Alibaba Group Holding Ltd (NYSE:BABA) Bets Big on Retail

After issuing a $7 billion bond in late November, Alibaba Group Holding Ltd (NYSE:BABA) has set its sight firmly on the retail industry. According to CEO, Daniel Zhang, the group is investing in physical retail stores. Zhang says that the group intends to assist physical retailers to digitize their services, after which they will be absorbed into the ecommerce platform. With AliPay, new physical retailers will have a seamless experience as they trade on Alibaba.com. The group is also keen in expanding into Russia among other markets.

In recent years, the group has focused its energy on retail. In November, Alibaba announced plans to buy a 36% shareholding in Sun Art Group, which is the largest supermarkets and hypermarkets operator in China. The group’s investment in Sun Art stands at $2.9 billion.

Brick and mortar retail business seems to be Alibaba’s next frontier. It has already invested over $8 billion in physical retail stores in less than two years. One of these investments is the acquisition of a departmental store Intime, which cost the group $2.6 billion. The company also partnered with Hema Supermarkets to spearhead its ‘retail’ vision.

Additionally, Alibaba is keen on expanding its global footprint, with a target of two billion customers. However, Zhang maintains that South East Asia is Alibaba’s most important market. The group has a customer base of 500 million and is present in a number of countries, including Russia and Spain. In India, Alibaba is not interested in ecommerce but in payments, having set up a payments system in the country.

Alibaba is also betting on cloud computing and film entertainment. Other than this, the group is a serial investor in other companies. These include businesses in the technology logistics space among others.

Zhang, who is not as famous as Alibaba’s founder and executive chairman Jack Ma, runs the day to day operations of the ecommerce firm. He says he expects Alibaba to implement its retail vision at a global level after positioning itself well in the Chinese market.

 

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Culver Stinson

Culver Stinson

Stinson is US Markets Daily’s Senior Producer for News & Public Affairs.