing and distribution costs. Earlier in April, JD.com had announced the creation of its own JD Logistics business unit indicating intent to invest in automated warehouse and drone capabilities.
Earlier this month, Chinese logistics firm Best, also backed by Alibaba, initiated a $930 million initial public offering to in-part, invest in its logistics and supply chain services along with advanced technology.
Other Chinese logistics firms that have recently become public companies are S.F. Holding, STO Express, YTO Express and ZTO Express, the latter raising $1.4 billion in a New York Stock Exchange listing in October.
Another area of attention has been India’s online commerce market, which is on-track for becoming the third-largest nation of Internet users. Both Alibaba and Amazon continue to position capabilities to position for global online platform dominance against local entities Flipkart and Snapdeal. The country has upped its in-country logistics capabilities, rising 19 places in the World Bank’s Logistics Performance Index. However, more investment is required since the country’s overall logistics infrastructure is underdeveloped. Such logistics include multitudes of motorcycle delivery persons with huge backpacks that can process cash transaction with delivery. Amazon has plowed upwards of a reported $5 billion in current and planned future investments in its India online capabilities and that includes logistics capabilities focused on smaller and more localized fulfillment capabilities.
Singapore is another growing area for online retailing and here, Lazada.com has been building out logistics capabilities leveraging over 100 logistics partners. In April 2016, Alibaba made a rather large $1 billion investment in Lazada which now includes leveraging Alibaba’s logistics capabilities across Asia.
Make no mistake that there are large sums of logistics investments flowing into the Asia online retailing sector, and they are not just physical but advanced information technology as-well. The scale of volume will likely continue to exceed other nations, and with that, we can all anticipate added last-mile delivery innovation.
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