Alibaba‘s burgeoning logistics subsidiary Cainiao recently declared the rollout of a “consolidated shipping” service in the United States, escalating its global logistics capabilities.
Through this cross-border service, multiple purchase orders from various Chinese e-commerce platforms are bundled and ferried to U.S. customers via air and sea transport routes, minimizing delivery times to as little as five days.
Moreover, these aggregated orders are consolidated in a warehouse before their dispatch from China.
By virtue of this strategic advancement, Alibaba is anticipated to capture a substantial market share among Chinese customers residing in the United States.
In addition, Cainiao is expected to gain significant traction among various Chinese e-commerce entities.
Expansion of Logistics Services
The company’s overarching expansion of cross-border logistics services is poised to fortify its comprehensive logistics services portfolio.
Aside from the recent U.S. launch, Alibaba’s Cainiao had previously provided consolidated shipping to Chinese consumers in international markets, including Hong Kong, Singapore, and Australia.
Furthermore, the company introduced Cainiao Express, a novel express delivery service, with a goal to offer doorstep deliveries, half-day, same-day, and next-day services – extending beyond the previously provided offerings to select Alibaba-owned businesses.
Additionally, Alibaba reportedly tabled a $57 million offer to acquire Chinese logistics firm Best, which boasts a robust market presence in Southeast Asia.
All these aforementioned initiatives are anticipated to further strengthen Alibaba’s Cainiao Smart Logistics Network business unit, which achieved sales of RMB 22.8 billion ($3.1 billion) in the second quarter of fiscal 2024, manifesting year-over-year growth of 25%.
Final Thoughts
The company’s expanding logistics portfolio is likely to enable it to capitalize on the burgeoning opportunities in the global logistics market.
According to an Allied Market Research report, the global logistics market is projected to reach $16.79 trillion by 2032, underscoring a compounded annual growth rate of 5.6% between 2023 and 2032.
Fortifying Alibaba’s position in the promising logistics market is expected to bolster the company’s overall financial performance in the immediate future.
The Zacks Consensus Estimate for BABA’s fiscal 2024 revenues stands at $133.01 billion, denoting a year-over-year growth of 5.52%. The Zacks Consensus Estimate for earnings is set at $9.12 per share, indicating a year-over-year growth of 14.86%.
Furthermore, the recent expansion in the U.S. market is poised to position Alibaba favorably against industry stalwarts like Amazon AMZN, which is continuously strengthening its foothold in the logistics sphere.
Amazon introduced Amazon Shipping, a ground shipping service for sellers, providing delivery for orders on Amazon.com, sellers’ websites, and other channels, encompassing domestic shipments within the United States.
The company also launched “Supply Chain by Amazon,” an end-to-end supply chain service empowering third-party sellers to retrieve inventory, ship across borders, handle customs clearance, store bulk inventory, and deliver to customers.
Zacks Rank & Stocks to Consider
Presently, Alibaba holds a Zacks Rank #3 (Hold).
BABA shares have declined by 37.4% over the past year, underperforming the Zacks Retail-Wholesale sector’s return of 15.8%.
Several better-ranked stocks in the same sector are The Gap GPS and Expedia Group EXPE. While The Gap currently boasts a Zacks Rank #1 (Strong Buy), Expedia carries a Zacks Rank #2 (Buy) at present. You can view the complete list of today’s Zacks #1 Rank stocks here.
The Gap has recorded a remarkable 70.5% gain over the past year, and its long-term earnings growth rate stands at 12%.
Expedia’s shares have surged by 53.9% over the past year, with a long-term earnings growth rate of 25.31%.
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Amazon.com, Inc. (AMZN) : Free Stock Analysis Report
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Alibaba Group Holding Limited (BABA) : Free Stock Analysis Report
