Alibaba’s Cainiao Buys Control of Dianwoda

Cainiao Network Technology Co., the logistics arm of Alibaba Group, invested $290 million to take control of domestic logistics service startup Dianwoda in another move to expand its delivery capacity.

The deal followed Cainiao and Alibaba’s investment in the $1.38 billion funding round of leading delivery company ZTO Express in May. Cainiao in June also announced a partnership with Emirates SkyCargo, the freight division of Emirates, to jointly develop a logistics hub in Dubai.

With Chinese consumers increasingly relying on online purchases and services that can deliver to their doorsteps, e-commerce giants and logistics enterprises have stepped up efforts to expand their networks of express delivery services.

Hangzhou-based Dianwoda, established in 2015, specializes in short-distance delivery services. It also provides outsourced services for other logistics providers to complete the last stage of delivery to customers. Dianwoda’s corporate clients include the logistics firms ZTO Express, YTO Express, Alibaba’s food delivery service Ele.me and supermarket chain Watsons Personal Care Stores.

Dianwoda has built a network of more than 3 million registered delivery workers. The company serves 1 million vendors and 100 million consumers in 300 cities, according to the company.

Under the deal, Cainiao and Dianwoda will coordinate their businesses and cooperate on warehouse, delivery and customer services, according to Cainiao.

Sources close to the companies told Caixin that Cainiao will transfer some of its short-distance delivery businesses to Dianwoda, including one-hour delivery for Tmall shoppers and 30-minute express food delivery for Alibaba’s Hema supermarket chain.

Alibaba is one of the early investors in Dianwoda, which has been a business partner of Cainiao since late 2016.

Zhao Jianfeng, chief executive officer of Dianwoda, said in an internal email Wednesday that Cainiao’s investment is a “strategic partnership that will benefit both sides.” Zhao said he foresees Dianwoda becoming one of the world’s largest instant delivery platforms within three years.

Contact reporter Han Wei (weihan@caixin.com)