Cainiao, Alibaba’s Logistics Arm, Opens Up

2 minute read

Alibaba Group-related logistics company Cainiao, formed two years ago to develop an efficient, China-wide parcel-delivery system, is on its way to achieving its goal and plans to be capable of providing next-day delivery of goods ordered from Alibaba’s online marketplaces in 50 cities by 2016.

Cainiao President Judy Tong today said “Cainiao has established a complete logistics network and aims to offer next-day delivery service in 50 cities by the end of the year,” up from 34 currently. 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. The company even recently launched a mobile app so consumers can use smartphones to track their orders and locate nearby package pick-up points.  

“The ultimate goal of Cainiao is to make it easy to deliver goods to anywhere,” Tong said, “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.

WATCH THIS VIDEO TO SEE HOW ALIBABA AND CAINIAO CONNECT RURAL CHINA

Tong said that this year, the company is expanding these networks outward, to international markets, and inward, to reach more areas in rural China.

On the international front, the company has established warehouses in several countries to support Alibaba Group’s cross-border e-commerce efforts. Delivery channels have been opened between China and the U.S., China and Australia, and China and Korea in partnerships involving companies such as DHL and Shanghai YTO Express, one of China’s leading logistics companies and a Cainiao shareholder. Alibaba Group recently took a minority stake in YTO Express.

Cainiao is also lowering costs of cross-border deliveries through special government-backed China Customs channels in cities such as Hangzhou, Guangzhou and Ningbo. By working with national post offices and other partners in several countries, Cainiao can now provide integrated logistics information that allows consumers to track information of their parcels globally.

In rural delivery, Cainaio now serves more than 1,200 villages in provinces including Ningxia, Guizhou, Jilin, Jiangxi, Fujian, Jiangsu, Zhejiang, and Guangdong. Cainiao said statistics in May showed 20 percent of parcels delivered to rural areas arrived on the day they were ordered or on the following day. Cainiao is also capable of shipping large home appliances to more than 2,800 districts and counties throughout the country—even in Tibet.

Cainiao is trying to speed parcel delivery in cities by establishing pick-up spots where consumers can collect their orders. Some 20,000 are already operating and the company plans more on college campuses, in communities by partnering with real-estate companies like Greentown and Vanke, and in convenience stores.  

During the Open Day event, Tong stressed that providing fast, reliable service was crucial to the company’s success. She urged delivery companies to avoid engaging in price wars that could damage the industry.

“Logistics service providers are scattered and fragmented in China,” Tong said. "Since they can’t compete on service, they compete on price, resulting in terrible service and unstable networks. Cainiao is changing this trend from competing on price to competing on service.“

Also crucial to Cainiao’s plans, company officials said, is the use of cloud computing and big data to supply its partners with continuous feedback on their performance that can help them improve operational efficiency and reliability.

“The core of the logistics industry is the system of logistics information,” said Alibaba Group CEO Daniel Zhang, who also spoke at Cainiao’s Open Day. “Ultimately, logistics companies are high-tech companies.”