Packages to be delivered to Alibaba consumers are stored in Cainiao warehouse in Tianjin. (Photo : www.alizila.com)
Alibaba Group Holding Ltd. is accelerating its efforts to provide faster delivery services to more Chinese cities as customer expectations continue to grow, and asked its logistics partners to curb practices that could upset their reputation, the Wall Street Journal reported.
Judy Tong, president of Cainiao, the Chinese e-commerce giant's logistics affiliate, said that they hope to offer next-day deliveries from the current 34 cities to 50 cities by the end of this year.
During a meeting with Cainiao's logistics and delivery partners on May 28, Thursday, Tong urged its logistics partner companies to avoid a price war, which she said could affect their service standards. If it continues, "ultimately we will lose this market," she told the audience.
According to the report, the competition among China's e-commerce players is rising, driven by the challenge to provide better delivery services. JD.com, Inc., Alibaba's main e-commerce rival, said last year that it provided same-day deliveries in 43 cities and next-day deliveries in another 256 cities in China. It has since expanded such services but did not have a direct comparison based on cities.
Alibaba, unlike JD.com which operates its own logistics services, relies on third-party providers, the report said. Alibaba's approach was aimed to keep the costs down as well as have less control over the services to deliver packages to consumers.
Tong said in an interview that Cainiao would continue with its drive against delivery companies that help merchants engage in fake transactions. It was reported that some merchants in Alibaba's platform and delivery companies are engaged in a practice known as brushing, which involves creating fake orders to artificially raise their sales volume. Alibaba executives have said that the fake numbers hurt its credibility.
The report said that Cainiao had terminated the services of 11 courier firms from its platform in April for their involvement in fake transactions or for failing to share data with the network's platform.
"Our attitude to our partners is very clear. If we find that you knowingly were engaged in falsifying credibility just to make profits, sorry, but on our platform this is something that deserves a beheading. This is our high-voltage line," Tong was quoted as saying.
The report said that Alibaba has worked to improve the fragmented logistics industry of the country over the past two years to make deliveries of orders from Alibaba's popular shopping sites quicker and more reliable. The e-commerce giant holds a 48-percent stake in Cainiao, in which it plans to invest $16 billion in logistics in five to eight years, the report added.
Tong said that a bulk of this investment was spent in land acquisition and building warehouses in eight cities. The network has one million square meters of warehouse space, which is set to be more than double that capacity this year with the purchase of another two million square meters of land this year, Tong added.
