Singapore Post Limited (SingPost) and Alibaba Group Holding Limited (Alibaba Group) announced a strategic business cooperation allowing them to tap into e-commerce opportunities in Southeast Asia and beyond.
SingPost and Alibaba Group have announced that SingPost and Alibaba Investment Limited, a wholly-owned subsidiary of Alibaba Group Holding Limited, have entered into an investment agreement under which Alibaba Investment Limited will invest $312.5 million to purchase 30 million existing ordinary shares held in treasury by SingPost and 190.096 million new ordinary shares and take a 10.35% stake in SingPost upon completion. Both companies also signed a memorandum of understanding (MOU) which will allow them to discuss and negotiate a joint venture (JV) in respect of the business of international e-commerce logistics. This provides amongst other things, greater access to SingPost’s international logistics capabilities, infrastructure and delivery networks, and as well as end-to-end solutions to Alibaba Group customers and merchants.
SingPost is a leading provider of e-commerce logistics solutions and trusted communications in the region. As the national postal service provider in Singapore for over 150 years, SingPost offers integrated trusted communications through its domestic and international postal services and a suite of cutting-edge digital solutions for businesses and consumers. With its regional network and infrastructure, SingPost is able to offer fully integrated e-commerce logistics solutions covering freight transportation, warehouse fulfilment, delivery and returns as well as web solutions, to its customers. SingPost’s e-commerce and related businesses currently account for about 26% of its total revenue.
Combining Strengths of SingPost Group and Alibaba Group
This landmark collaboration between two leading organizations – SingPost, one of the leading global postal companies and Alibaba Group, the largest online and mobile commerce company in the world in terms of gross merchandise volume in 2013 – leverages the core competencies of both companies to advance the e-commerce eco-system and create logistics solutions for international e-commerce.
Said Mr Lim Ho Kee, Chairman of SingPost: “This strategic investment by Alibaba is a significant milestone in our transformation journey into the region and is an affirmation of our long-standing strategy in e-commerce logistics as part of SingPost’s growth trajectory. SingPost will benefit from Alibaba’s expertise in e-commerce, technology and business volumes. We see considerable strategic advantages, such as the creation of new relationships and opportunities for strategic cooperation with the Alibaba Group, all of which are expected to increase the Company’s growth and development pace as it pursues regional opportunities.”
Mr Daniel Zhang, Chief Operating Officer of Alibaba Group said: “We are excited to collaborate with SingPost and leverage SingPost’s strong delivery networks and end-to-end e-commerce logistics solutions to facilitate international e-commerce. Through this collaboration, we hope to create concrete benefits for our overseas buyers and sellers by enhancing the user experience and providing greater access to a suite of international e-commerce logistics solutions and products.”
The collaboration is intended to allow SingPost Group and Alibaba Group to cooperate and leverage each other’s strengths and experience to create a platform for international e-commerce logistics business, business, giving priority to SingPost Group’s logistics services based on commercial terms. It aims to, amongst other things, (a) achieve full regional value chain of e-commerce logistics including warehousing, last mile delivery, linehaul, customs clearance, parcel collection, consolidation and order fulfillment, (b) provide Alibaba Group access to SingPost Group’s international logistics capabilities, infrastructure, and delivery networks including potential regional roll-out of POPStations, (c) offer end-to-end solutions to the customers and merchants of Alibaba Group, (d) allow SingPost Group’s operations to benefit from Alibaba Group’s expertise in e-commerce and business volumes and (e) allow Alibaba Group and SingPost Group to leverage on each other’s strong brands.
Over the next few months, SingPost Group and Alibaba Group will also continue discussions on the formalisation of a joint venture (JV) in respect of the business of international e-commerce logistics.
Investment by Alibaba Group enables SingPost to significantly scale up its regional capabilities and infrastructure to meet growing e-commerce demand
The e-commerce market in the Asia-Pacific region is becoming the largest e-commerce market in the world, with e-commerce sales expected to hit more than US$1 trillion by 2020, according to eMarketer.
Said Dr Wolfgang Baier, Group Chief Executive Officer of SingPost: “E-commerce logistics is the key enabler to capture the growth in e-commerce in Asia. This strategic investment will help boost our transformation in regional e-commerce logistics and realize our next growth frontier. With the tremendous e-commerce opportunity, the funds from this investment provide SingPost with financial flexibility and enable us to significantly scale up our e-commerce logistics business and build new capabilities as we are poised for growth in the region.”
Added Dr Baier: “Through this step-change strategic collaboration, SingPost will be able to grow its regional e-commerce logistics much faster and strengthen it as a regional revenue stream, even as our core domestic business continues to be under tremendous pressure from rapidly declining domestic traditional mail volumes. We will speed up investments into our regional capabilities especially technology and infrastructure. Still, as Singapore’s Public Postal Licensee (PPL), our foremost priority is to provide high quality domestic mail services to meet our service obligations in Singapore. We are already investing S$100 million to improve customer service and productivity including the replacement of our mail sorting machines and delivery fleet as well as offering more 24/7 services such as POPStation and ezy2ship. And we will continue to invest despite the declining domestic letter mail volumes into serving Singapore’s postal needs and meeting its stringent delivery standards.”
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