Employees of Tmall.com, a B2C platform operated by Alibaba Group, celebrate in the company's headquarters in Hangzhou, Zhejiang Province, after its turnover recorded an all-time high during the annual online shopping festival on November 11, 2014 (XINHUA)
Complement each other
In the days to come, Suning will set up a super flagship store on Tmall.com, a business-to-customer (B2C) platform operated by Alibaba, while Tmall.com will open a portal ushering consumers to Suning.com, the e-commerce branch of Suning. Meanwhile, Suning will share its own logistics service system with Tmall.com, and allow Tmall.com and Taobao.com, Alibaba's customer-to-customer (C2C) platform, to exploit its offline store resources. In addition, Alibaba will also completely open its financial resources to Suning both online and offline.
According to rough calculations, Suning owns more than 1,600 home appliance stores, more than 3,000 after-sales outlets and about 5,000 franchised service providers and small city service stations. In addition, as statistics from China Electronic Commerce Research Center show, Suning's logistics network is comprised of warehouses covering 4.52 million square meters, four aviation hubs, 12 automated sorting centers and 660 city distribution centers.
Zhuo Saijun, an analyst from Analysys International, an Internet business information service provider, said that what Alibaba valued was the offline resources Suning has accumulated in the past years.
For one thing, Suning can help Alibaba expand its marketing network and strengthen its brand influence in third-tier and fourth-tier cities; for another, the e-commerce titan can lay its hands on the sophisticated logistics and storefront resources Suning possesses, and exert a greater influence among traditional 3C home appliance suppliers and consumers, said Zhuo.
The 28.3-billion yuan paid by Alibaba to Suning will mainly go to the construction of offline stores and logistics system. By equipping Suning's logistics system with automated storage, sorting and delivery facilities, Suning and Alibaba can realize their goal of sharing inventory, combining transportation and distribution by automatizing logistics functions such as B2C delivery, return, transfer and allocation of goods.
"By integrating the complete network of our Cainiao logistics with Suning's own delivery system, and making full use of the edge Alibaba possesses in big data and cloud computing, the best delivery schemes can be figured out immediately, and commodities may reach the hands of consumers within two hours," said Zhang Yong, CEO of Alibaba.
In fact, in response to the slowdown of the e-commerce sector, Alibaba has begun to expand its presence throughout the industrial chain of commodity retailing, as is evident in its cooperation with Intime Department Store, and the establishment of Cainiao, a logistics firm, in partnership with five major privately owned express companies. By infiltrating both the upstream and downstream of commodity transactions, Alibaba is trying to mold an invisible retailing empire covering research and development, production, logistics, payment, and offline trading.
On the other side, Suning can take advantage of Alibaba's online platform to accelerate its Internet-oriented transformation, diversify its item categories, attract more consumers to its offline stores, and gain access to Alibaba's commodity suppliers, said a report of Analysys International.
"As a B2C distributor, Suning's online business is far lagging behind JD.com and has shown a declining tendency in competition," said Zhang Ju, an analyst from Gartner, a leading information technology research and advisory company, noting that Suning is in urgent need of consumers and traffic.
"On the platform of Tmall.com, not only can Suning maintain its brand independence, but it can also engage in traffic exchange with its partner," said Zhang Ju.
Moreover, Alibaba and Suning will eliminate all barriers existent in the process of data sharing. For example, the water purifier that often appears on the shopping lists of consumers on Tmall.com will soon find its way on the goods shelves of Sunning offline stores. Suning Chairman Zhang Jindong anticipates that the partnership will boost the sales volume of Suning and usher in a new era of customization.
