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Alibaba will eventually have a 25% stake in the department store operator
As much as online shopping has changed the retail game forever, there seems to be a lot of talk recently about bridging the gap between online and brick and mortar shopping. Perhaps retailers have begun to realize that there are benefits to both, and that they shouldn't just focus on one over the other.
Chinese e-commerce giant Alibaba seems have gotten the message, and looks to want to bring its online ecosystem to the offline world. It is going to do that with a big investment in Chinese department store operator Intime.
Alibaba is going to be putting a total of 5.37 billion Hong Kong dollars into Intime, it was revealed in a blog post put up on Sunday. The company will initially take a 9.9% stake in Intime for $214 million. It will also acquire $478 million in convertible bonds, which will, eventually, give Alibaba at least a 25% stake in Intime.
In total, Alibaba is taking an investment that is the equivalent of $692 million U.S. dollars.
So what will this new partnership look like?
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According to the Intime press release, the two companies will "integrate the advantages of resources, construct an open future commercial infrastructure system online and offline, and open the whole society to help promote commercial entities bi-directional integration with the Internet economy."
In addition, they will also be creating a joint venture company that will help develop online-to-offline business in shopping malls, department stores and supermarkets around China.
It's easy to see why Alibaba would look to Intime as its retailer partner, considering the size of the company. As of last year, Intime currently operates 36 stores, including 28 department stores and eight shopping centers.
Alibaba has been on a little bit of a shopping spree ever since the company started the process for eventually going public in the U.S. after it could not come to terms with regulators in Hong Kong. The company could raise up to $18 billion in that IPO.
The move was a way for Alibaba to compete against ones of its biggest rivals in China: Tencent, the company behind mobile messaging giant WeChat. That investment came after Tencent has taken a 15% stake in online direct sales company JD.com, a move that many saw as a direct hit against Alibaba given that JD is China's second biggest e-commerce company.
Obviously Alibaba has some competition for dominance in China, and investments into companies like Tango and Intime are meant to help it stay ahead of the curve.
(Image source: intime.com)
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Founded in September 2009, Tango is a free mobile video calling service that connects family and friends wherever they are. Tango offers high-quality video calling for iOS and Android devices and works over 3G, 4G, and Wi-Fi. More than 10 million people in 190 countries are using Tango to communicate every day, stay connected, and share special moments as they happen. Download the Tango application for free in the App Store and Android Market. Tango is based in Palo Alto, California.