Alibaba Group Holding Ltd. is reportedly considering reducing its minority stake in ZTO Express (Cayman) Inc., according to sources familiar with the situation.

The company has engaged investment banks to evaluate the potential sale of bonds that could be converted into shares in ZTO Express.

Discussions are ongoing, and no final decision has been reached, sources said.

Both Alibaba and ZTO have not issued comments on this matter.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ China’s express delivery market faces intensifying price competition despite volume growth

ZTO’s latest financial results reveal a pattern in China’s logistics sector: while parcel volume grew by 19.1% year-over-year to 8.5 billion parcels in Q1 2025, the average selling price for core express delivery decreased by 7.8% in the same period 1.

The company’s gross profit margin fell to 24.7%, down 5.4% from the previous year, highlighting significant pricing pressures despite strong volume growth 1.

This competitive landscape helps explain why Alibaba might reconsider its investment position, as the original strategic value of the stake, secured when e-commerce delivery demand was rapidly growing, may have evolved as margins compress across the sector.

ZTO continues to invest heavily in its future growth despite these pressures, with capital expenditure of RMB 2 billion in Q1 alone, suggesting a costly race among Chinese logistics providers to maintain market position 1.

2️⃣ Alibaba’s potential divestment reflects a pivot from its 2018 logistics expansion strategy

When Alibaba and Cainiao invested $1.38 billion for their 10% stake in ZTO Express in 2018, it was explicitly part of a strategy to enhance “first and last-mile delivery” capabilities and support Alibaba’s “New Retail” concept integrating online and offline commerce 2.

At the time, the investment aligned with a broader industry trend of e-commerce giants taking greater control over their supply chains, with CEO Daniel Zhang emphasizing ZTO’s importance to “the development of the new digital economy” 2.

The potential partial divestment now, just seven years after this strategic investment, suggests a possible reassessment of how Alibaba wants to structure its logistics relationships in a more competitive environment.

This shift parallels similar strategic reviews at other global e-commerce companies that have had to balance the benefits of vertical integration against the capital intensity of logistics operations.