Alibaba and Suning join forces
Chinese online giant Alibaba is to invest approximately RMB28.3 billion (US$4.63 billion) for a 19.99% stake in Suning, one of the largest consumer electronics retail chains in China. This will make Alibaba the second-largest shareholder in the company. Suning is also to 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% interest in Alibaba’s enlarged issued and outstanding share capital.
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 more convenient shopping experiences, as well as superior customer service to users looking to purchase online and through mobile devices.
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 omni-channel 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% of China’s counties including eight national distribution centers, 57 regional distribution centers, 353 city forwarding centers 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.
The collaboration will provide many tangible benefits to consumers. For example, consumers will be able to have a physical experience with the product in store, while at the same time being able to operate other areas – such as ordering and payment – through their own mobile device. Not only will customers be able to enjoy the tremendous amount of offerings and pay directly via the Alipay Wallet on their mobile device, they will also be able to experience the products and after-sale services in person in Suning’s over 1,600 physical retail stores in 289 cities across China. In addition, Suning’s retail stores, as well as its over 3,000 after-sales service locations and over 5,000 affiliate servicing partners in 320 cities across China will also be able to perform important after-sale maintenance or repair services to Tmall consumers.
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.” Ma 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 e-commerce 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.”
