Break Out: How cross-border e-commerce could evolve as Cainiao goes global

“Alibaba was founded in China, but it was created for the world.”

This grandiose statement was made by Jack Ma, the Chinese business magnate at the helm of the world’s largest retailer and e-commerce company, Alibaba, in June 2015. He was speaking at the Economic Club of New York and had just defined a new objective for Alibaba: to ship anything, anywhere in the world, within 72 hours.

The catchy tag line rang a bell similar to that of “Amazon Prime,” the U.S.-based e-commerce company’s two-day shipping model that was introduced to the market ten years prior, in 2005 – a feat, which, at the time, blew the logistics industry’s hair back.

Over the years, we have witnessed these e-commerce companies up the ante again and again, their unique logistics strategies constantly evolving to make these unprecedented shipping expectations a possibility.

But when Alibaba raised the bar again with the announcement of its 72-hour promise for international delivery, it launched the logistics industry into a new frenzy of curiosity and speculation: How would such a global network operate? Where would the hubs be located? Will Alibaba continue to outsource partners, or begin to bring its logistics cooperation in-house, like Amazon?

The company hasn’t been quick to fill in the details since that fateful day in 2015. The first major piece of the puzzle following the announcement came two years later, when Alibaba acquired its longtime logistics affiliate, Cainiao, which, over years of partnership, helped the e-tailer develop an intricate logistics network that reaches the most remote corners of its home country of China, employing cutting-edge warehouse optimization technology and a diverse compilation of last-mile delivery methods.

Then, last spring, the company made headlines again when it finally released its proposal to establish six new hubs around the globe — in Dubai, Hangzhou, Hong Kong, Kuala Lumpur, Moscow, and Liège – in pursuit of Ma’s goal, the latter of which, the company has already begun to deliver to since the announcement.

Speaking to the company’s network plan, Steven Verhasselt, vice president of commercial at Liège Airport (LGG) said, “Right now, they say they are not a logistics company, but a data management company,” adding that the strategy is sure to generate “plenty of opportunities for third parties who can help them to move the cargo.”

Yes, the potential effects that the e-commerce giant’s presence will have on these logistics communities will undoubtedly be significant. But would logistics players be universally enthusiastic about the potential business that Cainiao’s presence could bring to their communities? Or would they worry about the potential supply chain disruptions that its presence in cause in their hubs? And how will the presence of these six hubs transform the cross-border supply chain now that Cainiao has broken out into the rest of the world?

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