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Alibaba Unveils $15b Global Logistics Expansion Plan

Chinese-based Alibaba has announced it plans to spend US$15.2 billion over five years to expand its global logistics network, as the e-commerce giant pursues its “new retail” strategy. Overseas expansion will underpin the aggressive plan.

The news comes as the company announced it is investing US$807 million for a controlling interest (51%) in logistics business, Cainiao, it set up in March 2013 with other investors. Alibaba’s stake in the company jumps from 47% and provides it with an additional seat (totalling 4 out of 7) on Cainiao’s board of directors.

The transaction will see Cainiao come under Alibaba’s core commerce business, and subject to regulatory approvals is expected to be finalised next month.

Last year, Cainiao was scrutinised and investigated by America’s SEC (Securities and Exchange Commission) surrounding Alibaba’s accounting practices.

By investing billions of dollars into global logistics within the next five years, Alibaba intends to fulfil Chinese-based orders within 24 hours, and 72 hours anywhere else in the world.

The company states some of the funds would be directed towards the integration of technology within ‘smart warehousing’ inclusive of areas such as; logistics data technology, smart delivery and global logistics infrastructure.

Daniel Zhang, Alibaba’s Chief Executive Officer, states of the logistics expansion:

“By enhancing the logistics capabilities within the Alibaba ecosystem and extending our investment in this sector, we are further enabling our new retail strategy to bring online and offline retail into one seamless experience for shoppers”

“We will also continue to deepen our collaboration with various logistics partners to achieve this goal”.

As some background context, the Chinese company operates 13 physical stores which it states is rooted with its online infrastructure, driving its “new retail” vision. It states this integration will “reinvent” tradition supermarkets by merging online and physical store experiences. The company’s ‘Hema’ physical stores also stand as fulfilment centres for orders placed via its mobile app. On-site employees prepare items for delivery – as each store caters to a radius of 3 kilometres, deliveries are made within 30 minutes of ordering.

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