Alibaba aims for better logistics and distribution network with Haier investment

By Nicel Jane Avellana

Dec 09, 2013 08:50 PM EST

A report in the Financial Times said Alibaba will invest HKD 2.8 billion or USD 364 million in China-based appliance maker Haier to enhance its logistics and distribution network. The partnership between the two firms comes at a time when China's surge of ecommerce growth is sometimes hindered by the unreliable delivery relations in a country of 1.3 billion people, the report added.

Majority of the funds will be used to form a joint venture with Goodaymart, a subsidiary of Haier which has 26,000 stores and distribution sites located in 2,800 counties in the China. A statement from both firms said the joint venture will concentrate on developing a network in China that can deliver and install appliances and other large goods.

According to the report, the Alibaba-promoted shopping holiday known as Single's Day last month sold USD 5.7 billion worth of goods. This compared with the USD 1.7 billion spent in Cyber Monday in the US through desktop online shopping based on data from ComScore. Last year, Alibaba's multiple online platforms were able to handle total orders worth USD 171 billion.

Alibaba does not stock any products itself but provides an online platform for other firms to sell their goods. Haier and other brands sell on Alibaba's online sites like Tmall and Taobao. The report said employees from Alibaba checked on the sellers and logistics firms before Single's Day to see if they would be able to handle the expected orders.

Alibaba Executive Judy Tong who handles logistics told the Financial Times in an interview held before Single's Day, "In the past, there were logistic companies that had tens of thousands of employees and thousands of delivery station that still relied on paper work. It is up to us to encourage the transformation." System meltdowns had occurred in the past as a result of miscommunication which can be costly and dissuade consumers from making online purchases.

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