Alibaba Group Starts Work On Massive Logistics Network To Provide 24-Hour Deliveries Throughout China

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Alibaba Group officially launched (link via Google Translate) the China Smart Logistics Network (CSN) today, which former Alibaba CEO Jack Ma says will become the backbone of the country’s $190 billion e-commerce market. The network, which will be able to deliver shipments to any city in China within 24 hours, is backed by 100 billion yuan (about $16.3 billion) in funding and slated for completion in 8 to 10 years.

Though Jack Ma retired as CEO of Alibaba Group on May 10, he has signed on as chairman of CSN and is among a group of investors participating in the network’s first phase of investment. Other backers include Forsun and Yintai.

A stronger logistics network is crucial for China’s e-commerce economy because 70% of its current logistics warehouse infrastructure was built before the 1990s and cannot keep up with the speed and volume of current online transactions. CSN will provide third-party couriers, warehouses, shipping and other services, as well as analytics to help vendors improve shipment speed and reduce costs.

Once finished, CSN will support 30 billion yuan (about $4.9 billion) in daily online sales, says the Alibaba Group. That represents a boon for online vendors in China, including those who use Taobao and Tmall, the company’s shopping sites. Last year, annual sales volume on Taobao and Tmall surpassed a combined 1 trillion yuan (about $157 billion) for the first time. If CSN hits its target of supporting daily sales of 30 billion yuan, that could potentially translate into annual transaction volume of about 10 trillion yuan per year.