Cainiao Gets Ready for a Global Sale

Alibaba Group’s 11.11 Global Shopping Festival isn’t just the world’s biggest 24-hour online sale. For Alibaba’s logistics affiliate, Cainiao Logistics, the tsunami of online purchases generated on Nov. 11 by millions of Chinese consumers is an annual stress-test of the resiliency and scalability of its groundbreaking parcel-delivery network as the company coordinates shipping volumes some 10 times larger than the daily norm.

And when the 2015 sale gets underway less than two weeks from now, Cainiao will be facing another test: international deliveries. Alibaba, which is spreading the 11.11 festival to merchants and shoppers around the world, expects more than 5,000 overseas brands from 25 countries and regions such as the U.S., Europe, Japan and South Korea to participate this year, making it possible for Chinese shoppers to buy from overseas retailers and for shoppers around the world to buy from China through Alibaba’s online marketplaces.

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During the 11.11 festival last year, Cainiao coordinated the delivery of 278 million packages in China and overseas following the sale. That compares with an average daily volume of 30 million package deliveries generated on Alibaba’s China retail marketplaces last year. “The massive number of delivery orders generated from this great online shopping event really pushes us and our delivery partners to do our very best,” said Cainiao Chief Technology Officer Ben Wang in a statement.

Cainiao runs a logistics platform and central data-communications network that helps coordinate deliveries with more than 3,000 independent logistics companies located across China and abroad. To support cross-border e-commerce, Cainiao’s immediate challenge is to make sure international orders get delivered quickly and efficiently for the 11.11 sale. To make this happen, the company has enlisted the support of 49 international delivery partners who have set up 16 dedicated global delivery routes and 74 warehouses. This cross-border network can handle up to 4 million package deliveries per day, Cainiao estimates.

In preparation for the sale, the company has also been working with China customs officials in Shanghai, Hangzhou, Ningbo and Guangzhou to ensure faster customs clearance of imported parcels. Customs agencies have been integrated into Cainiao’s data network, which means logistics partners can share information with agencies such as parcel destination, while at the same time, delivery companies can see online when individual parcels have cleared customs.

Shoppers can also expect faster delivery thanks to China’s government, which has made it easier in recent years for citizens to make online purchases of products from international merchants to meet the growing demand from China’s middle class for imported goods.

Over the past two years, Beijing has allowed the establishment of bonded e-commerce warehouses in free-trade zones in seven Chinese cities. These warehouses allow foreign merchants to stock their products on the ground in China and deliver orders to consumers through an expedited customs-clearance process—reducing the time it takes to deliver cross-border orders from more than a week to a few days. Companies with storefronts on Alibaba Group’s Tmall Global international marketplace that are using bonded warehouses include Unilever and Ocean Spray.

Of course, Cainiao will be handling far more than international deliveries during the 11.11 festival. The company and its partners will also be gearing up to meet demand in China.

Cainiao estimates more than 1.7 million delivery personnel, 400,000 vehicles, 5,000 warehouses and 200 airplanes will be deployed by its logistics partners to handle deliveries on the PRC’s busiest shopping day.

Helping things run more efficiently this year will be Cainiao’s use of big-data technology, which helps courier companies predict and prepare for spikes in demand and determine optimal delivery routes according to traffic and weather. Cainiao’s high-tech logistics applications also include an e-waybill system that more efficiently shares shipping information among delivery firms, customers and merchants compared with traditional paper-based shipping forms.

“By leveraging big-data technology and our extensive domestic and international logistics network, all of us stand ready to deliver world-class logistics services to our customers once again this year,” said Cainaio CTO Wang.

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