Alibaba makes an investment in department store operator Intime Retail
One of China’s largest Internet groups has made its first investment in the traditional brick-and-mortar space. Alibaba has backed Intime Retail, a department store operator based in Hong Kong. Intime Retail operates 36 department stores throughout mainland China, each carrying luxury brands like Gucci. Alibaba has taken up a 25% stake in Intime Retail with a $692 million investment. The move is expected to have a significant impact on Alibaba’s initial public offering, which is expected to be launched later this year.
Investment provides Alibaba with 25% stake in Intime Retail
Through its investment in Intime Retail, Alibaba is likely attempting to target high-end consumers that are interested in luxury brands. This particular demographic is eager to spend money on cutting edge technology and trendy fashions, and the demographic has also shown itself to be particularly interested in mobile commerce. Alibaba is expected to engage these consumers with its Alipay application, which allows them to purchase products in physical stores with their smartphones.
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Alipay reigns supreme in the mobile commerce space
Alipay currently boasts of more than 100 million users throughout China. The app represents 70% of China’s estimated $209 billion mobile commerce market and is expected to continue growing in popularity as more consumers embrace mobile commerce. The application is expected to provide Intime Retail with a way to engage mobile consumers more effectively. Over the past few years, China’s department stores have been struggling to appeal to consumers because they offer relatively little benefits over shopping online.
Alibaba continues to compete with Tencent in the mobile space
Alibaba has been competing with Tencent for dominance in China’s mobile commerce sector. The two companies have been releasing new mobile-centric services and investing in promising retail and mobile technology groups in recent months. Alibaba is working to ensure that its initial public offering is as valuable as possible and has opted to pursue dominance in the mobile commerce space in order to achieve this goal. Currently, neither Tencent nor Alibaba have yet to establish a significant lead over one another in the mobile space.