Wednesday, January 11, 2017

Alibaba moves more into brick-and-mortar - Ben Cavender

Ben Cavender
Internet giant Alibaba paid US$2.6 billion for the retailer Intimate group, another sign Alibaba wants to leverage its online presence to brick-and-mortar retail operations, says retail analyst Ben Cavender to Reuters. Earlier it bought also leading retailer Suning.

Reuters:
In 2015, it invested $4.6 billion in electronics retailer Suning Commerce Group Co Ltd (002024.SZ), its biggest step to integrate online and offline shopping. 
"(Alibaba) is looking for ways to better leverage the technology it has," said Shanghai-based retail analyst Ben Cavender at China Market Research Group. 
"It's always looking for new models and new ways to drive growth, and it has obviously seen a slowdown in online sales... The advantage Alibaba has over a lot of brick-and mortar retailers is that it has probably better customer data than just about anybody else." 
Alibaba grew into China's largest e-commerce retailer with its Taobao and Tmall platforms. In 2014 it invested $692.25 million into Intime and now owns 27.82 percent, with Shen holding 9.17 percent. The pair plan to buy the rest of Intime using internal cash resources and external debt financing. 
Intime operates 29 department stores and 17 shopping malls in China, mainly in so-called first- and second-tier cities. Its profit fell 21.3 percent in the first-half of 2016, saying e-commerce had transformed the competitive landscape. 
Those malls could allow Alibaba to give brands a physical presence or act as collection points for online shoppers, Cavender said. In turn, department stores could use Alibaba's data on popular clothes or colors to choose brands or styles.
More in Reuters.

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