Alibaba Group to invest $16 bn in offline logistics, support
14 Oct 2013
Chines online retailer Alibaba Group plans to invest $16 billion in logistics and support by 2020 to revolutionise, China's retail industry, opening up the country's vast interior and bringing access to hundreds of millions of potential new customers.
A likely IPO would bring the company $15 billion or so, with Alibaba and partners such as delivery service firms and life insurers pumping in cash into revamping China's fragile supply chains and big new data centres to process reams of consumer information.
While Alibaba sees itself as a catalyst for change, its plans also laid the groundwork for retail rivals to chip away at its business further down the line.
By encouraging retailers to be more internet-savvy, and by building the networks for distribution of goods nationwide, Alibaba was showing bricks and mortar rivals how to push online growth without depending on its sites.
Companies including GOME Electrical Appliances, Haier Electronics Group Co and Chow Tai Fook Jewellery Group had branched into e-commerce, as they reape the rewards with their own online stalls on Alibaba's websites.
According to CEO Jonathan Lu, Alibaba expected to nearly triple the volume of transactions on its marketplaces to about 3 trillion yuan by 2016, overtaking Wal-Mart Stores Inc as the world's biggest retail network.
The e-commerce company was set up in 1999 by Chinese entrepreneur, Jack Ma, among other websites, and had grown to be one of the world's largest e-commerce companies on the basis of the value of transactions across its online platforms.
There had been much talk about the company looking to list its shares in the US and some analysts had projected its worth at least $100 billion.
Despite US online sellers like Amazon and eBay increasing their presence in India, Alibaba plans to continue to maintain a low profile, Alibaba's India head Khalid Isar, told livemint.
According to Isar the Chinese retailer had no immediate plans to launch a consumer presence, even as it had doubled its user base in the country since launch 2010 to 3.1 million.
As a pure-play business-to-business platform in India Alibaba has been foucusing on small and medium enterprises find global markets.
