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Alibaba Advances “New Retail” With $1.38 Billion Logistics Investment

Alibaba has seen how important logistics are to JD.com’s growth and market cap—and now it wants a piece of the action, too.

Logistics and the supply chain have emerged from the shadows to become the hottest new battleground in the war for customer satisfaction. In the U.S., Amazon primed customers to expect free two-day shipping virtually everywhere—prompting competitors to offer similar delivery options.

And now Alibaba is shelling out big bucks to further its “New Retail” vision of commerce that delivers the best of the digital and physical experiences, with speedy order fulfillment playing a major role in the next-gen customer experience. New Retail aims to unite intelligent supply chains, advanced retail technologies, smart logistics and cutting-edge mobile payments for the purpose of creating the best experience for both shoppers and merchants. Alibaba Group, and its Cainiao logistics unit, led a group of investors that put up $1.38 billion to grab a 10 percent stake in Chinese delivery services firm ZTO Express.

The investment furthers a partnership that began in September when Alibaba Group secured a controlling stake in Cainiao with the goal of developing its logistics network.

Cainiao offers same-day and next-day delivery in more than 1,500 counties and districts in China, providing services like smart sorting and e-shipping labels. Its Cainiao Post is as a network of last-mile stations serving communities in top 100 cities and approximately 1,800 universities.

Meanwhile, ZTO offers services ranging from line-haul, last-mile and express delivery to in-city delivery, fulfillment and warehousing.

ZTO chairman and CEO Meisong Lai said the new funds will help the company to expand its offerings across China and abroad. “Our continued collaboration with all industry constituents, and particularly, with Alibaba and Cainiao through this strategic partnership, will amplify our competitive advantage and support our mission to become a world-class comprehensive logistics service provider,” Lai said.