In preparation for the next wave of e-commerce, Alibaba has decided to invest more than $100 billion yuan (approximately AUD$20.5 billion) into smart logistics.
In a bid to build the technical backbone of its smart logistics network, Alibaba has partnered with its logistics subsidiary, Cainiao Network, investing $100 billion yuan into the development of new fulfilment systems that will reportedly improve delivery reach and efficiency.
Alibaba also hopes to reduce the cost of logistics across its network, as it estimates it processes one million B2C parcels through customs on a daily basis.
“We want to build this network to help the industry to meet the future needs,” Alibaba’s founder, Jack Ma said at Cainiao’s 2018 Global Smart Logistics Summit in Hangzhou.
“Today, the industry can process 100 million packages a day. In the future, we will need to process one billion packages a day. The logistics industry needs to get prepared for that with a robust infrastructure.”
As part of its $100 billion investment, Alibaba and the Cainiao Network will also be dedicating approximately A$1.8 billion into express delivery system, ZTO, in exchange for a 10 percent stake in the company. This transaction is expected to close by the end of June, subject to customary closing conditions.
The investment is aimed at improving the three businesses working relationships, while also developing the transformation of China’s logistics industry amid the growth of New Retail.
“ZTO has been an important partner to Alibaba Group and Cainiao Network in the development of the new digital economy. The continuing expansion of New Retail is catalysing new opportunities and demands in logistics,” Daniel Zhang, the CEO of Alibaba Group and Chairman of Cainiao Network said in a statement.
“This strategic investment will strengthen synergies across our mutual businesses to create new value and improved experiences for merchants and consumers.”
According to Alibaba, in order to link online and offline commerce in an engaging way, investments will need to be made into smart supply chains, retail technologies, advanced logistics and mobile payments. This is something that has been illustrated in the recent opening of the first New Retail megastore for INTERSPORT, which has been developed through collaboration with Alibaba’s Tmall.
Tmall has reportedly worked closely with the sporting goods retailer to transform its flagship store in China into a New Retail megastore. The updated store concept leverages Alibaba’s insights, supply chain management, retail technologies, smart logistics and electronic payments, and infuses a range of Tmall technology that helps customers to experience a seamless online and offline shopping experience.
“INTERSPORT is delighted to open our first New Retail store in partnership with Alibaba’s Tmall. The world-class technologies from Alibaba’s Tmall will give our customers an entirely new shopping experience and help us link our offline and online activities,” the CEO of INTERSPORT, Victor Duran said.
One of the key innovations on show at INTERSPORT’s revamped flagship store is an interactive window display that leverages AR engagement. As a customer walks past the window, motion sensor cameras will intuitively identify the approximate age and gender of the passer-by and will recommend products accordingly. Consumers will also be able to stop and scan a QR code so they can shop the product recommendations through INTERSPORT’s Tmall store directly from their phone.
While the concept of New Retail has become commonplace in China, Australia is a little slower off the mark adopting some of these technologies, with Alibaba identifying a slow adoption of QR codes as one of the reasons behind Australia’s hesitation in utilising AR technologies.
However, earlier in the year, Alibaba’s Tmall did have New Retail pop-up stores in both Sydney and Melbourne, to introduce the concept of New Retail to Australian retailers.
Alibaba believes the Australian retail industry will be able to change the way it thinks about online and offline shopping, but first, brands will need to spend some time educating their consumers before the full breadth of Tmall’s technology can become commonplace.