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Alibaba and Suning Commerce Enter into Strategic Alliance
Alibaba will spend US$4.6 billion for a stake in Suning as China’s biggest e-commerce operator adds a network of electronics stores in its biggest deal ever.
Alibaba Group and Suning Commerce Group have announced that Alibaba will invest approximately RMB28.3 billion (US$4.63 billion) for a 19.99 percent stake in Suning, one of the largest consumer electronics retail chains in China. After the closing of the investment in Suning, Alibaba will be the second-largest shareholder in the company.
Concurrent with Alibaba’s investment in Suning, Suning will invest up to RMB14 billion (US$2.28 billion) to subscribe for up to 27.8 million newly issued ordinary shares of Alibaba. After the investment, Suning will hold approximately a 1.1 percent interest in Alibaba’s enlarged issued and outstanding share capital.
The strategic collaboration between Alibaba and Suning marks a milestone that signals the further integration of digital and offline retail. This strategic collaboration will bring benefits to hundreds of millions of Chinese consumers who use Alibaba’s online platforms and Suning’s offline channels. By cooperating, Alibaba and Suning will be able to provide holistic and more convenient shopping experiences, as well as superior customer service to users looking to purchase online and through mobile devices.
Chairman Jack Ma is building up Alibaba’s retail presence after a 24 percent drop in the company’s market value this year, bolstering the appeal of e-commerce operations facing slowing growth in China and helping Alibaba compete with JD.com, which specialises in selling electronics.
As part of the transaction, Alibaba and Suning have entered into a strategic collaboration agreement to build on synergies in e-commerce, logistics and incremental business through joint omnichannel initiatives. Under the collaboration, Suning will open a flagship store on Alibaba’s Tmall.com platform, focusing on consumer electronics, home appliances and baby products. The store will offer high-quality product offerings at attractive prices and an unparalleled superior shopping experience. Suning’s flagship store will be a major win for Tmall.com, and reflects Tmall’s status as the premiere platform for brands and retailers who wish to establish their online presence and direct engagement with customers.
In the area of logistics, Suning will become a partner of Cainiao, Alibaba’s logistics affiliate and Suning’s logistics services cover almost all of the 2,800 counties and districts in China. Suning boasts a nationwide logistics network covering over 90 percent of China’s counties including eight national distribution centres, 57 regional distribution centres, 353 city forwarding centres and over 1,700 last-mile delivery stations. With Cainiao’s intelligent delivery solutions and Suning’s well-developed distribution network, customers can expect to receive their orders in as fast as two hours in the near future.