E-commerce giant Alibaba is perilously close to hacking the “e” off of ”e-commerce.”
Alibaba Group, one of the largest online retail operations in the world, has decided to invest $692 million in Chinese department store chain Intime Retail Group, the company announced today.
The Internet titan aims to capitalize on its vast knowledge and experience of shopping in cyberspace to improve the physical retail experience and boost sales across Intime’s 36 stores in China.
Alibiba said it would invest $692 million (5.37 billion Hong Kong dollars) for as much as a 25 percent stake in Intime.
An Intime partnership “will allow for the increased integration of online technologies at physical points of sale,” Daniel Zhang, Alibaba’s chief operating officer, said in a statement on Monday.
That means the Hangzhou, China-based Alibaba will bring more tech to Intime’s aisles, facilitating smartphone payments, for example. But it also plans to bring Intime further into the digital space, selling Intime’s wares on its Tmall.com shopping site.
Alibaba has carried out a spate of deals ahead of a planned U.S. IPO, which analysts have predicted could garner the company more than the Facebook IPO’s historic $16 billion.
It’s looking to stay one step ahead of Shenzhen, China-based rival Tencent Holdings, which has also invested in tech upstarts and more traditional sectors like logistics companies and appliance makers.
Alibaba is often compared to Amazon; but with so many working parts, it also resembles sections of PayPal and Google.
Even as the company branches out into sectors like cloud computing, the biggest slice of its revenue still comes from product purchases; it generated a massive $2.8 billion in net income through September, according to quarterly filings, with revenue in that period amounting to $6.7 billion.
Total gross merchandise traded on Alibaba last year was roughly $240 billion, more than double Amazon’s total of around $100 billion.
Shares in Intime soared 17 percent following the Alibaba announcement in early trading Monday.
The gains proved short-lived, however, as investors digested the details of the deal: Alibaba purchased the stock at a 13.7 percent discount to its last traded price on March 26.
Intime’s stock closed at $8.35, down 7.5 percent.