China’s E-tailers Battle for Online-to-Offline Market

on April 21 2014 | in Digital Retail | by | with No Comments

Alibaba, Intime Retail, O2O, online to offline retail

The growing online-to-offline (O2O) market is drawing the interest of China’s largest e-commerce services.

The trend blurs the distinction between online and offline consumption, and is gaining steam. According to Chen Yougang, a partner at the McKinsey consulting firm, it will soon be crucial for businesses to maintain an O2O presence.

“In [the] future, O2O will be indispensable if a retailer wants to survive market competition. By it’s nature, O2O fulfills consumers’ demand through the online and offline channels at the same time,” Chen said in an interview with the South China Morning Post.

China’s largest e-commerce operator, Alibaba, joined the race last month by purchasing 25 percent of the department store operator Intime Retail for HK$5.37 billion. The move will allow the businesses to “share their membership resources and logistics network and enhance the payment experience.”

According to Alibaba’s chief operating officer, Daniel Zhang Yong, the purchase was spurred by changing consumer sentiment.

“Over the past 15 years, Alibaba has been focusing on its online business. However, the relationship between the internet and consumers has changed substantially, and we need to adapt to that change,” said Zhang.

Tencent, Alibaba’s fellow e-commerce giant, is also negotiating with a high-ranked shopping center firm “to expand its business empire from the online to the offline market.” also has plans to work with over 10,000 convenience stores in major Chinese cities.

Zhang also noted the importance of m-commerce in adapting to the trend. Personal computers aren’t required to shop online anymore, thanks to the popularity of smartphones, tablets, and other mobile devices. In fact, there were 1.24 billion subscribers to mobile devices in February, 839.05 million of which used the internet on their devices.

image credit: soory

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