Suning, Alibaba invest 5b yuan to accelerate shift to online shopping

Chinese e-commerce giant Alibaba Group and Suning, a leading home appliances and consumer electronics retailer, plan to invest 5 billion yuan (HK$5.9 billion) in a partnership aimed at shifting consumers from bricks-and-mortar retailing to the internet.

Compared with China’s total retail sales of about 30 trillion yuan a year, the 3 trillion yuan sales on Alibaba’s e-commerce platform over the past year is only a small part of it, Alibaba’s chief executive Daniel Zhang said at the partnership’s press conference in Beijing on Wednesday.
“Through the partnership between Alibaba and Suning, we hope to boost China’s retail sales to grow faster from 30 trillion yuan to even 300 trillion yuan. This can be achieved by integrating the online and offline sales channels under a digitalisation process,” Zhang said.

Alibaba last August agreed to invest 28.3 billion yuan for a 19.9 per cent stake in Suning, which has more than 1,600 physical outlets and 5,500 after-sales service centres across the nation. The deal was the e-commerce powerhouse’s biggest investment in the bricks-and-mortar retailing sector.

Over the next few years the two companies will invest in logistics and after-sales service so as to further integrate the current online sales channels with physical outlets, said Hou Enlong, chief operating officer of Suning.

In some lower-tier cities, traditional physical shops still dominate as consumers have yet to shift to the internet for buying home appliances and electronics, so the market potential is huge, said Yin Jing, president of the home appliances and consumer electronics business unit at Alibaba.