Alibaba is making strategic plays in a bid to strengthen cross-border trade, enhance its retail offering and reinforce its dominating position in the Asia-Pacific region.
China’s largest e-commerce company Alibaba Group has been busy again this week.
Firstly, its agreed to take a larger stake in Singapore Post and invest in a subsidiary of the publicly traded post office to strengthen their joint development of e-commerce logistics services in the Asia-Pacific region.
The deal will see Alibaba buy an additional five percent of SingPost shares for S$138.6 million, increasing its ownership position in the mail and parcel carrier to 14.51 percent. Alibaba will also invest S$67.85 million in SingPost’s Quantium Solutions International (QSI), taking its stake in the company to 34 percent. QSI runs a logistics and fulfilment network in more than 10 Asia-Pacific countries, providing e-commerce warehousing, last-mile delivery and other end-to-end e-commerce solutions.
It’s all part of Alibaba’s strategy to promote cross-border trade, working with companies such as SingPost to reduce some of the barriers to efficient worldwide delivery of small parcels ordered online – namely high shipping costs, lengthy delivery times and complications in getting orders through customs. The aim is to help Chinese businesses sell and ship easily around the world.
According to a recent report from Accenture and AliResearch, by 2020, China is expected to become the world’s biggest cross-border B2C market with the transaction volume of imported goods purchased online reaching US$245 billion. The report predicts over 200 million Chinese consumers will be cross-border shopping in five years, with the global B2C cross-border e-commerce market expected to balloon in size to US$1 trillion from US$230 billion in 2014.
In the report, researchers forecast that cross-border online shopping will see compound annual growth of 27.4 percent over the next five years, double the rate of worldwide B2C shopping as a whole.
Alibaba and SingPost began collaborating last year when Alibaba, through an investment vehicle, acquired an initial stake in SingPost.
“Alibaba started as our customer and then last year became our shareholder and business partner,” said SingPost Group Executive Officer Wolfgang Baier in a statement. “We are now taking the next step by building a regional e-commerce logistics platform and infrastructure for e-commerce players across Asia Pacific, based on Quantium Solutions.”
Confronted with dwindling revenue in the digital era, national mail carriers such as SingPost have been increasingly trying to adapt by expanding services into the high-growth e-commerce arena.
“The pace of transformation at SingPost has been accelerating steadily,” said SingPost Chairman Lim Ho Kee. “As a postal service provider, we are on a burning platform, facing a global decline in mail revenue with trends like e-substitution and lifestyle changes.” Ho Kee called the partnership with Alibaba “a win-win situation for both of us because we share similar goals and have a natural fit between our operations across Asia.”
Secondly, Alibaba also announced today it has invested in Mei.com, China’s leading flash sales platform for luxury and fashion products, to enhance Mei.com’s supply chain services of the sales of limited time discounted quality products from well-known international luxury and fashion brands to consumers in China.
Alibaba will integrate resources from its B2C platform Tmall.com, China’s largest third-party platform for brands and retailers, to form a specialised services team to support Mei.com’s development and assist them in growing their user base, brand cooperation base, logistic services and IT infrastructure services. Mei.com’s close cooperation with a wide selection of luxury brands will complement Tmall.com’s existing selection of affordable luxury goods for Chinese consumers.
Daniel Zhang, CEO of Alibaba Group said, “Alibaba Group’s ecosystem and its multi-level cross-platform retail services will be further enhanced with our investment in Mei.com. We hope that Mei.com will exert its advantages to create synergy with Tmall in providing more premium luxury goods to consumers. At the same time, Alibaba will help Mei.com and other brand partners enter our ecosystem to allow more efficiency in helping them locate consumer groups, conduct brand marketing and establish an online supply chain system.”
Thibault Villet, founder and CEO of Mei.com said, “We are very pleased to receive this strategic investment from Alibaba Group. The two parties complement each other and together with Tmall, we will bring premium and trusted genuine brands to consumers. In the future, we see a significant opportunity to provide enhanced shopping experience for Chinese customers in search of affordable fashion and luxury products.”
Mei.com launches sales events every day at 9am to promote genuine goods that are offered at significantly reduced prices. Similar to Tmall.com, Mei.com cooperates directly with international brands or official designated brand distributors and promotes more than 2,400 brands across the world, including well-known international brands such as Armani, Zegna, Michael Kors, Trussardi, Roger Vivier, Longchamp, Tumi, and Guerlain.