Chinese Logistics

Marc Cuban linked to a tweet that goes to a blog post about China. It’s negative on Alibaba (BABA).

Some of the article I can’t take a view on because I’m not up to date on all of Alibaba’s business moves. However, it seems like the analysis is resting a bit on this photo:

Anyway, while I was traveling, I had a chance to peruse the Alibaba September Quarter figures, Press Release, 6K, Investor Presentation and of course, took some time to listen to the always entertaining Investor Call. Shortly thereafter, Alibaba had reported their amazing “Singles Day” sales figure of $25.3 Billion of fake GMV.

To put this figure in perspective, this year, “Singles Day” GMV came in at just a few billion more than the annual revenue of Sears/K-Mart (140,000 employees and 1,500 locations world-wide)….. again, I’ll repeat that….. Alibaba sold, shipped and delivered the annual, global, sales volume of Sears/K-Mart in just one day! ….800 Million orders to deliver! Incredible! Bravo!…..all those guys on the tuk-tuks, scooters and bicycles must be exhausted……

The Alibaba business model has triumphed once again. It’s now obvious that UPS, FedEx, DHL, et al, have it all wrong. Why in the world would anyone invest in all of that expensive GPS, scanning, package tracking automation and logistics hardware when you can just dump your packages on the sidewalk and let homeless people figure out how to get them where they are supposed to go? Again, the wizardry of Alibaba’s ecosystem has rewritten the global-logistics playbook. Absolute genius….

I don’t know if the logistics have improved over the past few years, but the Chinese post office was not a bastion of efficiency. The worst I’d ever seen was a guy standing in a sea of mailbags, packages everywhere, total chaos. It looked like a bomb went off. I gave him my claim ticket and he went back to find my package, and emerged with it after several minutes. The “private” delivery services are more efficient. I’ve seen scenes like the above, but in every case I can remember, it was outside of a main delivery area, such as outside the gates of a university or office building. Often, the students or office workers came out to pick up their package.

I’m positive Chinese delivery companies and the Post Office could increase efficiency. But what looks like total mayhem from the outside somehow manages to get packages where they’re going.
1. Sell 800 million packages
2. ???
3. Customers receive their packages

The ??? is incredible amounts of human labor.

Amazon sold nearly $3 billion during its PrimeDay sale in July. Amazon is about as large as Alibaba (similar share of online sales). Unlike in the U.S., however, Single’s Day is more like Black Friday and PrimeDay rolled into one. One firm estimated $4.7 billion in Amazon sales from Black Friday through Cyber Monday last year. Alibaba’s claim of $23.5 billion in sales looks inflated even if those sales are all rolled into one, assuming some big ticket items aren’t in the mix. (Did they offer deals on foreclosed properties and bad debt?)

Author: 罗臻 http://www.investinginchinesestocks.blogspot.com

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