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Alibaba and Suning create a ‘new kind of commerce model’

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Alibaba Group is taking a 19.99% stake in Suning Commerce Group as part of a deal that the two say will change the way commerce happens.

The RMB 28.3bn (£2.87bn) deal makes the Chinese marketplace the second-largest shareholder in Suning, a leader consumer electronics retail chain in China.

But the deal resonates beyond the Chinese market because it’s an example of a new kind of online and offline commerce model. It echoes the collaboration in the UK between eBay and Argos, which enables eBay shoppers to pick up their online purchases from high street branches of the general merchandise retailer.

Alibaba says this is a strategic collaboration that brings online and offline retailer closer together. Between them the two say they will provide more holistic and more convenient shopping experiences as well as improving the customer service available to shoppers buying online and via mobile devices. Suning will open a flagship store on Alibaba’s platform, while Alibaba will benefit from Suning’s well developed logistics network, which covers more than 90% of China’s countries and has eight national distribution centres, 57 regional ones, and more than 1,700 last-mile delivery stations. Marrying these resources with the intelligent delivery solutions that Cainiao, Alibaba’s logistics affiliate, offers should mean, says Alibaba, that customers can soon expect to receive their orders in as little as two hours.

Jack Ma, executive chairman of Alibaba Group , said: “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.” He added: “This alliance will benefit consumers and merchants by cultivating an open and transparent integrated ecosystem that will be the backbone of the future economy.”

Zhang Jindong, Suning’s chairman, said: “The collaboration between Alibaba and Suning is a milestone in China’s retail industry and its influence on ecommerce and offline retailing will be enormous. This collaboration signals a new trend in the Internet age: strengthening China’s traditional industries by leveraging the power of internet. It will also help transform China’s manufacturing industry and broaden the global horizons of Chinese brands.”

Chris Dawson, co-founder and editor of Tamebay, recently acquired by InternetRetailing Media, represented InternetRetailing when he appeared on Sky News Business Tonight discussing the acquisition. Read his analysis of the deal here.

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