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Alibaba sinks another billion into logistics

Alibaba-Group-Binjiang-campus-in-Hangzhou-ChinaJust two months after announcing plans to acquire Ele.Me, a Chinese delivery platform valued at US$9.5 billion, Alibaba is making another significant investment in its logistics capabilities.

The e-commerce giant and its logistics arm, Cainiao, today announced a strategic agreement to deepen their collaboration with ZTO Express.

The agreement will see Alibaba and Cainiao invest US$1.38 billion in the express delivery company in exchange for 10 per cent equity of the company.

The transaction is expected to close in early June, subject to customary closing conditions.

Alibaba’s collaboration with ZTO comes as it ramps up its New Retail offering, which merges offline and online retail. At the company’s Hema Supermarkets, for instance, certain shoppers can have their orders delivered to their doorstep within 30 minutes for free.

New Retail relies on robust last-mile delivery capabilities, especially in city centres.

Alibaba chief executive and Cainiao chairman Daniel Zhang said ZTO has been an important partner in this respect.

“The continuing expansion of New Retail is catalysing new opportunities and demands in logistics,” he said, adding that the investment will strengthen synergies between the two companies and improve the experience for Alibaba’s merchants and consumers.

According to a statement from Alibaba, ZTO will use the investment to build up its first and last-mile pick-up and delivery capabilities, warehouse management, cross-border logistics and technology-driven smart solutions.

ZTO founder and CEI Meisong Lai said the partnership will enable the company to expand its offerings both in China and internationally, improve its logistics efficiency and enhance the customer experience.

“The growth of e-commerce and New Retail in China demands more efficient express delivery and expanded logistics services. To that effect, we are delighted to enhance our partnership with Alibaba and Cainiao through their strategic investments in ZTO,” Lai said.

This story first appeared on sister site Internet Retailing.

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