The deal represents the Chinese technology company’s fourth investment in an express courier firm.
To date, Alibaba owns 10% of Chinese courier ZTO, 11% of YTO, and 27.9% of Best Logistics.
In 2017, the company also invested an additional $807mn in Cainiao to gain a controlling stake in the firm.
On Monday (11 March), STO Express announced that its controlling shareholder, Shanghai Deyin Investment Holdings Co. Ltd., plans to create a new subsidiary that will own a 29.9% stake in the courier firm.
Alibaba says it will pay 4.66bn yuan (US$693.3mn) for a 49% stake in the new subsidiary and, in turn, it will hold more than 14% of STO Express.
In a statement, Alibaba confirmed its investment in "one of the top five express delivery companies in China".
"We will deepen our existing collaboration with STO in technology, last-mile delivery across China and New Retail logistics," the company said.
"This investment is a step forward in our pursuit of the goal of 24-hour-delivery anywhere in China and 72 hours globally.”