International

How Alibaba Gave SingPost A Global Logistics Boost

Alibaba-backed logistics and eCommerce solutions provider Singapore Post Ltd. (SingPost) is expanding its warehouses and freight services in the U.S. with a majority stake acquisition in eCommerce provider Jagged Peak.

“The acquisition of Jagged Peak allows us to use their state-of-the-art eCommerce omnichannel technology to enable brands and retailers not only to leverage their warehouse facilities in over 20 locations in the U.S. but expand these services into our Asia Pacific warehouse network,” said SingPost CEO Wolfgang Baier in a press release.

The expansion comes as SingPost prepares to serve the rising middle class in Southeast Asian countries, which are expected to push eCommerce to new heights with their affinity for shopping for international brands.

“We need to double down” the company’s eCommerce efforts, Baier told Bloomberg. “ECommerce is going to grow, and we want to make sure we’re there.”

The 71 percent equity stake in Tampa, Florida-based Jagged Peak, which reportedly cost SingPost $15.8 million, adds to the $129 million the company has spent on acquisitions since last year, according to Bloomberg.

Backing SingPost’s growth is Chinese eCommerce giant Alibaba, which is its second-biggest shareholder. In July this year, Alibaba reportedly agreed to increase its share in SingPost to 14.51 percent from 10.23 percent.

Alibaba also invested in SingPost’s logistics subsidiary, which offers warehouses in the Asia Pacific region. “Alibaba started as our customer and then last year became our shareholder and business partner. Today, with the significant growth in eCommerce ahead, both of us are convinced of the long-term value of working together in a win-win partnership for eCommerce businesses in Asia Pacific," said Baier.

With a solid backing from Alibaba, by the end of June, the company had cash and equivalent assets worth S$556 million and is now looking to make more investments beyond Singapore, which is its home turf and the source of 80 percent of its revenue.

Other than investments in building its logistics infrastructure, much like Amazon, the company is also looking into drone delivery for its eCommerce network, Bloomberg reported.

“We’re not just a delivery company, we’re not just a mail company,” Baier said. “This eCommerce ecosystem will explode once there’s a critical mass in terms of deliveries.”

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The How We Shop Report, a PYMNTS collaboration with PayPal, aims to understand how consumers of all ages and incomes are shifting to shopping and paying online in the midst of the COVID-19 pandemic. Our research builds on a series of studies conducted since March, surveying more than 16,000 consumers on how their shopping habits and payments preferences are changing as the crisis continues. This report focuses on our latest survey of 2,163 respondents and examines how their increased appetite for online commerce and digital touchless methods, such as QR codes, contactless cards and digital wallets, is poised to shape the post-pandemic economy.

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