uploads///Consumers willing to pay delivery

Alibaba’s Logistics Arm Aims at Next-Day Delivery

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Fast delivery leads to customer satisfaction and more purchases

Delivery time is another key metric besides price of goods that Alibaba (BABA) is now focusing on to compete in the e-commerce market. According to a report from the Wall Street Journal, the company’s logistics arm, Cainiao, plans to open new grocery distribution centers in China (MCHI), which will make deliveries faster.

The new distribution centers will speed up the order deliveries of Alibaba’s Tmall supermarket in various major cities in Eastern China, as it will be the biggest warehouse among Cainaio’s grocery warehouses. The intent is to deliver groceries to over 250 cities by the end of 2015 and make next-day delivery possible in around 50 cities.

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Besides Alibaba, Amazon (AMZN), Google (GOOG) (GOOGL), and eBay (EBAY) too are working towards improving their logistics network. As discussed in the previous article, logistics defines the future of e-commerce players. Amazon recently announced its free same-day delivery service for Prime members, which we discussed in the previous part of the series.

Similarly, Google Express service is a same-day shopping service for orders that consumers place online from retail stores like Staples and Walgreens. eBay too offers a same-day delivery service called eBay Now. eBay has also partnered with Argos stores in the United Kingdom. Through this partnership, goods sold by eBay’s merchants online will be available for customers to pick up immediately at Argos stores.

Consumers avoid paying extra for same-day delivery service

The same-day shipping market has huge growth potential. However, consumers tend to avoid paying extra for same-day delivery service. According to a Harris Interactive survey of 2,241 US adults, and as the chart above shows, 70% of consumers don’t want to pay extra for overnight or same-day delivery.

Groceries have most recently gained traction in the Chinese e-commerce space. According to a report from Harris Interactive, 78% of US consumers prefer to purchase groceries in person rather than online. Thus, e-commerce players are taking initiatives to explore this segment and make maximum profits.

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