Firm linked to Alibaba opens China's biggest robot warehouse to help deal with Singles Day demand

Key Points
  • Cainiao, a Chinese logistics firm majority-owned by Alibaba, has opened a warehouse with over 700 robots working in it.
  • It is in preparation for Alibaba's massive Singles Day shopping event on November 11. 
  • On Tuesday, Cainiao unveiled what it would be doing to support the shopping festival.
E-commerce giant Alibaba just opened the largest automated warehouse in China
Alibaba just opened an automated warehouse with 700 robots working in it

A Chinese logistics firm majority-owned by Alibaba has opened a warehouse with over 700 robots working in it to deal with the demand from Singles Day, the huge annual shopping festival run by the e-commerce giant.

The company, Cainiao, on Tuesday unveiled what it would be doing to support the shopping festival, which takes place on Nov. 11 and last year raked in over $25 billion in sales.

The logistics firm runs warehouses and works with delivery companies to get packages to customers. It says it uses technology to make the process more efficient and its publicly stated goal is to eventually deliver to anyone in China within 24 hours and internationally in 72 hours.

Automation in its warehouses has become a huge focus for Cainiao, which is 51 percent owned by Alibaba.

Automation is key in logistics: Alibaba-affiliate Cainiao
Automation is key in logistics: Alibaba-affiliate Cainiao

On Friday, the company officially opened a warehouse in Wuxi, a city in the east of China, which employs 700 so-called automated guided vehicles. Those are robots that can automatically pick up a parcel and deliver them to another part of the warehouse where it is then picked up by a delivery firm. Cainiao says that process has brought significant time savings.

Ben Wang, vice president of Cainiao, told CNBC that the Wuxi facility is the "largest automated warehouse in China," adding that the company is focusing on automating more processes.

Last year on Singles Day — also known as the Double 11 shopping festival — Cainiao processed over 800 million packages. This year it is expecting over a billion, Alibaba CEO Daniel Zhang said earlier this month during an event in Beijing.

"Automation is definitely the key to the future of logistics ... we are putting a lot of effort in trying to do more automation," Wang told CNBC.

The executive added that, for the near-future, humans will work in warehouses alongside robots, but eventually such locations could be fully automated.

"We do envision that, in the future, we will see a main automated warehouse because we do predict the technology will get there soon to see a fully automated warehouse," Wang said.

Alibaba is not alone in trying to bring more automation to warehouses. Amazon uses robots to transport parcels around its fulfillment centers, too. U.K. grocery delivery firm Ocado also uses various automated machines in its warehouses.

Despite rising automation at Cainiao sites, the company continues to post losses. Wang said the priority right now is to continue investing and did not give a timeline for when the firm might be profitable.

"Our focus right now, actually, is to try to build the overall infrastructure for logistic and so this is our key focus right now. Monetization is not our priority right now, we actually are working using the technology to build a better logistic infrastructure and to ensure a better customer experience," Wang said.