Chinese company Alibaba makes the move into bricks-and-mortar with a $3 bln purchase of a stake in Sun Art, China's top retailer. Graham Mackay reports.
It's a titan of the industry that some see as the beginning of the end for bricks-and-mortar shopping... Yet the Chinese online retail giant Alibaba just announced it's spending nearly 3 billion dollars on a major stake in Sun Art - the country's top hypermarket player. (SOUNDBITE) (English) SUN ART CHIEF EXECUTIVE OFFICER, LUDOVIC HOLINIER, SAYING: "I am thrilled to welcome our new shareholders that will enable us to write a new chapter of Sun Art's story. We base our success on being both global and local, on top of this we can now say we are digital, It's one of the largest investments of its kind for Alibaba eccentric celebrity CEO Jack Ma. With more than 8 percent market share - Sun Art is a household name in China, and clearly profitable. (SOUNDBITE) (English) IG, MARKET ANALYST, CHRIS BEAUCHAMP, SAYING: "I think it's taking a path that we've seen other major online retailers take a course where Amazon goes Alibaba tends to follow not soon afterwards. They're looking to just broaden their presence within the economy itself, within the broader consumer environment. This kind of move tends to make sense it means you've got easier places to send and receive goods." But some analysts warn Ma needs to tread carefully. Alibaba is snapping up its stake in the business for a 24 percent discount... A sign for some that the writing is indeed on the wall for the offline shopping model. Other say moving further into uncharted territory could be a challenge... And that issues like product licenses, tax and higher labour costs - All things that Alibaba hasn't had to worry about in the past - will soon begin to add up.