Chinese ecommerce giant Alibaba (BABA) is aiming to speed up delivery between China and the U.K. by opening warehouses on the new train line between the two countries.
The New Silk Road
Dubbed the New Silk Road, freight travels along rail lines through China, Kazakhstan, Russia, Belarus, Poland, Germany, Belgium and France, before ending in London 16 days later. Alibaba, according to the U.K.’s Telegraph, has reached out to property developers with buildings located on the new train line to be used as warehouses for the ecommerce giant. The idea is for Alibaba to have its stock and delivery hubs along the train line so that it can get products to Europe at a quicker pace.
While Alibaba is the dominant player in China, it hasn’t made as much of a name for itself in Europe, unlike Amazon (AMZN). In 2015, Alibaba opened an office in London to serve as its European headquarters and late last year opened its first warehouse in the U.K. Still Amazon is the leading ecommerce company in the U.S. and Europe. The report noted Alibaba has looked at warehouse locations around Europe with representatives of Alibaba meeting with the Bulgarian government in January to discuss a logistics center for eastern parts of Europe. (See also: Alibaba-Backed Best Logistics Gears Up for $1B IPO.)
Amazon Expands Logistics
Alibaba’s potential move to compete better in Europe comes amid a growing saturation of its core market in China that is forcing it to expand into other businesses. It also comes as Amazon is trying to morph into a logistics company as well as an ecommerce giant and is entering the China market. According to a recent report in the Financial Times, Amazon is taking aim at the global logistics industry in China, which is valued at $8 billion, by expanding a program in China in which wholesalers can use Amazon to ship their products around the globe via sea, land and air.
Dubbed Amazon Logistics+, the service has been expanding over the course of the past few months and now includes cross-border air transport, packaging, warehousing, customs and handling services. That offering will not only pressure the likes of UPS, FedEx and DHL but also Alibaba. Alibaba already facilitates cross-border sales via its wholesale marketplace, but it doesn’t control the logistics as Amazon is starting to do. Alibaba lack of ownership of shipping infrastructure could put pressure on its business if Amazon’s service resonates with wholesalers in China.