May 28, 2014, 10:34 AM

Alibaba boosts its cross-border logistics assets with an investment in Singapore Post

China’s largest e-commerce company will pay nearly $250 million for a 10% stake in SingPost, which provides cross-border logistics services for online retailers in Asia.

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China’s largest e-commerce company announced today an investment in Singapore Post, which, besides delivering mail in Singapore, also provides logistics services to online retailers in Asia.

Alibaba Group Holding Ltd. will invest S$312.5 million (US$248.8 million) for a 10.35% in SingPost, as it is widely known. In addition, the two companies say they are continuing discussions on forming a joint venture in international e-commerce logistics.

It was the second deal with a regional postal service this week for Alibaba, which has announced plans to go public on a U.S. stock exchange this year. Alibaba also announced a deal with Australia Post to make it easier for Australian retailers to sell on Tmall, one of Alibaba’s two big online shopping portals that together account for 80% of online retail sales in China. Australia Post will also promote Alibaba’s Alipay payment service in Australia, making it easier for Chinese tourists to shop in Australian stores.

The deal with SingPost will enable Alibaba to offer the 8 million Chinese retailers that sell on its two online marketplaces, Tmall and Taobao, access to SingPost’s warehouses, customs-clearing services and delivery and return services throughout Southeast Asia and other parts of the Asia-Pacific region, the companies say.

“We are excited to collaborate with SingPost and leverage SingPost’s strong delivery networks and end-to-end e-commerce logistics solutions to facilitate international e-commerce,” says Daniel Zhang, chief operating officer of Alibaba Group. “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.”

Lim Ho Kee, chairman of SingPost, calls the Alibaba investment “a significant milestone in our transformation journey into the region and is an affirmation of our long-standing strategy in e-commerce logistics as part of SingPost’s growth trajectory. SingPost will benefit from Alibaba’s expertise in e-commerce, technology and business volumes.” SingPost’s logistics business accounts for 26% of its revenue, according to Alibaba’s Alizila blog.

Western observers say Alibaba’s moves reflect its aspirations to grow beyond China.

“Nearly all of the big e-commerce companies around the globe have international aspirations and Alibaba is no exception,” says Zia Daniell Wigder, an analyst who covers global e-commerce at Forrester Research Inc. “It's not surprising to see Alibaba making Southeast Asia a priority: The markets in the region have enormous potential but are still early stage today. Alibaba has an opportunity to establish itself as a player in the region given that market dynamics are still in flux in many countries and the bulk of e-commerce growth is yet to come. By contrast, short of an acquisition, it is harder to be disruptive in markets like the U.S. or U.K. which are relatively mature markets with well-established leading players. 

This Alibaba investment and the Australia Post agreement are extensions of Alibaba’s Tmall Global service that allows brands and retailers based outside of China to sell to online consumers in China via Tmall, says Scot Wingo, CEO of U.S.-based ChannelAdvisor Corp., which helps retailers sell through online marketplaces like Amazon, eBay, and, following recent announcements, Tmall in China and MercadoLibre in Latin America. Wingo says Tmall Global is “an initiative geared towards bringing more selection of Western goods to Chinese buyers.” He adds that the deals also could enable more sales by Chinese online retailers to overseas shoppers via Aliexpress.com, an Alibaba e-commerce site geared to sales to foreigners.

Alibaba also recently announced a deal with U.S.-based ShopRunner to offer favorable shipping rates for Chinese online shoppers visiting the e-commerce sites of the more than 100 U.S. retailers that work with ShopRunner to provide free shipping to U.S. consumers.

In addition, Alibaba recently announced plans to launch an online marketplace in the U.S., called 11Main, which it says will offer hard-to-find items in categories, such as baby products, fashion and art.

Alibaba early this month filed with the U.S. Securities and Exchange Commission documents needed to sell shares on a U.S. stock exchange, an initial public offering expected to take place later this year. In those documents, Alibaba disclosed that its online marketplaces handled $248 billion in sales in 2013, more than the combined volume of Amazon.com Inc. and eBay Inc.

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