China-based e-commerce giant Alibaba Group has taken control of struggling logistics network Cainiao with an investment of 5.3 billion yuan (US$807 million) in a move to dramatically increase its international reach.
The investment, once completed, will increase Alibaba’s stake in the logistics network from 47 percent to 51 percent and brings the estimated valuation of Cainiao to about $20 billion, according to Reuters.
In addition, Alibaba said this week that the investment is part of a five-year plan to pump $15 billion into its global e-commerce logistics network, including direct sales channels in Southeast Asian countries.
“Our commitment to Cainiao and additional investment in logistics demonstrate Alibaba’s commitment to building the most-efficient logistic network in China and around the world,” said Alibaba CEO Daniel Zhang yesterday in an official statement.
Created four years ago by Alibaba and eight other Chinese logistics investors, Cainiao has lately not been profitable. However, Alibaba said that the network is the key to its ultimate goal to fulfill all e-commerce customer orders in China within 24 hours, and all international orders within 72 hours. The $15 billion investment, said Alibaba founder Jack Ma, will be used to develop Cainiao’s IT services and increase its warehousing capabilities to meet this enormous demand.