Alibaba, Suning Form Strategic Alliance, Create O2O Giant

Alibaba Group Holding Limited and Suning Commerce Group Limited have agreed to form an extensive strategic alliance to create a far-reaching O2O (online-to-offline) e-commerce platform, according to a company announcement.

Alibaba says it will 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, and become the second-largest shareholder in the company.

In turn, Suning will invest up to RMB14 billion (US$2.28 billion) for an approximately 1.1% interest in Alibaba.

"This new alliance brings forth a new commerce model that fully integrates online and offline," says Jack Ma, executive chairman of Alibaba.

Suning will open a flagship store on Alibaba’s platform, focusing on consumer electronics, home appliances and baby products.

Suning, with a logistics network covering almost all of the 2,800 counties and districts in China, will also become a partner of Cainiao, Alibaba’s logistics affiliate.

The two parties will also work together on e-commerce channels, logistics, technology infrastructure, data and other areas to provide Chinese consumers a more convenient shopping experience.

Consumers will be able to examine real products in Suning’s bricks-and-mortar stores, while at the same time order and pay for them on Alibaba.

With their combined extensive logistics network, consumers could receive their orders in as fast as two hours in the near future.

The deal is still pending shareholding and regulatory approval.

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