Alibaba to pay $4.6B for Suning electronics retailer
E-commerce giant gains network of physical stores to distribute its goods
Chinese e-commerce company Alibaba has announced it will spend 28.3 billion yuan ($4.6 billion US) for a stake in Suning Commerce Group Ltd., adding a network of electronics stores to its holdings.
The deal for 19.99 per cent of Suning is the biggest ever for Alibaba, which raised $22 billion US in an IPO in New York last year.
Suning, an electronics chain with 1,600 stores, will take a 1.1 per cent stake in Alibaba for $2.25 billion.
Customers would be able to browse electronics in Suning stores, which are in 290 Chinese cities throughout China, before purchasing them on an Alibaba site.
And Suning's network of physical stores will extend the reach of Alibaba's distribution operations and cut the delivery time of goods to customers.
E-commerce slowdown
As China enters a slowdown, Chinese consumers have pulled back on sales, resulting in slower growth than expected for Alibaba, which runs Taobao.com, China's largest online shopping site, Tmall.com, which sells goods from domestic and international retailers and Alibaba.com, which sells goods from Chinese manufacturers to the world.
Since January, Alibaba has announced 22 deals at a total value of $9.1 billion, but its share price is down 24 per cent this year. It still trades above the $68 list price.
Chair Jack Ma hopes the Suning partnership will help Alibaba grow its sales of electronics and appliances which are forecast to expand by 23 per cent in China by 2018, according to Euromonitor.