Alibaba to pick up stake in STO Express

Alibaba Group Holding said it will spend 4.66 billion yuan (US$693 million) for a 14 percent stake in STO Express Co Ltd as it reinforces efforts in the delivery sector.

Shenzhen-listed STO Express shot up by the daily limit of 10 percent and closed at 22.48 yuan.

Alibaba said the two parties would deepen existing collaboration in technology, last-mile delivery across China, and new retail logistics.

"We hope to join hands with industry partners to further lower logistics costs and to enhance efficiency for the manufacturing industry, and we'll continue to enrich the ecosystem within the logistics industry to meet evolving market demands," Alibaba's release read.

This marks the e-commerce firm's fourth investment in the Chinese courier sector after it acquired minority stakes in YTO Express Group Co Ltd, Best Inc and ZTO Express Inc.

It already owns 11 per cent of Shanghai-headquartered YTO Express and 27.9 per cent of Best Logistics.

STO Express is among a dozen courier delivery firms that work with Alibaba under Cainiao, which connects delivery service providers as well as warehouse and courier information service firms.

Last year, e-commerce giant Alibaba pledged to invest over 100 billion yuan to build a delivery network that fulfills domestic deliveries within 24 hours, and global orders within 72 hours. It plans to open five logistics hubs in the cities of Dubai, Hangzhou, Kuala Lumpur, Liège and Moscow.

Cainiao Network also set up a joint venture to build a logistics center at Hong Kong International Airport with the China National Aviation Corporation and Shanghai-based delivery company YTO Express, which is due to be operational in 2023.

China’s express delivery and logistics businesses have been booming as online retailing took off, showing consumers are turning to digital platforms for their everyday shopping.

During last year's Singles Day shopping spree on November 11, major online shopping sites saw the total number of online shopping packages climb 25 percent from a year ago to 1.35 billion, according to the State Post Bureau.

In 2018, domestic courier firms handled a total of 507 billion packages, adding 26.6 percent from a year ago, and combined revenue jumped 21.8 percent to 603.8 billion yuan.