E-commerce behemoth Alibaba is working with Fonterra and New Zealand Post to track customers' orders using blockchain technology.

The system, which is being trialled, aims to improve supply chain transparency and will be rolled out across Alibaba's online marketplaces if successful.

Fonterra and Australian supplements company Blackmores are the first to use the traceability system on products purchased through Tmall Global.

Alibaba signed a memorandum of understanding with Fonterra and NZ Post last year in Auckland.

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The food safety framework aims to enhance consumer confidence and build a trusted environment for cross-border trade. It is part of the online retail giant's wider strategy to build commerce infrastructure.

Alibaba general manager of Tmall import and export, Alvin Liu, said the framework was created to enhance consumer confidence in response to the significant challenge of food fraud.

Food fraud costs the global food industry US$40 billion ($56b) per year, according to research from Michigan State University.

Consultancy firm PwC estimates 40 per cent of food companies find food fraud difficult to detect within their current methods, and 39 per cent think their products are easy to counterfeit.

"Given the potential of emerging tech, including blockchain, we want to be at the forefront of developing food quality and safety standards across the supply chain," said Fonterra president of greater China Christina Zhu.

Alibaba signed a memorandum of understanding with Fonterra and NZ Post last year in Auckland. Picture / 123R
Alibaba signed a memorandum of understanding with Fonterra and NZ Post last year in Auckland. Picture / 123R

"In China and many other markets, we know consumers want to be able to trace the products they purchase online, so we welcome being a part of creating a globally respected framework that protects the reputation of food companies and gives greater value and consumer confidence."

Alibaba have engaged PwC in New Zealand, Australia and China to help build the food safety framework using blockchain technology.