Alibaba takes stake in YTO Express
Alibaba Group Holding Ltd has agreed to take a minority stake in Shanghai YTO Express (Logistics) Co. Ltd. YTO Express is one of the 14 logistics partners that work closely with Cainiao, the logistics affiliate which Alibaba set up in May 2013 in partnership with a consortium of logistics companies. Cainiao aims to build a “nationwide logistics platform that connects delivery companies, warehouses and distribution centers together in order to enable higher efficiency in China’s logistics industry and a better customer and merchant experience”. Essentially, Alibaba created Cainiao because it was concerned that China’s existing logistics infrastructure would not be able to keep pace with its booming e-commerce business.
Commenting on the deal with YTO, Judy Tong, Senior Vice President of Alibaba Group and President of Cainiao, said: “The strategic investment in YTO Express reflects our commitment to improving quality and service standards in China’s logistics industry. As a platform, we look forward to working closely with partners who share our vision in developing an efficient logistics infrastructure and solutions that will drive development of China’s logistics sector in order to fully satisfy our customers’ needs.”
Established in 2000, YTO Express is now second only to China Post in terms of its coverage of the Chinese market. The company manages eight logistics compound nationwide, operating 72 transfer centres and over 12,500 pick-up points. It has over 180,000 employees servicing more than 2,300 Chinese cities. YTO Express is one of just three companies that hold a license for aviation logistics – and it began offering this service in 2014.
Alibaba has not disclosed the size of its stake in YTO Express, although media reports have said that it is probably a 20% share.
In related news, Cainiao has unveiled a three-hour “speedy” delivery service in five major Chinese cities: Beijing, Shanghai, Guangzhou, Hangzhou and Tianjin. The new service will initially cover healthcare products ordered from Tmall.com but will be gradually expanded to cover other product categories.
By the end of 2015, Cainiao plans to expand the three-hour service to 14 other major cities including Shenzhen, Nanjing, Chongqing, Wuxi, Qingdao, Shenyang and Xi’an, bringing the total number of cities covered by this service to 19.