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Alibaba steps up retail brick-and-mortar strategy with $4.6B buy-in

Alibaba is expanding its retail reach in one large move at one large cost.

August 10, 2015

Alibaba is expanding its retail reach in one large move at one large cost in acquiring 20 percent of an offline rival for $4.6 billion.

In return, the retail competitor, Suning, is paying $2.28 billion to grab a 1.1-percent holding in Alibaba, according to a TechCrunchreport Monday.

The unique partnership and co-investment will help Alibaba keep a strong foothold in the brick-and-mortar environment viaone of China’s top electronic retailers. The offline-online trend, notes TechCrunch, is becoming a much more prolific strategy in the Chinese retail segment.

Suning operates 57 regional distribution centers, 353 forwarding centers and boasts 1,700 delivery stations — an infrastructure that will benefit Alibaba’s logistics partner, Cainiao.

"Over the past two decades, e-commerce has become an inextricable part of the lives of Chinese consumers, and this new alliance brings forth a new commerce model that fully integrates online and offline," TechCrunch quotes Alibaba leader Jack Ma. "This collaboration signals a new trend in the Internet age: Strengthening China’s traditional industries by leveraging the power of Internet," Ma’s counterpart, Suning Chairman Zhang Jindong added via a statement, according to TechCrunch. "It will also help transform China’s manufacturing industry and broaden the global horizons of Chinese brands."