Alibaba enhances delivery push by acquiring 14 percent stake in STO Express

Alibaba enhances delivery push by acquiring 14 percent stake in STO Express 1

Alibaba Group, China’s largest e-commerce company, has proposed to purchase a 14 percent stake in STO Express, one of the largest courier service providers in the country, to further strengthen its delivery capabilities as competition with local rivals continue to heat up.

Hangzhou-based Alibaba will invest 4.66 billion yuan ($695 million) in Shanghai-headquartered STO Express, the latter said in a stock exchange filing on Monday, whose shares soared 10 percent — the daily limit in the SSE — after the announcement.

It is Alibaba’s fourth investment into a major Chinese express courier company after the technology giant previously invested in YTO Express, ZTO Express, and Best Inc.

Alibaba is investing heavily into courier companies in China as the online e-commerce operator believes that it needs to prepare for a future where a billion packages are processed a day.

The company has also pushed for faster logistics for products purchased from its online marketplaces, Taobao and Tmall, as it works toward the goal of 24-hour-delivery anywhere in China and 72 hours globally. 

Currently, consumers living in many major Chinese cities already enjoy next-day delivery services from Alibaba when purchasing certain types of products.

Alibaba is also facing challenges from its major rival, JD.com, which operates its own logistics arm and has vowed to drum up sales through its strong in-house logistics.

JD.com plans to expand into the less-developed Chinese cities and open more offline businesses in 2019 by enhancing its management system through big data and digitisation, the Beijing-based company announced earlier this month. It also added that it would hire around 10,000 employees for JD Logistics as couriers, warehouse staff, and entry-level managers.

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