{"id":21828,"date":"2017-11-14T12:51:08","date_gmt":"2017-11-14T17:51:08","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/alibabas-singles-day-sale-powered-by-ai-robots-and-drones\/"},"modified":"2017-11-14T16:40:45","modified_gmt":"2017-11-14T21:40:45","slug":"is-alibabas-smart-logistic-platform-sufficient","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/is-alibabas-smart-logistic-platform-sufficient\/","title":{"rendered":"Is Alibaba’s Smart Logistic Platform Sufficient?"},"content":{"rendered":"

Scale of logistics:<\/strong><\/p>\n

\u201cSingles Day\u201d sale by Alibaba, has become the world’s biggest online shopping day of the year. With a record sale of $25.3 billion [1] within 24 hours on Nov11, it is at least 12 times the Amazon\u2019s Prime Day sales [2]. Behind the $25.3 billion sales are the 810 million parcels generated within 24 hours [3] – almost every 15-65 years old Chinese person will receive a package from Alibaba. Moreover, such scale will soon be a norm. It is expected that the number of parcels in China will surge to 1 billion per day within the next decade [4]. With Alibaba\u2019s 51.3% share of the China\u2019s B2C online sales [5], this is a huge challenge to the company\u2019s logistic operation under the exploding delivery volume.<\/p>\n

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Although a long-time market leader in the e-commerce space, Alibaba\u2019s logistic has been supported by 3rd party companies to maintain an \u201casset light\u201d business model. With the growth of the direct logistics approach of JD.com which now has 32.9% of the market share (up from 17.7% in 2014) [5], and its 211 program – same day delivery for orders submitted prior to 11AM and next day delivery for orders submitted before 11PM, Alibaba\u2019s logistics has been a competitive disadvantage for the E-commerce giant in recent years.<\/p>\n

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“Smart Platform” and asset-light\u00a0business model<\/b><\/p>\n

Big Data Platform:<\/p>\n

To strengthen its logistic services under its \u201casset-light\u201d business strategy, Alibaba invested $807 million, to increase its stake in logistics platform firm Cainiao Smart Logistics to 51 in Sep 2017 [6]. Instead of creating a courier service company, Cainiao Smart logistic is a Cloud and Big Data powered platform that connects 3rd party logistic partners with E-commerce Merchant to improve the overall delivery efficiency. Its goal is to fulfill orders on the mainland within 24 hours and within 72 hours globally [6].<\/p>\n

By connecting logistic partners and the E-commerce Merchant – Cainiao platform feed real-time information to small merchants to choose the most efficient delivery option within a pool of delivery firms based on its location and type of goods. Cainiao\u2019s smart routing and sorting service also reduce logistics firm\u2019s delivery errors by 40%. In addition, it provides a real-time tracking system to enhance the information synchronization and transparency among logistic partners, Merchants, and Consumers.<\/p>\n

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https:\/\/www.youtube.com\/watch?v=bgHfEK34xYk<\/a><\/p>\n

Warehouse Automation:<\/p>\n

In major cities in China, Alibaba set up fulfillment center for merchants to store inventories. This enables Cainiao to leverage its big data and cloud platform to optimize the warehouse design and data flow for more efficient warehouse management.<\/p>\n

In addition, Like Amazon\u2019s move with Kiva Robotics, Alibaba opens the largest smart warehouse in China manned by 60 cutting-edge AGV (Automated Guided Vehicle). These AGVs are equipped with Wifi, self-charging capabilities to lift and move the sorting shelves to the workers, who then packed and posted the products to customers around the world. [7]<\/p>\n

https:\/\/www.youtube.com\/watch?v=bvEzDNxj7hA<\/a><\/p>\n

Robots and Drones deliver the last mile:<\/p>\n

In the long term, Cainiao’s E.T. logistic lab is aiming to implement the coolest technology to improve logistics efficiency to the last mile and reduce labor cost as much as possible to cope with increasing demand.\u00a0The Robot \u201cXiao G\u201d operates as an autonomous delivery vehicle that interface with transportation management system to optimize delivery route. It uses simultaneous localization and mapping (SLAM) system to assess the local environment and uses the deep learning algorithm to predict the trajectory of moving objects, pedestrians, and vehicles. [8]<\/p>\n