Alibaba to Spend Billions on Warehouse Network in China

Jan. 20, 2011
Alibaba Group will make a major investment in logistics in China to help companies meet growing domestic consumption

Alibaba Group, one of the world’s largest e-commerce companies, is planning to build a network of warehouses across China at an initial estimated cost of between $3 billion and $4.5 billion. The company hopes to mobilize other partners to join in this effort to create an integrated logistics platform that will help elevate the quality of service to Chinese consumers and allow merchants to meet rapidly growing domestic consumption needs.

Alibaba Group hopes to spark a total investment of more than $15.05 billion in logistics development in China by others partners in the e-commerce eco-system.

"It’s clear that logistics is a crucial link in the e-commerce eco-system and in order for Chinese entrepreneurs to reach their future growth goals, this sector needs to develop rapidly in China. It’s also clear that everyone involved in this sector needs to work together to accomplish this," says Jack Ma, chairman and CEO of Alibaba Group. "Hopefully within 10 years’ time, anyone placing an order online from anywhere in China will receive their goods within eight hours, allowing for the virtual urbanization of every village across China. In order to achieve this, we will need to establish a modern, 21st century logistics network."

Alibaba Group’s strategy towards logistics is composed of four key parts. Initially, Taobao, one of the largest online retail websites in China, will continue to pursue the Taobao logistics initiative, which consists of the Taobao supply chain management platform, to help merchants handle inventory, a logistics partnership network, and an industry code of standards guiding logistics service providers. At the same time, Taobao will focus on providing relevant value-added services in accordance to product vertical-specific needs.

Alibaba Group will also mobilize efforts to establish an integrated logistics platform that aims to bring together all players in the industry, from warehousing to delivery.

Third, Alibaba Group will invest in the establishment of a nationwide warehouse network across China in the goal of redressing the key bottleneck facing the logistics industry.

Fourth, will offer warehousing facility support to small Chinese exporters.

Alibaba Group will coordinate closely with working partners in all sectors of the logistics industry to establish a national network of warehouse facilities to service the business-to-consumer industry across China. Usage of the Alibaba Group-owned warehouse facilities will be a service available to all, including partners in the logistics industry, Taobao sellers as well as independent B2C websites.

The Beijing/Tianjin area, the Yangtze River Delta and the Pearl River Delta are the regions initially selected by Alibaba for warehouse construction because of their proximity to major population centers. Initial plans are to establish warehousing facilities in these three regions totaling approximately 3 million square meters (32 million square feet) in size.

"Creating a network of warehouse facilities is a key tactic in our strategy to resolve the bottleneck facing the logistics industry in China. In the other areas of the logistic industry, Alibaba Group will mainly participate through investments aimed at helping our working partners to accelerate their own growth," says Zhang Wei, senior vice president of Alibaba Group and head of its strategic investment team. "

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