By Lauren Dodillet
Alibaba Group Holding Ltd will invest $4.56 billion into Suning Commerce Group Co Ltd to accumulate a sum 19.99 percent share in the electronics company, a joint statement announced Monday. In return, Suning will purchase a 1.1 percent stake in the Chinese e-commerce giant for $2.2 billion. The move is Alibaba’s biggest step toward integrating online and offline shopping experiences to date.
The Alibaba-Suning alliance will allow customers to try out products in one of Suning’s 1,600 outlets before purchasing an item on Alibaba’s popular online platform TMall via smartphone, which will feature a new section dedicated to Suning’s products. The two companies will also combine the logistical resources of their distribution networks to deliver products in as little as two hours after purchase.
The deal also reinforces Alibaba’s top e-commerce position against Chinese rival JD.com. Previously JD.com has had healthy electronics sales, whereas Alibaba has recently begun to make up for it’s lack of electronics products by linking up with companies like Gome Electrical Appliances Holding Ltd and Haier Electronics Group Co Ltd, both of which manufacture and sell home appliances. The deal with Suning will further boost Alibaba’s electronics sales.
Many companies and policymakers in China have begun touting the effectiveness of the online-to-offline business model. The combination of the sectors has proven lucrative for Alibaba, and Chief Executive Daniel Zhang mentioned in Monday’s joint statement that more deals with offline retailers are feasible in the future, so long as brick-and-mortar partners can bring in additional customers.