Chinese e-commerce giant Alibaba buys 10% stake in SingPost
Chinese e-commerce giant Alibaba Group has invested the equivalent of nearly $250m US dollars in Singapore’s national postal service to take a 10.35% stake in the company. SingPost said today that it had entered into a landmark investment agreement with Alibaba’s investment arm, Alibaba Investment Ltd, in which the Chinese firm will invest S$312.5m ($249m USD) to purchase 30m existing ordinary shares and 190.096 new ordinary shares in the postal firm.
The companies also signed a memorandum of understanding that would allow them to set up a joint venture to run services in the international e-commerce logistics sector.
Discussions over a possible joint venture will continue for the next few months.
SingPost said cooperation could also come in other areas of Southeast Asian e-commerce, opening up greater access to SingPost logistics services for Alibaba Group, its customers and e-commerce merchants.
“Step-change”
Singapore’s national postal operator, which was listed on the Singapore Stock Exchange back in May 2003, said the investment from Alibaba would allow it to ramp up its transformation into a regional e-commerce logistics specialist to pursue a market forecast to be worth $1 trillion (USD) in sales by 2020.
Dr Wolfgang Baier, the SingPost Group chief executive, said the funds would enable a “step-change” in his company, accelerating its e-commerce growth and investment in regional capabilities and infrastructure.
He said: “This strategic investment will help boost our transformation in regional e-commerce logistics and realize our next growth frontier. With the tremendous e-commerce opportunity, the funds from this investment provide SingPost with financial flexibility and enable us to significantly scale up our e-commerce logistics business and build new capabilities as we are poised for growth in the region.”
World Mail Award winner SingPost grew its turnover nearly 25% year-on-year in the last year thanks to strategic acquisitions, many of which were in the e-commerce logistics field. The company made S$658.8m ($527m USD) in revenue in the 12 months up to the end of March.
E-commerce and related activity currently accounts for about 26% of SingPost’s revenue, and represents a key growth area to compensate for a declining traditional mail business in the Group as a whole.
As part of Alibaba’s investment deal, the Chinese e-commerce giant will make use of SingPost’s cross-border e-commerce logistics services, including delivery of products into the postal company’s expanding network of self-service parcel locker terminals, called POPStations.
Alibaba
Alibaba Group was founded in 1999 as a privately-owned group of e-commerce businesses based in Hangzhou. In 2012, the Group’s two largest websites handled the equivalent of $170bn USD in sales, more than Amazon and eBay combined.
The Group accounts for more than 60% of parcels delivered in China through websites including Taobao, China’s largest online shopping market, Tmall.com, China’s largest third-party platform for retailers, consumer shopping portal AliExpress and Alibaba.com, China’s largest global wholesale platform for small businesses.
The company’s vice president of international e-commerce, John Spelich, recently commented in a Post&Parcel article that Posts can win the e-commerce logistics market if they provide the right services to merchants, including a better international returns offering.
Commenting on the SingPost investment, Alibaba Group chief operating officer Daniel Zhang said his company would leverage the Post’s “strong delivery networks” to provide end-to-end e-commerce logistic solutions for its international merchants and customers.
He said: “Through this collaboration, we hope to create concrete benefits for our overseas buyers and sellers by enhancing the user experience and providing greater access to a suite of international e-commerce logistics solutions and products.”
