China is the Future of Logistics
Given China’s lead in E-commerce innovation — having more mobile-native consumers and a bigger country with more consumers and more penetration in high-density Asia broadly speaking — China’s logistics innovation will end up being superior to even Amazon, Walmart and the West.
What Reuters reported on about a week ago has come to pass. YTO got a cash injection from Alibaba for a global push. Stocks like JD.com and Pinduoduo are also at the bleeding edge of logistics innovation.
China’s pivot in digital transformation has been incredible since about 2010. E-commerce has brought in a logistics boom in China over the last decade, transforming small-town delivery businesses into multinational corporations. China’s E-commerce and AI growth will continue in retail with its consumers becoming the center of global consumerism.
Twenty-year-old YTO announced this week it will sell 379 million shares to Alibaba at a price of 17.4 yuan per share, lifting Alibaba’s stakes in YTO from 10.5% to 22.5%.
JD.com logistics has been working on an automated warehouse for quite some time. What people don’t understand about China’s economic development is that it has fueled technological innovation at a pace other countries just won’t be able to replicate. It’s not just Alibaba vs. Amazon in the duopoly of the future of logistics.
JD is fueling supply chain innovation too. YTO Express Holdings soared 259% on Wednesday after Alibaba increased its investment stake in the Chinese delivery firm by nearly $1 billion. Amazon recently was granted drone delivery approval, even as digital transformation around E-commerce has grown about 50% or 5 years in the 5 months since March, 2020.
China is a digital transformation native country in 2020. The same cannot be said for the U.S. which is small game in the global growth of E-commerce in the 2020s. China just has the scale to be able to create new ideas in supply-chain and logistics management and innovation, fueling shifts in global consumer behavior from payments to multi-level apps. In a world of mini-apps and QR codes, China has no competition.
YTO, which commands a 14% share of China’s express delivery market, is among the five logistics behemoths that hail from eastern China’s rural county of Tonglu. Along with rivals STO, ZTO, Best Express and Yunda, YTO’s rise is inseparable from Alibaba, according to TechCrunch.
So why is China impressive in the future of logistics? In the first half of 2020, delivery firms in China dispatched 33.9 billion parcels, up 22.1 per cent from the same period last year, while revenue from the sector recorded a 12.6 per cent year-on-year growth to 382.4 billion yuan, according to data from the Ministry of Transport.