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Alibaba (BABA) Plans to Open Logistics Center in Bulgaria

Zacks

Chinese e-commerce giant Alibaba Group Holding Limited BABA is set to bolster its foothold in the logistics space.

In its latest push into logistics, the Chinese e-commerce group reportedly has plans to set up a logistics centre in Bulgaria, Xinhua for timely delivery of goods in Europe. Alibaba also plans to offer Bulgarian food and commodities through its online platform.

Per the Chinese news agency report, representatives of Alibaba Group along with GS-Solar Company and GoldPoly Group had met the Bulgarian prime minister – Boyko Borissov – to explore the various investment opportunities in the country.

The government said, “Alibaba Group's ideas for investments are linked to setting up a logistics center to back up their operations in Europe.”


In the last one year, the stock has outperformed the Zacks Internet-Commerce industry. It has returned 37.91% compared with the industry’s return of 31.81%. The stock jumped 2.16% in yesterday’s trading.

Alibaba’s Ongoing Efforts in the Logistics

The move underscores Alibaba’s growing interest in the global logistics business. The company has been exploring this space with investments in couriers and warehouses in recent years.

It has also opened its own logistics service known as Alibaba Logistics. This service assists Chinese brands and merchants with the transportation of goods around the world after they have been sold on one of Alibaba's marketplace sites, such as Taobao or Tmall.

The company has also started leasing containers on ships, allowing Alibaba Logistics to facilitate first-mile shipping for third-party merchants on its marketplace.

Just last week, Alibaba sealed a partnership with Maersk, a unit of Denmark's A.P. Moller-Maersk and the world’s biggest container shipping line, to offer online reservation of space on the latter’s vessels. The service eliminates freight forwarders from the booking process and limits their services to haulage.

The company is leaving no stone unturned to extend its e-commerce reach to mobile, video and distribution business with its eyes now set on China ships.

Our Take

Timeliness has become one of the most important factors in the e-commerce space. As competition intensifies, Alibaba needs to up its game. With the integration of its own logistics service platforms, Alibaba could build a solid logistics platform for small and medium-sized Chinese businesses.

Zacks Rank and Stocks to Consider

Currently, Alibaba is a Zacks Rank #3 (Hold) stock. Some better-ranked stocks in the industry are Itron, Inc. ITRI, sporting a Zacks Rank #1 (Strong Buy) and Mercadolibre, Inc. MELI and Cognex Corporation CGNX carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Itron delivered a positive earnings surprise of 30.55% on average in the past four quarters.

Mercadolibre delivered a positive earnings surprise of 23.58% on average in the past four quarters.

Cognex posted a positive earnings surprise of 24.92% in the trailing four quarters.

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