Alibaba Group Holding Ltd. has established itself in the online retail category and also dominates this market. The Chinese e-commerce giant is planning to expand the business in various other fields of retail in order to ensure impressive business all year round. Currently, the business in online retail is slow these days and hence it has decided to venture in offline retail also. Keeping this in mind, Alibaba has declared to buy the Chinese mall operator Intime. Alibaba buying Intime is a significant step for the company to launch itself in the offline market. Intime presently is in charge of 17 shopping malls and 29 departmental stores across the country. After the acquisition takes place, Alibaba will own almost three-quarters of the company. This means that it will also have the power to take decisions for Intime.
Alibaba is undoubtedly one of the leaders in online retail stores. But through the Alibaba Intime deal, the company is planning to use its business expertise to develop offline retail in the same manner. The main aim is to modernize offline retail and make it at par the online e-commerce companies. Alibaba had bought a stake in the company worth $692 million three years back. But not the largest online retailer of China is bidding to make Intime private with the thought of deepening its integration with physical departmental stores. This acquisition will take place at the price of approximately $2.6 billion.
Alibaba buying Intime and its consequences
Offline retail is a $4.5 trillion industry which is on a downfall due to the growing popularity of online shopping. People nowadays prefer buying online and delivery at their doorstep. Due to better convenience and attractive deals on these shopping portals, the sale at physical stores undergoes adverse effects. Therefore through this acquisition, Alibaba is trying to modernize offline retail to expand business in offline and online retail both. The Alibaba Intime deal is proof that offline retail is still relevant. This is in accordance with the fact that e-commerce giants are willing to invest in it. This might also lead to the renewal of offline retail stores.
Alibaba aims to provide retailers its services for reaching new customers, offer better marketing features and promotions, integrate digital payment system, improve inventory management, and mainly, enable engagement with customers stronger as well as long-lasting. Alibaba CEO Daniel Zhang commented on Alibaba buying Intime that retail market need not be divided into the real or virtual market. He believes that retailers who cling on to the old ways might face disruption. Hence physical stores must connect to consumers through mobile reach and improve its technological capability.