Scale of logistics:
“Singles Day” sale by Alibaba, has become the world’s biggest online shopping day of the year. With a record sale of $25.3 billion  within 24 hours on Nov11, it is at least 12 times the Amazon’s Prime Day sales . Behind the $25.3 billion sales are the 810 million parcels generated within 24 hours  – almost every 15-65 years old Chinese person will receive a package from Alibaba. Moreover, such scale will soon be a norm. It is expected that the number of parcels in China will surge to 1 billion per day within the next decade . With Alibaba’s 51.3% share of the China’s B2C online sales , this is a huge challenge to the company’s logistic operation under the exploding delivery volume.
Although a long-time market leader in the e-commerce space, Alibaba’s logistic has been supported by 3rd party companies to maintain an “asset light” business model. With the growth of the direct logistics approach of JD.com which now has 32.9% of the market share (up from 17.7% in 2014) , and its 211 program – same day delivery for orders submitted prior to 11AM and next day delivery for orders submitted before 11PM, Alibaba’s logistics has been a competitive disadvantage for the E-commerce giant in recent years.
“Smart Platform” and asset-light business model
Big Data Platform:
To strengthen its logistic services under its “asset-light” business strategy, Alibaba invested $807 million, to increase its stake in logistics platform firm Cainiao Smart Logistics to 51 in Sep 2017 . Instead of creating a courier service company, Cainiao Smart logistic is a Cloud and Big Data powered platform that connects 3rd party logistic partners with E-commerce Merchant to improve the overall delivery efficiency. Its goal is to fulfill orders on the mainland within 24 hours and within 72 hours globally .
By connecting logistic partners and the E-commerce Merchant – Cainiao platform feed real-time information to small merchants to choose the most efficient delivery option within a pool of delivery firms based on its location and type of goods. Cainiao’s smart routing and sorting service also reduce logistics firm’s delivery errors by 40%. In addition, it provides a real-time tracking system to enhance the information synchronization and transparency among logistic partners, Merchants, and Consumers.
In major cities in China, Alibaba set up fulfillment center for merchants to store inventories. This enables Cainiao to leverage its big data and cloud platform to optimize the warehouse design and data flow for more efficient warehouse management.
In addition, Like Amazon’s move with Kiva Robotics, Alibaba opens the largest smart warehouse in China manned by 60 cutting-edge AGV (Automated Guided Vehicle). These AGVs are equipped with Wifi, self-charging capabilities to lift and move the sorting shelves to the workers, who then packed and posted the products to customers around the world. 
Robots and Drones deliver the last mile:
In the long term, Cainiao’s E.T. logistic lab is aiming to implement the coolest technology to improve logistics efficiency to the last mile and reduce labor cost as much as possible to cope with increasing demand. The Robot “Xiao G” operates as an autonomous delivery vehicle that interface with transportation management system to optimize delivery route. It uses simultaneous localization and mapping (SLAM) system to assess the local environment and uses the deep learning algorithm to predict the trajectory of moving objects, pedestrians, and vehicles. 
Most recently, Cainiao showed off an army of drones that successfully delivered six boxes of passionfruit over a five-kilometer waterway to an island in East China’s Fujian Province. 
With Robots, AI and Drones, Alibaba delivered its first Singles day sale package in 12 mins in Shanghai and its first rural package in Guizhou in 69 minutes .
Analysis of the actions
Looking at Alibaba’s highly data-driven “platform model” which is decentralized, horizontally integrated. Both the “hardware” perspective of efficiency improvement, cost reduction and the “software” aspect of service quality depend on the implementation of its logistics partners. With fierce competition from JD, which differentiated itself with superior logistic services and increasing middle-class population who demand more services, is “Smart Platform” Enough for Alibaba to catch up its logistics services quality and quality?
Alibaba has to make sure their logistic partners are fully onboard with its vision in its logistic space.
It should consider joint development with key logistic companies on high tech development to ensure the project feasibility and adaptability. It should also invest or increase its shares in key logistic partners to influence its strategy, making sure the whole logistic system surrounding Alibaba are working towards the same vision.
Questions to consider:
Are data-driven cloud platform and asset-light a winning strategy for Alibaba continue to maintain its market leadership?
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