Online meets offline: Chinese E-commerce giant Alibaba buys nearly 20% stake in Electronics Retailer Suning for USD 4.6 billion, head towards a strategic alliance

Alibaba Group Holding Limited (BABA) and Suning Commerce Group Limited ("Suning") today announced that Alibaba will invest approximately US $4.63 billion for a 19.99% stake in Suning which ranks as one of the largest consumer electronics retail chains in China. Post this investment, Alibaba will be the second-largest shareholder in the company.

Image courtesy: europe.chinadaily.com.cn

The deal stands out differently as even Suning will invest up to US $2.28 billion to buy 27.8 million newly issued ordinary shares of Alibaba attaining a 1.1% interest stake in Alibaba’s enlarged issued and outstanding share capital.

This deal marks a new milestone in the integration of digital and offline retail. This strategic collaboration will benefit the consumers who frequently use Alibaba’s online platform and Suning’s offline channels. This will leverage the online power as well the physical location of the stores enabling a much smoother logistics, also for the regular Suning regular visitors it would be an advantage to shop online from the stores that they trust. The move can give Alibaba an advantage over its second ranked competitor JD.com.

Recently in India also, Shoppers Stop has had tied up with Snapdeal for its online store and selling. It again signifies a case where some traditional industries get a boost with the power of E-commerce.