US Online Retailer IHerb Taps Alibaba’s Cainiao For New Hong Kong Logistics Facility

US online retailer iHerb is setting up a new warehouse in Hong Kong with Cainiao Smart Logistics Network, the logistics arm of Chinese e-commerce giant Alibaba Group Holding, seeking to boost its order fulfilment capabilities in Asia.

The Hong Kong facility, which will be operated by Cainiao, can process up to 15,000 orders per day, the US firm said on Thursday.

The centre is 500 metres from the Hong Kong International Airport Cargo Terminal and 2 kilometres from the Hong Kong-Zhuhai-Macau Bridge, iHerb said.

The company, which specialises in health and wellness products, is ramping up operations in Hong Kong with the goal of achieving faster delivery in the region, iHerb chief operating officer Miriee Chang said in a statement.

Alibaba decided to scrap the IPO to “double down on its investment in Cainiao” given the unit’s “strategic importance”, Alibaba chairman and co-founder Joe Tsai said at the time. The e-commerce giant also said that it would invest up to US$3.75 billion to buy back the remaining shares from Cainiao’s minority shareholders.

It was crucial for Alibaba to achieve deep integration between Cainiao’s operations and its e-commerce businesses to provide “the most competitive consumer experience”, Tsai also said in March.

Cainiao has been ramping up its operations in Hong Kong as cross-border e-commerce booms.

“Boasting rich resources and advantages in e-commerce logistics, Hong Kong is an important bridge connecting the trade between the East and the West,” Cainiao’s vice-president and general manager of China supply chain Shuai Yong said in a statement on Thursday.

Cainiao last year built a major facility at the Hong Kong International Airport (HKIA), Cainiao Smart Gateway, which occupies a total floor area of 380,000 square metres, and is expected to add 1.7 million tonnes of cargo volume to the city’s airport each year, according to the HKIA.