The number of consumers who are shopping online via Chinese e-commerce platforms is amazing. However, there is a downside to this online performance in that brick and mortar companies are finding it harder and harder to compete with these companies. Not only are they having to compete with prices, but they also have to compete with the number of items that these companies are offering. This is the case with Suning, an electric retailer who is finding it hard to compete with the likes of Alibaba and other online retailers.
However, Alibaba is offering Suning a new way to approach the market. Alibaba just announced that they are interested in purchasing into the company. They plan to pay around $4.6 billion, which would earn them a 20% stake in Suning. Suning will then be buying into Alibaba with a $2.28 billion sale that would result in a 1.1% stake in Alibaba for the company.
Alibaba’s Plans for Suning
So what does Alibaba plan to do with Suning? This is the question that many people are asking as they do wonder what Alibaba would want with a brick and mortar store when their operations are based on the Internet. According to Daniel Zhang, the chief executive of Alibaba, they are going to use the retail outlets are a way to sell groceries and other items that they have, items that are also considered to be out of the realm of Suning’s electronic business.
“We will also work with them to figure out integrated solutions to do in-store pickup and in-store return to serve our clients.”
This move could completely change the grocery business for Alibaba, as they are going to be reaching more consumers, and perhaps a new base of consumers that were not reachable beforehand.
It is unclear how Suning will work with their new direction in the commerce world, however, consumers are going to see some benefits from this arrangement.
One of the major benefits that are going to be seen with this new arrangement between Suning and Alibaba is that customers are going to have the option of viewing goods in store before purchasing. This can help to reach a number of customers who are still a bit hesitant about goods online. The Suning stores will serve as a display and storage store, while the person can utilize their mobile phone in order to get this delivered to their home.
Customer service is going to improve as well, as Alibaba plans to have Suning be a location for customer service, including returns and the like. It is going to put Alibaba into the light once again, showcasing why they are considered the best e-commerce platform that China has to offer.