Alibaba-Maersk tie up opens new frontier in e-commerce wars

Amazon’s got its Prime Air, but Alibaba just raised the stakes with the announcement of a partnership with Maersk Line that enables customers to reserve space on its ocean vessels online. In addition to cutting out freight forwarding middlemen and opening pathways to global markets, the move is being seen as a shot in the arm to the struggling maritime business that is floundering in a sea of overcapacity and low shipping rates.

On Dec 22, 2016, Maersk began offering the maritime service on Alibaba’s OneTouch booking website. OneTouch offers advance booking of cargo space on selected routes from eight Chinese ports, with a pre-paid deposit. OneTouch, which was acquired by Alibaba in 2010, targets small- and medium-sized Chinese exporters and allows them to book airfreight and parcel delivery services.

“This gritty industry has taken the background role in the past, but now has the potential to affect the way every product is sourced, bought and delivered,” said Freightos CEO Zvi Schreiber, shortly after the Maersk deal was announced. He added that, “building on a massive, 80 percent e-commerce market share in China, Alibaba’s new partnership with Maersk – which controls 25 percent of all container ships globally – means Chinese manufacturers and retailers have a direct line to U.S. buyers, avoiding middleman markups.”

Alibaba’s freight platform offers export services, such as logistics and customs clearance, and is reportedly the fastest-growing part of Alibaba’s business-to-business division.

The move reaffirms Alibaba’s aspirations of becoming a global logistics leader, and offers an interesting counterpoint to Amazon, which appears to be focused on exploring the frontiers of e-retail. That isn’t to say Jeff Bezos’ investment in Convoy, an Uber-like system that lets truckers find jobs without the traditional legwork, isn’t a significant challenge on the logistics side. Rather, it speaks to how different markets and business models drive growth.

Both e-commerce giants have grown to the size where their core functions are impinged upon by logistics shortfalls. For Amazon, its efforts to cut delivery times forced it to invest in conventional – and less conventional, drone-operated – delivery vehicles, ranging from trucks to 767 freighters.

Alibaba’s advantage is that it does not hold its own inventory, giving it freedom to invest in its own infrastructure that extends from logistics to payments. The downside to that dynamic is that Alibaba doesn’t have its own inventory, and thus exerts less control over quality and authenticity of its products. For instance, the Chinese e-commerce juggernaut announced this week that it was suing two vendors that used its Taobao online-shopping website to sell fake Swarovski watches. This week’s decision represents the first-ever instance of an e-commerce platform taking a counterfeiter to court in China.