Proving the Business Case for the Internet of Things

Cainiao IoT helped Alibaba prepare for shopping festival

Steve Rogerson
November 13, 2018



Chinese shopping giant Alibaba’s smart logistics company Cainiao Network used IoT and robotics technologies to prepare for this year’s 11.11 global shopping festival. Last year, the one-day event brought in $25.3bn in gross merchandise volume, more than double that of Black Friday and Cyber Monday combined.
 
In 2017, the smart logistics company delivered 812 million orders. This year, Cainiao was expecting even more. To prepare for the deluge of packages, Cainiao rolled out a host of initiatives and advanced technologies.
 
“Consumers increasingly want faster, better delivery, so that’s what we’re doing,” Cainiao vice president Ben Wang said. “This year, we’re striving to achieve a new high, leveraging the beauty of scale and technology.”
 
Cainiao recently opened the biggest automated warehouse in China, in the eastern city of Wuxi. It is part of the company’s first Future Park, a logistics complex run by IoT applications, big data, edge computing and artificial intelligence to boost efficiencies in the shipping process.
 
Powered by IoT connectivity, Cainiao uses 700 robots – automated guided vehicles – to fulfil orders. The system directs the AGVs to drive, load and unload while planning the best routes to distribute parcels and avoid collision. The robots allow for 50% more orders to be processed within a given time period than a traditional warehouse, Cainiao said.
 
There is also the Sky Eye programme, a cloud-based, video-monitoring system that was used by Cainiao’s logistics partners for this year’s 11.11. Leveraging computer vision technology and algorithms, Sky Eye monitors warehouse operations to look for kinks in the logistics process and sends updates to workers so they can be fixed in real time.
 
In addition, Cainiao partnered with 15 major Chinese express-courier companies to crunch logistics data so manpower and transportation ware used more efficiently in the 200,000 delivery stations used for to support 11.11. The data also helped increase the use of resources, avoid bottlenecks and management of locally held inventories.
 
AliExpress, which sells Chinese goods to consumers overseas, and Tmall World, a site aimed at Chinese consumers living abroad, took on a bigger role in this year’s 11.11. In expectation of an increase in cross-border shipments, Cainiao chartered 51 flights to Western Europe, Russia and south-east Asia, as well as about 1000 shipping containers set for buyers in south-east Asia and other destinations by sea.
 
On the inbound side, Cainiao prepared bonded warehouses across China that cover over a million square metres. That’s up 80% from last year, the company said. The bonded warehouses, which house specific products that have been given preferential tax treatment by the Chinese government, were used to store goods at warehouses nearest to the consumers most likely to order them, which helped cut delivery times.
 
This year was also the first time that goods ordered during 11.11 were delivered directly from stores to customers, a sign that new retail advances continue to play a role in the festival. Short-distance delivery services were available in over 280 cities.