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Alibaba Bets on AI as Amazon Renews Global Retail Onslaught


Jun. 3 2019, Updated 10:48 a.m. ET

Speeding up deliveries

Cainiao, Alibaba’s (BABA) logistics arm, is planning to adopt artificial intelligence technology in its delivery operations, according to a report by Xinhua. The goal is to make Cainiao’s logistics operation faster and more efficient. Cainiao ships packages to Alibaba customers in and outside China. Alibaba’s goal is to speed up its delivery process so that it can ship all orders to customers across China within 24 hours and to customers outside China within 72 hours.

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As e-commerce companies expand into selling fresh food items, express delivery has become important for their operations. Alibaba’s domestic e-commerce rival JD.com (JD) is using drones and rolling out robots for its last-mile deliveries. In the United States, Amazon (AMZN) has rolled out ambitious initiatives to speed up its deliveries. For example, the company is paying its workers to resign to go start their own delivery businesses so that they can help it deliver packages to customers. Amazon has also begun using robots for last-mile deliveries.

Walmart (WMT), which is also making a huge e-commerce push, tried a delivery model where its store workers would drop off packages for its online shoppers as they head back home after their shift, also as a way to speed up deliveries.

Cainiao generated $575 million in revenue for Alibaba

In addition to handling Alibaba deliveries, Cainiao also ships packages for other clients and earns revenue in the process. In the March quarter, Cainiao generated $575 million in revenue for Alibaba, which helped lift Alibaba’s total revenue 51% YoY to $13.9 billion in that quarter. Revenue rose 50% YoY at Shopify (SHOP) in the March quarter.


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