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Alibaba bets big stakes on logistics upgrades

Editor: Li Kun 丨CCTV.com

06-22-2016 16:11 BJT

By Tom McGregor CNTV Commentator

Hangzhou-based online retailing giant Alibaba stands atop as China's largest e-commerce company. In terms of GMV (gross merchandise volume), it's way ahead of rivals - JD.com and Suning. Alibaba's founder Jack Ma continues to play a pivotal role as the company's vision leader.

Ma takes a future-oriented approach in the e-commerce industry. He had recently attended the 2016 Global Smart Logistics Summit in Hangzhou to tout upcoming upgrades and hi-tech innovations that are likely to transform Alibaba's business line.

He believes the company's success story is due to its state-of-the-art logistics networks.

"You can talk about the miracle of e-commerce in China or in the world," Ma said at the summit. "But the logistics industry is where China's real great miracle has been over the past decade."

Going with Cainiao Logistics

The best method for e-commerce sites to boost efficiency and cut costs would be to seize control of companies delivering parcels to online purchasers, according to Ma. Alibaba holds a 50 percent and controlling stake of China's largest delivery firm, Cainiao Logistics.

Cainiao will introduce major upgrades on data-enabled smart solutions to cut costs and accelerate delivery times. Alibaba wants to deliver a package to a consumer in China within 24 hours after an online transaction and within 72 hours for international purchases.

It's more challenging, since e-commerce in China has witnessed 50 percent annual sales volume growth rates since 2011 and China's logistics industry is expected to deliver 300 million parcels per day in 10 years.

Smart solutions can lead the way

Logistics costs are unavoidable for e-commerce companies, and finding answers to reduce expenses can make or break them. Cainiao CEO Tong Wengzhong told the China Post (the Taipei based newspaper) that the company's roadmap is to lower China logistics costs in next 10 years.

"Logistics costs account for 6 percent of the GDP (gross domestic product) in the United States, which delivered 12.7bn. parcels last year," Tong said. "China delivered 20.6bn. parcels last year ... it is possible to lower China's logistics costs to 5 percent (currently - 16 percent) of the country's GDP."

She added, "Once we have a unique standard in terms of geographic location, data and service, the logistics industry can develop in a smart way and all industrial participants can share the infrastructure and resources with each other to improve efficiency and cut costs."

Droning deliveries and more

Another approach to cut costs on logistics would be to eliminate third-party warehouses so that shipments from factories go straight to online purchasers. Utilizing drones and robots can smooth the path for shipments.

A Big Data Center can coordinate with manufacturers on delivery schedules. Robots and drones will receive Internet messages as to when and where to pick up items in factory warehouses and place them into cargo trucks.

Alibaba is also considering launching an Uber-like vehicle hailing service for the cargo industry that can ensure swift delivery of parcels to remote areas in China and around the world.

However, China's double-digit annual growth rates in the e-commerce sector are not sustainable and Alibaba is looking to expand into India and later challenge Amazon in the North American market.

Alibaba to champion new biz trends

Ma stands poised to meet upcoming challenges. He created an online retail giant with little capital and investment at its founding. He recognizes that logistics upgrades in regards to Big Data, cloud computing, drones and robots can boost delivery efficiency while lowering costs.

He's making a big gamble to integrate logistics networks, which could be risky because unexpected systems failures may occur, while fixing technical glitches get more expensive. But if all goes according to plan, Alibaba will play with a winning hand.

Tmcgregorchina@yahoo.com

WeChat ID: 86 13439758718

 

( The opinions expressed here do not necessarily reflect the opinions of Panview or CCTV.com. )

 

 

Panview offers a new window of understanding the world as well as China through the views, opinions, and analysis of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

Panview offers an alternative angle on China and the rest of the world through the analyses and opinions of experts. We also welcome outside submissions, so feel free to send in your own editorials to "globalopinion@vip.cntv.cn" for consideration.

 



  





 

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