Alibaba Group is investing about S$279 million (US$206 million) in its e-commerce logistics cooperation with Singapore Post to expand their joint activities in the Asia Pacific region, the two companies announced today.
The Chinese e-commerce giant, which last year bought a 10% stake in SingPost for S$312 million ($231m), will buy a further 5% stake for S$187 million (US$139m), giving it about 14.5% of the company, based on the enlarged share capital basis. About 75% of the net proceeds of S$183 million will be re-invested into expanding SingPost’s e-commerce logistics activities.
Alibaba Group will also take a 34% stake in Quantium Solutions International (QSI), SingPost’s Asian e-commerce logistics subsidiary, for up to S$92 million (US$68m). In addition, the two companies will enter “a joint strategic business development framework to improve efficiency and integration in e-commerce logistics”.
“The three initiatives signal the deepening of a business relationship that started last year and a commitment from both parties to increase e-commerce logistics collaboration in the future to build a leading e-commerce logistics platform to service the rapidly growing e-commerce businesses across Asia Pacific and beyond,” they said in a joint press release.
QSI, offering end-to-end e-commerce logistics and fulfilment services in 10 countries across the Asia Pacific region, will reorganise its business and become the joint venture vehicle of SingPost and Alibaba Group.
“This will allow QSI to ramp up its development of e-commerce logistics infrastructure and services. In addition, QSI will also become a platform for both parties to strengthen their collaboration and realise synergies across their businesses. QSI will encompass e-commerce warehousing, last mile delivery and other end-to-end e-commerce solutions,” SingPost and Alibaba Group explained.
Under the ‘joint strategic business development framework’, SingPost and Alibaba will share their respective knowledge and leverage each other’s strengths to scale across the e-commerce logistics value chain. A joint Steering Committee will be created and drawn from their respective executives.
Daniel Zhang, Alibaba Group CEO, said: “Over the past year, Alibaba and SingPost have worked closely to explore cross border e-commerce opportunities and created a series of customised logistics solutions in various markets. This additional investment into SingPost and establishment of a joint venture signify our commitment in expanding our global logistics footprint, which in turn will help Chinese businesses sell, and global brands deliver more easily around the world.”
Lim Ho Kee, Chairman of SingPost, said: "The pace of transformation at SingPost has been accelerating steadily. As a postal service provider, we are on a burning platform, facing a global decline in mail revenue with trends like e-substitution and lifestyle changes. It is a win-win situation for both of us because we share similar goals and have a natural fit between our operations across Asia. On behalf of my fellow directors, I welcome Alibaba as one of our partners on the next phase of the journey.”
Wolfgang Baier, Group CEO of SingPost, added: “We are now taking the next step by building a regional e-commerce logistics platform and infrastructure for e-commerce players across Asia Pacific based on Quantium Solutions – our e-commerce logistics subsidiary. Alibaba started as our customer and then last year became our shareholder and business partner. Today with the significant growth in e-commerce ahead, both of us are convinced of the long term value of working together in a win-win partnership for e-commerce businesses in Asia Pacific.”
The deeper cooperation with Alibaba Group marks the latest stage of SingPost’s ongoing transformation from a mostly mail company into a broader-based group offering mail and parcel deliveries, e-commerce services and logistics services, including freight forwarding.
Under Austrian-born CEO Wolfgang Baier, the company aims to become a ‘regional leader in e-commerce logistics and trusted communications’, targeting in particular the booming e-commerce market in Asia Pacific. Logistics now represents about 50% of SingPost revenues and had an operating profit margin of 4.5% in the year ending March 2015.
SingPost has expanded rapidly in recent years with a series of acquisitions in the Asia Pacific region, including Australia’s Couriers Please and New Zealand’s Famous Pacific Shipping. In Singapore, the company is investing in parcel services to compensate for the declining mail business.
