Alibaba invests over $1.3 billion to expand its hold in Brick and Mortar retail

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Updated: February 12, 2018 11:41:00 AM

Alibaba took 15 percent equity stake in Beijing Easyhome Furnishing for $867 million, and pumped another $486 million into Shiji Retail Information Technology -- a big data firm focused on retail.

Alibaba invests in brick and mortar

Chinese e-commerce giant Alibaba has further strengthened its presence in the physical or brick-and-mortar retail with over $1.3 billion investments announced over the weekend. The fresh investments will help it develop its ‘new retail’ strategy which combines online and offline models. Alibaba took 15 percent equity stake in Beijing Easyhome Furnishing for $867 million, and pumped another $486 million into Shiji Retail Information Technology — a big data firm focused on retail.

According to a KPMG report released last November, 33 percent of online shoppers in China said that seeing products at a physical store led to a digital purchase.

Easyhome has 223 stores in 29 provinces, autonomous regions and municipalities across China. The company claims to have over 580 million active monthly users on its e-commerce platform. The tie-up will provide both online and offline customers with a comprehensive home-improvement solution, Alibaba said.

This is Alibaba’s fourth offline major investment in brick and mortar chain. In November last year, Alibaba acquired 36% stake in Sun Art Retail, one of the the largest hypermarket operators in China. Alibaba also has a stake in electronics chain Suning Commerce Group, as well as in department store powerhouse Intime Retail. Not just that, Alibaba operates the hyperlocal Hema supermarket chain and has invested in Home Times furniture stores in Hangzhou.

Brick and mortar stores are facing relentless competition from online retailers and are reeling under eroding sales. Worldover, several big and iconic chains have either shut down or scaled down their operations. However, that does not seem to be the case in China. The physical stores not only have a role to play in the world of retail, but they are complementing the online sales model. In China, brick-and-mortar shops are increasingly driving online sales in an offline-to-online process.

It’s not just offline to online model Alibaba is toying with. It is also trying the concept of unmanned shops. Last year, the tech giant showed off its own cashier-less shop, which utilizes QR code scanning and facial recognition to facilitate automatic payment and purchasing.

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