China may be a long way from major markets in North America and Europe, but the country’s biggest e-commerce company is setting an ambitious goal of delivering an online order from China to anywhere in the world within three days.
That projection recently was made by Judy Tong, the head of the Alibaba Group Holding Ltd.-backed logistics service Cainiao. Alibaba and several delivery services, retailers and other companies formed Cainiao two years ago to create a nationwide delivery service for China, something that does not exist today.
“The ultimate goal of Cainiao is to make it easy to deliver goods to anywhere,” Tong said at a recent event, “so that parcels delivered in China can arrive in 24 hours and parcels delivered cross-border can arrive in 72 hours” instead of several days currently for China shipments and days or weeks for international orders, according to Alibaba’s Alizila blog.
Alibaba owns 48% of Cainiao and Alibaba founder and executive chairman Jack Ma previously had set a goal of making it possible for an online seller in China to deliver to anywhere in the country within one day. He said that should be possible within five to eight years. Tong is upping the ante with the promise of global delivery within three days in a similar timeframe.
She says Cainiao is making progress both domestically and internationally.
The delivery service, which links together regional carriers in China, already can deliver orders within one day to 34 Chinese cities, and that will increase to 50 cities by the end of the year, Tong says.
“Since its launch, Cainiao has partnered with thousands of logistics service providers, is establishing warehouse and distribution centers in 12 key cities, has opened service centers in 1,200 villages and rural provinces, and has expanded international delivery to 217 countries and areas,” according to the Alizila blog post. The company also recently launched a mobile app so consumers can use smartphones to track orders and locate nearby package pickup points.
Ma, Alibaba’s founder, is on a U.S. tour this week promoting Alibaba as a way for small U.S. businesses to sell online to China’s rapidly growing middle class.
In terms of international delivery, Alizila reports that Cainiao has opened warehouses in the United States, South Korea and Australia, to fulfill orders placed on Alibaba’s Chinese marketplaces by consumers in those countries. Cainiao is working on cross-border fulfillment with such carriers as DHL and Shanghai YTO Express, a Chinese logistics companies and a Cainiao shareholder. Alibaba Group recently took a minority stake in YTO Express, Alizila says. Cainiao is also forging deals with national postal services in several countries so consumers can track their orders.
While Alibaba and other partners have said they will invest $16 billion in Cainiao to knit together a network of regional carriers with a common computer system, Alibaba’s leading competitor, online retailer JD.com, has been building its own network of warehouses and delivery vehicles.
JD.com, No. 1 in the Internet Retailer 2015 China 500 says it can deliver within hours in some big cities because it owns its own delivery fleet and infrastructure.
“JD.com can deliver products it sells within three hours in five large cities, such as Shanghai and Beijing,” a spokesman tells internet Retailer.
However, Alibaba could have an advantage in small cities and villages. For example, Cainiao has teamed with Goodaymart, the logistics arm of Chinese electronics manufacturer Haier, to deliver home appliances to 2,800 towns and districts throughout China. Cainiao says 1,500 of those towns can be reached within 24 hours. Alibaba invested in Goodaymart in December 2013, taking a 34% stake.
While Alibaba reported $394 billion in sales on its marketplaces during its most recent fiscal year, the company is not ranked in the Internet Retailer China 500 because it is not a merchant itself. Rather, Alibaba operates China’s two biggest online marketplaces, Taobao and Tmall, which together account for about 80% of online retail purchases in China. Ma says 10 million companies now sell on those marketplaces. However, like eBay Inc., Alibaba does not own merchandise and is not the merchant of record for any sales on its marketplaces.
Alibaba raised $25 million when it went public on the New York Stock Exchange last September, making it the largest IPO ever. The company, which trades under the stock symbol BABA, is currently valued at $222 billion.