China’s Fosun supports Alibaba in logistics build-out

Alibaba has formed Cainiao Network Technology as a vehicle through which the consortium can invest in the network. According to the South China Morning Post, members include Yintai Group, SF Express, Shentong Express, Zhontong Courier, Yuantong Express and Shanghai Yunda Express, as well as Fosun. Jack Ma, Alibaba's founder and executive chairman, is chairman of Cainiao.

The plan is to construct a network of warehouses throughout China that will underpin the delivery system for goods bought and sold via Alibaba's e-commerce platform, which incorporates C2C portals Taobao and Tmall as well as B2B giant Alibaba.com.

Alibaba has completed more than $12 billion in M&A and other financing in the last two-and-a-half years - about half of that is equity that has gone to private investors - but this was primarily used to privatize the B2B business and then buyback half of Yahoo's stake in the company.

Adding integrated logistics platforms to e-commerce businesses is expected to lower pre-order delivery costs, shorten delivery times and allow greater penetration of lower-tier cities. It therefore represents a powerful tool in the competitive landscape.

Rival platform 360Buy has raised $1.7 billion across two rounds of funding in the last two years. While the company is essentially buying market share - selling products at close to zero or even negative margins in order to secure customers and build brand value - as it seeks to establish scale ahead of an IPO, it is also spending big on logistics.

Last year the company is said to have invested RMB3.6 billion in its warehousing and delivery network and it expects to commit another RMB10 billion by 2014.

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• Topics
• Technology
• Expansion
• Greater China
• Fosun Group
• Alibaba Group
• TMT
• Logistics
• China