Alibaba furthers logistics push, invests $693 million for STO Express

Chinese tech giant Alibaba is continuing its push into the logistics industry with plans to scoop up a 14.65% stake in Shenzhen-listed logistics company STO Express.

The company’s controlling shareholder, Shanghai Deyin Investment Holdings Co. Ltd., will set up a joint venture with Alibaba, according to a securities filing dated Monday. Deyin Investment will hold a 51% stake in the new company by investing 29.90% of its STO Express shares. Alibaba will invest RMB 4.66 billion ($693.44 million) for 49% of the joint venture.

Deyin Investment is also setting up a second new subsidiary, which will hold a 16.0% stake in STO Express. The transactions will bring the parent company’s stake in STO Express down to 7.6%. The new subsidiaries haven’t been set up yet.

“This investment is a step forward in our pursuit of the goal of 24-hour delivery anywhere in China and 72 hours globally,” an Alibaba spokeswoman told TechNode.

“Alibaba aims to push logistics costs, which currently comprise about 15% of China’s gross domestic product, down to under 5%, and enhance the efficiency of this sector,” she said. The company will meanwhile “share technological know-how and new logistics solutions to help [our partners] improve services to merchants and consumers.”

This investment would be a continuation of Alibaba’s initiative to tighten its ties with Chinese courier service giants through cross-shareholding. The e-commerce giant already holds minority stakes in three of the country’s top logistics companies: ZTO Express, YTO Express, and Best.

“We will deepen our existing collaboration with Alibaba in logistics technology, last-mile delivery, and new retail logistics,” STO Express said in a statement.

Chinese courier companies including YTO Express, STO Express, ZTO Express, and SF Express also own stakes in logistics company Cainiao, co-founded with Alibaba and more than a dozen other Chinese companies in 2013.

China’s express delivery market has recorded sharp growth over the past few years thanks to a booming e-commerce industry. The country’s delivery sector handled 50 billion parcels in 2018, up 26% year-on-year according to data from the State Post Bureau.