Business and Marketing

Its 20% stake in Suning will give it access to 1,700 same-day delivery stations.

Suning has distribution access to 90% of China.

What if Amazon bought a seat on the board of Best Buy? That's essentially what's happening in China, where Alibaba announced it will pay $4.6 billion for a 20% stake in Suning Commerce Group, which operates more than 1,600 electronics stores in the Middle Kingdom. Best Buy runs close to 1,800 worldwide.

The move by China's biggest—and the world's most profitable—Web marketplace signals the necessity of having immediate delivery options in place for even large, unwieldy merchandise. According to a press release announcing the deal, Suning will provide that capability to Alibaba's third-party sellers via eight national and 57 regional distribution centers covering 90% of China. It operates some 1,700 last-mile delivery stations.

“This new alliance brings forth a new commerce model that fully integrates online and offline,” said Alibaba Executive Chairman Jack Ma in a statement.

Added Suning Chairman Zhang Jindong, “This collaboration signals a new trend in the Internet age: Strengthening China's traditional industries by leveraging the power of Internet.”

In the U.S., Amazon performs same-day delivery in New York, San Diego, and Tampa Bay as a free service to Prime members on orders of $35 or more. Ebay recently ended its same-day delivery experiment, judging it nonessential for its seller community. Deliv, a same-day delivery service, meanwhile, has expanded to eight markets that include Chicago, Los Angeles, and New Jersey.

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