Alibaba Group Holding and its logistic arm Cainiao Network has signed a strategic agreement to acquire a 10% stake in China-based ZTO Express (Cayman) with an investment of $1.38bn.

As part of the deal, Cainiao and ZTO will strengthen their partnership to work towards the growth of New Retail, a concept developed by Alibaba that promotes seamless integration between online and offline commerce.

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The investment will enable the companies to expand first and last-mile pickup and delivery capabilities, warehouse management, cross-border logistics, and technology-driven smart solutions.

Alibaba Group CEO Daniel Zhang said: “ZTO has been an important partner to Alibaba Group and Cainiao Network in the development of the new digital economy.

“The continuing expansion of New Retail is catalysing new opportunities and demands in logistics.

“This strategic investment will strengthen synergies across our mutual businesses to create new value and improved experience for merchants and consumers.”

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“This strategic investment will strengthen synergies across our mutual businesses to create new value and improved experience for merchants and consumers.”

Cainiao Network president Lin Wan said: “This investment will enable Cainiao and ZTO to supercharge joint innovation and development to accelerate digitalisation of the industry.

“We will continue to work closely with industry leaders, including ZTO, to enhance our logistics infrastructure and broaden our service offerings to meet the growing demand from New Retail.”

Based on insights drawn from advanced technology and data analytics, the New Retail concept is designed to integrate online and offline commerce through deep consumer engagement.

New Retail concept will need investment going forward in smart supply chains, retail technologies, advanced logistics and mobile payments to offer an enhanced experience for both consumers and merchants.

The transaction is scheduled to close in early June.