Chinese online retail giant Alibaba and its logistics arm Cainiao Network Technology are investing US$1.38bn in courier firm ZTO Express in a move that will boost the group's logistics capability in the highly competitive domestic market.

ZTO is a fast-growing express delivery company in China. Its service capabilities include line-haul, last-mile, express delivery, in-city delivery, fulfillment and warehousing. Recent initiatives in building its logistics eco-system have been in areas including LTL transportation services, international logistics, and supply-chain management.

Alibaba and Cainiao will take a 10% equity stake in the company to help boost capability for its New Retail concept, which promotes seamless integration between online and offline commerce. The investment will further support both Cainiao and ZTO's focus on building up first and last-mile pickup and delivery capabilities, warehouse management, cross-border logistics and technology-driven smart solutions.

"ZTO has been an important partner to Alibaba Group and Cainiao Network in the development of the new digital economy," says Daniel Zhang, CEO of Alibaba Group and chairman of Cainiao Network. "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."

Cainiao claims to have the world's leading smart logistics network. Its technological innovation for the industry includes e-shipping labels and smart sorting. It has the capability to provide same-day and next-day delivery in nearly 1,500 districts and counties in China, and now operates Cainiao Post, a network of last-mile stations covering communities in top 100 cities and around 1,800 university campuses across the country.

Lin Wan, president of Cainiao Network adds: "The logistics industry in China is highly competitive with its own unique features and presents plenty of new opportunities ahead. This investment will enable Cainiao and ZTO to supercharge joint innovation and development to accelerate digitalisation of the industry."