Suning Appliance buys Redbaby as part of big retail plans

Suning Appliance, China's largest electrical appliance retailer, has bought a leading e-commerce seller of maternal and baby products, taking it one step closer to its goal of becoming the country's answer to Walmart and Amazon.

The company runs Redbaby.com.cn China's largest online seller of baby formula, food, diapers and toys, as well as Binggo.com a skincare and cosmetics online shop.

Suning hopes the deal will help it boost its female customer base, enrich its product mix and achieve its annual online sales target.

The company, which ventured into the e-commerce sector in 2009, has set a sales target of as much as 20 billion yuan (HK$24.5 billion) for its online platform Suning.com for this year. But it achieved only 5.3 billion yuan in sales in the first half due to intense market competition and the sluggish economic environment.

After the latest acquisition, the company said it was still on track to hit the sales target.

The two websites under Redbaby will continue independently and their products will also be sold in part of Suning's street-level shops.

"Our target is to achieve 10 billion of annual sales for the segment of maternity and baby products by the year of 2015," said Li Bin, deputy president of Suning.com

Suning Appliance, the major rival of Gome Electrical Appliances, has rolled out an ambitious plan to become a top retailer that combines the business models of American supermarket chain Wal-Mart and e-commerce operator Amazon.

The company will soon open shops in Beijing, Shanghai, Guangzhou and Nanjing to showcase the new product mix, which has been extended from electrical appliances to video games, financial services, car products and gymnastic equipment.

The new shops, to be called Expo outlets, will be increased to 300 by 2015.

Meanwhile, Suning is also testing the water in other areas of the retailing sector through Japanese home appliance brand Laox, in which it acquired a controlling stake in June.

The company has opened several Laox Living Plaza shops over the past few months in first-tier cities selling products from imported cosmetics to toys and kitchenware.

Suning sees e-commerce as a key element of its transformation plan.

The company has earmarked 4.7 billion yuan to build warehouses and enhance its logistic services across the nation.

Suning, which operates more than 1,700 shops, aims to double the number to 3,500 by 2020. Many will be transformed from home appliance outlets to comprehensive stores.