The dominant e-commerce retailer in China, Alibaba has been going on a bit of a buying streak itself, snapping up existing brick-and-mortar retailers and logistics providers in its continued efforts to remain nimble and competitive. Alibaba’s strength largely stems from its business model, such that it does not purchase or hold any of the inventory it sells. Rather, for the vast Chinese consumer market, it provides a platform that collects nearly anything people might want to purchase, then ensures that the delivery takes place efficiently and accurately—a persistent challenge in China, where the delivery infrastructure remains insufficient, especially in rural areas. By purchasing controlling shares in physical retailers and logistics providers, Alibaba can coordinate and ensure access to the products and services they already sell for its customers. In a telling comment, the company’s chief executive noted that Alibaba does not “divide the world into real or virtual economies, only the old and the new.” With the belief that physical retailing remains a pertinent and important market for consumers, it is seeking to make it new by infusing traditional retail operations with its advanced technological capabilities.
Source: Amie Tsang and Paul Mozur, The New York Times, January 10, 2017