Beijing - China’s largest e-commerce company, Alibaba, and its financial partners announced yesterday that they have authorized spending up to $4.5 billion to build an enormous network of warehouses in an attempt to tap the growing numbers of Chinese who shop online. This investment, actually said to likely range from $3 to $4.5 billion, will be made over the next three to five years with the primary goal to be construction of the warehouses, but it will also support logistics firms connected to Alibaba.

Founder of Alibaba, Jack Ma, knows very well that China’s current logistics framework is severely fragmented, and this leads to slow delivery times and, often, damage to items shipped via the standing network. Ma wants to change this and make it possible for customers to actually receive their orders within eight hours – and thus achieve the “virtual urbanization” of every village in China.

There will be significant challenges for Alibaba’s plan. Simply consider that in a single quarter last year, China’s e-commerce market was valued at 119.1 billion yuan ($17.93 billion), of which Alibaba’s consumer-oriented arm Taobao took 75.2%. China also has some 420 million households online at present and 30% of those utilize online shopping, so the numbers involved are rather large.

Yahoo Inc. owns a 40% stake in the Alibaba.


Source: Reuters