To meet Chinese consumers’ growing demand for fresh food that can be ordered online, Cainiao, Alibaba Group’s logistics arm, is opening distribution centers in Beijing, Shanghai and Guangzhou to provide delivery of meat, produce and other perishables purchased on Taobao Marketplace and Tmall.com within 24 hours.
The three new distribution centers are equipped for “cold-chain” storage and delivery with temperature-controlled warehouses as well as refrigerated trucks and special cold boxes for transport. Their opening will extend 24-hour, door-to-door delivery of fresh groceries ordered on Alibaba’s marketplaces to 18 Chinese cities, according to Cainiao. The Shanghai and Guangzhou centers began operating this month, while the Beijing center is expected to open on June 25. Service will be expanded to 50 cities by the end of the year.
The rapid growth of online grocery shopping in China is driving investment in the country’s outdated infrastructure for storing and transporting perishable food, which according to some estimates sees spoilage rates of up to 40 percent. Roland Berger Strategy Consultants estimated last year that the country’s cold-chain industry was growing at an average rate of 25 percent a year and would reach RMB470 billion ($75.7 billion) in 2017.
“The cold supply chain in China normally serves the business-to-business market,” said Maggie Chen, head of Cainiao’s the fresh food delivery team. “However with the rising popularity of e-commerce, we believe efficient cold-chain delivery in the business-to-consumers segment is sorely needed.” Chen added that Cainiao will invest more and work closely with partners to strengthen its cold-chain system across China.
Cainiao, which is 48%-owned by Alibaba Group, operates as a consortium of logistics companies, coordinating deliveries through a central logistics information system that connects a network of express delivery companies. Cainiao’s partners Hengfu Logistics and Honotop Logistics will manage the refrigerated warehouses, while Winshine Logistics and Chengbang Logistics will be responsible for last-mile delivery to consumers.
As competition for online grocery customers heats up, marketplaces such as Tmall are vying to make the shopping experience more convenient by shortening delivery times and allowing buyers to choose when their orders arrive at their homes. Cainiao is offering consumers a range of options including delivery on specific dates and times, and evening delivery.
Meanwhile, Cainiao yesterday rolled out same-day delivery service in Shanghai and Beijing. Consumers in these cities will receive goods ordered through Tmall’s supermarket site on the same day if they place orders before 11 a.m. Buyers can also opt for evening delivery before 10 p.m. Same-day service is set to be extended to 12 cities, including Guangzhou, Shenzhen, Chengdu, Tianjin, Wuhan and Nanjing, by the end of the year, according to Cainiao.