Excellent career progression opportunities.
The news came unexpectedly, but in the context of the Chinese retail industry, it is by no means coincidental.
The consumer market as a whole is rather weak, while competition over distribution channels is unprecedentedly high. In contrast, e-commerce companies are having it much easier. Statistics by iResearch, a consulting firm, showed that online transactions ballooned by The vulnerability of the traditional retail industry in China stands in contrast with the strength of many brick-and-mortar stores in the US, which have developed into multichannel sellers in order to compete with pure e-commerce competitors.
In China, the level of integration of the retail industry is so low that traditional retailers have suffered a fatal blow from the rise of e-commerce players. Even though many companies have made efforts to transform themselves, it has been extremely hard for them to open their own channels online because they are either too small in size or too inexperienced to manage such transitions.
On the other hand, the government believes that from a macroeconomic perspective, a healthy retail industry should have a mix of e-commerce companies as well as offline stores.
Therefore, it is trying to clean up the e-commerce sector, cracking down on fake products and imposing taxes on online sellers. These measures will influence the way e-commerce companies operate, possibly forcing them to look for opportunities offline.
The uniqueness of the Chinese market has motivated e-commerce companies and traditional retailers to work together and complement each other. For Alibaba, the investment in Suning is an important step in its efforts to protect its advantage over rivals in China, notably JD.
Operating like Amazon, JD.
In the face of the threat, Alibaba needs to team up with offline retailers on logistics, especially on the delivery of large-sized products like home appliances. For them, Suning is a good choice because the company has a strong brand image offline and it has also embraced e-commerce with an online offering of its own in the past two years.
To make the partnership work, the two companies need to connect on a deeper level genetically. One negative example is the acquisition of AOL by Time Warner—a promising merger that ended as a disastrous failure, partially due to the incompatibility of their business cultures.
From the macro level, a robust retail industry should consist of a healthy e-commerce market and an integrated and efficient offline market.
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