Xiong Wei, Senior Vice President of Cainiao: How to Make Cross-border Commodity Logistics 9 Days Faster? | An Exclusive Interview with 36Kr

Written by Peng Qian

Edited by Qiao Qian

It's another "Black Friday", and Nicole, who lives in the UK and has 8 years of overseas shopping experience, has already received the new rice cooker she ordered on AliExpress a few days ago. In the year she first went to study in the UK, she tried to order a rice cooker on Amazon and paid a high shipping fee, but she waited for more than 2 months and still didn't receive the goods. Finally, she bought an old one at the offline second-hand market to make do.

Now, overseas consumers who place orders for products with the "5-day delivery" (that is, "Delivered within 5 days") logo in the AliExpress Choice channel can receive packages with free shipping from China within 5 working days, while previously it took at least 14 days.

The logistics service provider behind this is Cainiao.

It is a consensus in the industry that the cross-border logistics chain is too long. How can Cainiao save 9 days?

Specifically, Cainiao achieves the "three-in-one" function of warehousing, distribution, and trunk warehouse through the construction of the domestic collection network, saving 1 - 2 days; on the overseas customs clearance side, the "fast in and fast out" integrated customs and warehouse model eliminates the distribution center link; at the end, in key markets such as Europe and the United States, an efficient customs clearance, distribution, and end-delivery network is built, and most areas can complete delivery the next day after collection.

Cainiao, with such capabilities, is already very different from when it was born more than ten years ago.

Cainiao was born out of Alibaba founder Jack Ma's grand design of "Global delivery within 72 hours" and "We will invest hundreds of billions to do it". In the past 11 years, from the initial electronic waybill to self-built warehousing and distribution services for domestic Tmall Global and Tmall Supermarket's self-operated businesses, to investing in overseas infrastructure and chartering trunk flights, Cainiao has built a global logistics network to serve cross-border e-commerce, and its business has visibly become heavier from light.

Before and after the epidemic, Chinese merchants urgently needed to go overseas to find increments, and the overseas growth opportunities for the "Four Little Dragons of Going Overseas" and Cainiao came.

Cainiao data shows that since last year, the international business (cross-border express delivery, international supply chain, and overseas local services) has begun to play a leading role, accounting for more than 47% of revenue, and has been the largest growth source for Cainiao in each quarter since then. In the fiscal year 2023, Cainiao delivered more than 1.5 billion cross-border e-commerce packages, ranking first in the world, and serving more than 100,000 merchants and brands engaged in cross-border trade.

Objectively, however, cross-border e-commerce is not the mainstream shopping method in the vast majority of countries, and the market size of cross-border e-commerce logistics services is still smaller than that of local e-commerce logistics services in various countries. Therefore, in addition to cross-border direct delivery and overseas warehouses, Cainiao is also trying more local-to-local express delivery services.

For example, Cainiao's global logistics network, which has been heavily invested in over the past few years, is not only capable of undertaking the end-delivery from China to Spain, but also undertakes local-to-local business in Spain, business from Spain to France, Poland and other countries, and even covers the outer islands of Spain, achieving "next-day delivery" throughout Spain.

36Kr recently interviewed Xiong Wei, Senior Vice President of Cainiao Group and General Manager of the Cross-border Logistics Division, in the Cainiao Park in Hangzhou. He joined Cainiao in 2018. Before that, he had been engaged in strategic consulting for more than 10 years. 36Kr talked with him about the changes of Cainiao after building a global logistics network in the past 5 years, and how to handle the competitive and cooperative relationship in the new market environment to find new growth opportunities.

In 2023, Cainiao signed a contract with Deutsche Post DHL Group (DHL) to jointly invest 60 million euros in Poland in the first phase; Xiong Wei is on the left

36Kr: How big is the difference between today's Cainiao and the Cainiao during the electronic waybill period?

Xiong Wei: Actually, Cainiao has a different strategic development opportunity every 5 years. In the first 5 years, it basically used technology to support the express delivery industry and provide more inclusive services. For example, for the electronic waybill, when Double 11 was in its third year, the e-commerce logistics developed explosively, but at that time, the overall operation level of the domestic Tongda Express system was weak, and someone needed to build the technical system behind it.

Later, Tongda Express went public, and their volume and service capabilities reached a certain level. Then we began to think about the need for some innovative products in the next 5 years. Since 2018, we have served import bonded businesses like Tmall Global, and also provided services for export to overseas consumers, providing end-to-end, faster, more timely, and more controllable high-quality services.

36Kr: Everyone is relatively familiar with Cainiao serving self-operated businesses such as Tmall Supermarket and Tmall Global in China. What is the situation overseas?

