Alibaba BABA launched an affordable logistics solution, namely Logistics Marketplace, for small and medium-sized enterprises (SMEs) in the United States.
The new solution offers a point-of-contact for buyers and pre-vetted logistics service providers, enabling businesses to offer tailored solutions to their target customers. This service is meant for reshaping the supply chain strategies of various enterprises and reducing traditional logistics hurdles.
This solution allows buyers to compare real-time quotes from various logistics service providers, book tailored solutions, and view verified options like customs clearance, storage, combined shipments and drop shipping.
Additionally, it includes “Send Inquiry” and “Logistics RFQ” features for sellers, streamlining their process of partnering with freight forwarders.
Hence, Alibaba is expected to gain solid traction across SMEs in the United States on the back of its latest move which will help these businesses to expand their global reach.
Alibaba Group Holding Limited Price and Consensus
Alibaba Group Holding Limited price-consensus-chart | Alibaba Group Holding Limited Quote
Strengthening Logistics Services Aids Growth
Apart from the launch of Logistics Marketplace, Alibaba’s logistics arm Cainiao announced the launch of a “consolidated shipping” service in the United States, bolstering its overseas logistics offerings.
The cross-border service packages multiple shopping orders from various Chinese e-commerce platforms and delivers them to U.S. customers via air and sea transport routes, reducing delivery times to as little as five days.
The company’s launch of Cainiao Express, a new express delivery service, remains noteworthy. It aims to offer doorstep, half-day, same-day and next-day deliveries to select Alibaba-owned businesses.
Alibaba Group also revealed its plans to invest $1.1 billion in South Korea over three years in its quest to build a logistics center and expand businesses across the country. The company further announced that it would invest $200 million this year for the development of the logistics center and $100 million for small and mid-sized firms.
All the above-mentioned endeavors are expected to aid the company in capitalizing on the growth opportunities present in the global logistics market. Per an Allied Market Research report, the global logistics market is expected to reach $16.79 trillion by 2032, indicating a CAGR of 5.6% between 2023 and 2032.
Solidifying prospects of Alibaba in the promising logistics market will likely strengthen the company’s overall financial performance in the near term.
The Zacks Consensus Estimate for BABA’s fiscal 2024 revenues is pegged at $130.77 billion, indicating year-over-year growth of 3.7%.
Stiff Competition
However, Alibaba faces stiff competition from notable industry players like Amazon AMZN and JD.com JD in the logistics market space. Its shares have lost 11.2% in the year-to-date period, underperforming the Zacks Retail-Wholesale sector’s return of 6.4%.
Amazon introduced an end-to-end supply chain service called “Supply Chain by Amazon,” allowing third-party sellers to pick up inventory, ship across borders, handle customs clearance, store bulk inventory and deliver to customers.
Earlier, the company launched Amazon Shipping, a ground shipping service for sellers, offering delivery on orders on Amazon.com, sellers’ websites, and other channels, covering domestic shipments within the United States.
JD.com, on the other hand, recently announced that its logistics arm, JD Logistics expanded its international express delivery service from Guangzhou and Shenzhen to nearly every district in China. The service offers efficient logistics solutions for various products, including documents and apparel, among others, with the United States, the U.K. and Germany as top destinations.
Earlier, the company announced its partnership with Geopost to bolster its global logistics capabilities. The partnership will allow seamless C2C and B2C shipping services between China and Europe, providing comprehensive tracking, delivery and one-stop express solutions for individuals and businesses.
Zacks Rank & Stock to Consider
Currently, Alibaba carries a Zacks Rank #4 (Sell).
A better-ranked stock in the same sector is The Gap GPS, sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Gap has gained 2.8% in the year-to-date period. GPS’ long-term earnings growth rate is 12%.
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