Alibaba, Amazon, Startups, Everyone Wants to Disrupt Global Logistics

Amazon vs. Alibaba

Alibaba, which wants to build “the future infrastructure for global commerce”, is continuing to roll out services for sellers to sell abroad.

Reuters:

Maersk, the world’s largest container shipping line, has teamed up with Alibaba (BABA.N) to allow customers to reserve space on its vessels through the Chinese company, illustrating growing cooperation between e-commerce and logistics firms.

Maersk, a unit of Denmark’s A.P. Moller-Maersk (MAERSKb.CO), began offering the service to Chinese shippers on Alibaba’s OneTouch booking website on Dec. 22, a spokeswoman for the shipping line said on Wednesday.

Shippers traditionally go through freight forwarders to book space for goods on container vessels, but lines such as Maersk are allowing cargo owners to book directly via the internet.

It is a continuing trend for both Alibaba and Amazon:

Amazon.com (AMZN.O) has registered a Chinese business as a freight forwarder and has leased aircraft to handle more of its own deliveries in the United States.

Alibaba, owner of China’s largest e-commerce platforms, has been making inroads into logistic services in recent years by taking stakes in couriers and buying warehouses. The company was not immediately available to comment on the Maersk relationship.

Maersk said this was part of the shipping line’s strategy to provide digitized services for customers and that it plans to launch more pilot programs on third party portals.

The big market opportunity here lays at the feet of the e-commerce giants, not the logistics companies. Those big marketplaces have the market power: They have the access to both sellers and buyers. They can integrate logistics services (and commoditize them even further in the process). (In fact, logistics services have always been a logical extension for marketplace providers. It is surprising that Fulfillment by Amazon hasn’t yet been copied all over the place.)

But it is not just the giants that are tackling logistics. Startups are jumping in as well, promising more innovation coming to logistics. (And by god, do online retailers need a better logistics ecosystem to work with.)

CB Insights from last year:

Since 2012, $8.3B has been invested in the space across 938 deals. In 2015, $2.5B was invested across 293 deals, and to-date in 2016, $4.2B has been invested across 253 deals. At the current run rate, total deals will reach 315 by the end of the year.

The category really took off in 2014, when deals and dollars doubled compared to the previous year. The following year, 2015, saw another run-up in activity with nearly 300 deals.

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The top two most well-funded companies are both based in China:

Cainiao, discussed above, tops the list with $1.5B in total funding through one round of private equity financing. The Chinese company provides a logistical platform that primarily services the Alibaba marketplace. The private equity round, which valued the company at a $7.7B, was led by GIC, Khazanah Nasional Berhad, Primavera Capital Group, and Temasek Holdings.

Best Logistics, another Chinese firm, raised $760M in private equity financing and to-date has raised $805M. Like Cainiao, the company also provides logistics services to the e-commerce market.

CB Insights, also last year, rounded up the top investors in the space:

SV Angel topped the list with 7 unique investments since 2012. FundersClub, Kleiner Perkins Caufield & Byers, and New Enterprise Associates all tied for second with 6 investments apiece.

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We are still waiting for the start of the “Global Supply Chain by Amazon” programe, which was rumored to go official last year.

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