Xiong Wei: Since 2017 and 2018, we have made some large investments in two areas. The first is overseas infrastructure. In 2017, we opened the first ehub (Integrated E-commerce Logistics Hub) in Kuala Lumpur. In 2018, we invested in Liege, Europe and Hong Kong respectively. These nodes make our global logistics basic network more efficient. At the same time, from the end of 2017 to the beginning of 2018, we started to build an aviation network. Our first charter flight in 2018 was to Russia. Before the epidemic, we had already opened a lot of exclusive charter flights for e-commerce, and after the epidemic, we also increased this investment. Cainiao has hundreds of charter flights flying from China to all over the world every week, and about 5 million packages go from China to all over the world every day.

36Kr: Why did Cainiao set such a heavy strategy in these 5 years?

Xiong Wei: This is determined by the market opportunity of cross-border logistics. There are usually only two options for overseas consumers to buy Chinese goods. Either they use the ancient and inefficient national postal services, which cost $1 - $2. For example, it may be winter when a Russian user buys a summer dress and it is delivered. Or they use DHL or FedEx, which can arrive in 3 days, but it costs about $100, and ordinary consumers will not choose it either. Only by building its own network can Cainiao balance the timeliness and cost.

36Kr: What is the current service and price of Cainiao?

Xiong Wei: In mid-2020, we launched the "5 US dollars within 10 days", which has covered many markets around the world. Since the beginning of last year, we have launched the "10 US dollars within 5 days", which now covers about a dozen of the most core markets. These two are the most mainstream products.

36Kr: Can the economic account of the "5-day delivery" service customized for AliExpress by you be balanced?

Xiong Wei: Today, the logistics cost and the logistics fee collected from merchants and consumers are not actually equal. We are willing to let everyone not spend more money first and experience a better service first. But through some data comparisons, we can see that for the same 5-day delivery product, the service provided by Cainiao may have a significant cost advantage compared to the services combined by others in the market.

36Kr: What is the general logistics timeliness level of several Chinese cross-border e-commerce companies?

Xiong Wei: It depends on how the platform provides solutions to merchants and consumers. Different platforms have their own choices, whether it is the economic line, the dedicated line, the standard service or the customized service. The mainstream service suitable for Amazon is still "10-day delivery", and there is no particularly promoted "5-day delivery" service market. AliExpress, along with Temu and Shein, the three major Chinese cross-border companies, have together improved the logistics experience to a service mainly based on "5-day delivery" and "10-day delivery". The goods of Chinese cross-border e-commerce are already very competitive. As long as the logistics experience continues to be optimized, the purchasing power of the entire overseas consumers will definitely increase.

36Kr: What is the current daily order volume of Cainiao International?

Xiong Wei: Currently, the daily average package volume is 5 million, accounting for 1/3 of China's total cross-border exports. The other 2/3 are other platforms and some scattered packages. Globally, our comparable top logistics companies such as FedEx and DHL have a daily average package volume of about 1 million.

36Kr: How much of Cainiao's export orders does AliExpress account for?

Xiong Wei: AliExpress is an important customer of Cainiao. We have an independent team to support AliExpress and provide more targeted services. In addition, we also have a dedicated team to serve other customers in the market.

36Kr: I heard that Cainiao is also striving for more cooperation with companies like Temu and Shein. What is the latest progress?

Xiong Wei: AliExpress can be understood as a major customer on Cainiao's underlying network. We also have some other medium-sized platform customers, and these customers have also used our specific services in some local links.

36Kr: Does this mean that the competition among Internet giants is not as rigid as before?

Xiong Wei: In the past, it was more of a strategic defense. Now, it will be more from a business perspective and more market-oriented. Only when everyone shares this logistics network provided by Cainiao at the bottom layer can there be a stronger scale advantage, which is conducive to the upgrading of the entire industrial chain.

36Kr: 2024 is the beginning of a new 5-year period for Cainiao. What will Cainiao do in the next 5 years?

Xiong Wei: Continue to layout the global hub network, not only for export and import, but also do a large number of overseas local express delivery businesses, such as from the Middle East to Europe, from North America to South America, to establish a global network. This is the era of Cainiao 3.0. Currently, we have laid out at least 10 overseas local networks. For example, in Spain, it not only undertakes the end development from China to Spain, but also undertakes the local-to-local business in Spain, and the business from Spain to France, Poland and other countries.

36Kr: The Four Little Dragons are expanding rapidly overseas, and AliExpress has also become more strategic in Alibaba's strategy. As a supporter, has Cainiao felt the changes and pressure?

Xiong Wei: AliExpress actually has a history of more than ten years, and this business has developed very rapidly after the epidemic. When competitors come in, everyone works together to expand the overseas market. I think this is a healthy competition. At the end of last year and the beginning of this year, our business mechanism also had some changes. Cainiao and AliExpress negotiated a framework agreement, which is equivalent to a customized service. Handling it according to a simpler and clearer business relationship can also promote some solutions for merchants and consumers more efficiently.