Chinese e-commerce king Alibaba Group Holding Ltd. is making a play for brick-and-mortar domination on its own turf.
The company said Monday that it’s spending 28.3 billion yuan ($4.6 billion) to become the second-largest shareholder in Suning, an electronics chain with more than 1,600 retail stores in 298 cities across China. In return, Suning will shell out 14 billion yuan ($2.28 billion) for up to 2.78 million newly issued Alibaba shares.
Jack Ma, executive chairman of Alibaba, described this alliance as one that “brings forth a new commerce model that fully integrates online and offline” and said it will “benefit consumers and merchants by cultivating an open and transparent integrated ecosystem that will be the backbone of the future economy.”
Under the union, Suning will open a store on Tmall.com, Alibaba’s business-to-consumer platform, selling electronics, home appliances and baby products. Plus, Suning’s nationwide network of distribution centers and more than 1,700 last-mile delivery stations will join Cainiao, Alibaba’s network of logistics affiliates. This means customers can expect to receive orders in as fast as two hours in the near future.
In addition, the alliance means customers can go into a Suning location to check out a product in person before ordering and paying for it using Alibaba’s Alipay Wallet on their mobile device, while the stores will also offer after-sale maintenance or repair services to Tmall shoppers.
Daniel Zhang, CEO of Alibaba Group, said, “We are seeing the integration of e-commerce with traditional commerce where consumers are able to enjoy a more engaged, omnichannel and seamless shopping experience. Customers will be able to enjoy the vast online offerings while having convenient access to physical stores.”
“The collaboration between Alibaba and Suning is a milestone in China’s retail industry and its influence on e-commerce and offline retailing will be enormous,” said Zhang Jindong, Suning’s chairman. “This collaboration signals a new trend in the Internet age: Strengthening China’s traditional industries by leveraging the power of the Internet. It will also help transform China’s manufacturing industry and broaden the global horizons of Chinese brands.”
Zhang added, “By maximizing Suning’s bricks-and-mortar assets with Alibaba’s vibrant ecosystem, we are in the best position to provide the ultimate shopping experience for all our customers.”