China’s Alibaba Group Holding said it formed a strategic partnership with Bailian Group, the largest retailer by store numbers to join the e-commerce giant’s drive to use big data to improve and profit from brick-and-mortar sales.
The deal, which does not include any financial investment in Bailian, is the latest in Alibaba’s still nascent efforts to capture a bigger share of the retail market as online sales growth slows.
It has also spent $4.6bn on a minority stake in appliances retailer Suning Commerce Group Co, is leading a $2.6bn bid to take department store and shopping mall operator Intime Retail Group Co private and has bought a stake in grocery chain Sanjiang Shopping Club Co Ltd.
News of the agreement sent shares in Bailian Group firms surging but analysts cautioned it may take several years before returns from using big data can make a significant difference to earnings.
“There is a big push right now across brands to try and figure out how to mix physical and online shopping but gains so far have been limited,” said Shanghai-based retail analyst Ben Cavender at China Market Research Group.
The two firms will initially cooperate on supply chain technology using Alibaba’s big data capabilities and will integrate Alipay payments with Bailian Group’s existing membership program.
Bailian operates 4,700 outlets in 200 cities including supermarkets, convenience stores and pharmacies – more than double the stores owned by Suning, Intime and Sanjiang combined.
A sign of Alibaba Group is seen in Zhejiang province. The firm, which has an active user base of around 500mn, said it wants to tap China’s entire $4.8tn retail economy by developing data-driven management tools for retailers and brands.
