Alibaba buys truck access to internal market
One of the largest beneficiaries of the online shopping boom is spending $400 million on logistics to grab a hold of the central Chinese market.
Chinese e-commerce giant Alibaba has spent HK$2.82 billion (AU$400m) on a deal with appliance maker Haier Electronics to access the company’s broad logistical reach.
Haier has strong delivery links, especially for large-sized items, established with the suppliers to tens of millions living in less-develop cities of China’s interior.
Alibaba made the deal to boost its ability to ship larger items such as household appliances and furniture to the growing market.
It is a two-way deal. For Haier; the partnership with China’s biggest online shop will further its expansion into online retail and logistics, a strategy aimed at giving it an edge in the fierce battle for margins in the world's most fierce appliance market.
“This collaboration with Haier Group is a win-win-win partnership,” Jack Ma, executive chairman of Alibaba Group, said in a statement.
"The logistics for large-size goods is the next nut for Alibaba to crack," said James Roy, an analyst at the Shanghai-based China Market Research Group.
"It is a very complicated and difficult sector to get a lot of control over it. Alibaba has put a lot of sweat into how to build that capability up."
The big spend is the latest bolstering effort by Alibaba, which runs a large range of sites including China’s equivalent of eBay – the Taobao marketplace.
Alibaba is seen to be strengthening its assets and profit margins ahead of its float on the stock market, which is expected to be worth around $15 billion or more.
China's 1.7 trillion yuan (AU$308 billion) online retail market will overtake the United States to become the world's biggest this year, analysts say.