Alibaba buys US$866 million stake in Chinese furniture retailer Easyhome

PUBLISHED : Sunday, 11 February, 2018, 6:56pm
UPDATED : Sunday, 11 February, 2018, 11:43pm

Alibaba Group Holding will pay about 5.45 billion yuan (US$866 million) for a 15 per cent stake in Beijing Easyhome Furnishing Chain Store, the operator of China’s second largest home improvement supplies and furniture chain.

It is the latest move in the e-commerce titan’s online-to-offline strategy, following its US$2.9 billion investment in Sun Art Retail, which runs one of China’s largest hypermarket chains, in November.

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Alibaba said on Sunday it will support the digital transformation of Easyhome’s 223 stores in 29 Chinese provinces, autonomous regions and municipalities, through its cloud and enterprise systems, and logistics platform. It will also be able to provide “consumer insights”.

“From home design to refurbishment projects, the two parties will provide customers with end-to-end home improvement solutions,” it added.

Beijing Easyhome said in a separate statement it has received a combined 13 billion yuan from a group of investors, including Alibaba, Chinese insurer Taikang Group, Yunfeng Capital – which is backed by Alibaba’s founder Jack Ma – and Beijing Harvest Capital.

The retailer said it plans to fully integrate its online and offline operations by 2022. By then it aims to have over 600 stores nationwide and gross merchandise volume – total sales through its platforms – of more than 100 billion yuan.

Alibaba has prioritised its efforts to expand into physical retail in recent years, investing billions in grocery chains and shopping malls. Part of the “New Retail” strategy is to attract customers to its online platform by bringing enhanced digital capabilities to the brick-and-mortar stores.

The transformation echoes that of US e-commerce behemoth, which in June surprised shoppers with its US$13.7 billion acquisition of high-end American grocery store Whole Foods.

“We want to redefine the physical retail experience and transform from physical to digital, ” said Alibaba CEO Daniel Zhang after last year’s Sun Art Retail acquisition.

In January 2017, the company led a US$2.5 billion bid to buy out Chinese department store chain Intime Retail.

In 2015, it bought a 20 per cent stake in Chinese electronics retailer Sunning Commerce Group for US$4.6 billion.

Alibaba owns the South China Morning Post.