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Nov. 21 (NBD) -- The Internet giant Alibaba announced on Monday that it would invest about HK$22.4 billion (2.88 billion U.S. dollars) in Sun Art Retail Group Limited, acquiring 36.16 percent of the company's direct and indirect holdings. The e-commerce company expects to improve its offline system and grab more offline market shares. 

According to the announcement made by Sun Art, Alibaba's stake purchase includes two deals. Taobao China Holding Limited will pay HK$16.13 billion (2.08 billion U.S. dollars) for a 26.02 percent stake of Sun Art, and at the same time buys in 19.9 percent shares of Sun Art's biggest shareholder JiXing, a deal worth HK$6.29 billion (806.45 million U.S. dollars). 

Known as China's top hypermarket operator, the Hong Kong listed Sun Art is operating 446 stores across 29 provinces, cities and autonomous regions, under the brands of Auchan and RT-Mart.

In the first three quarters of this year, the company reported a revenue of 79.03 billion yuan (11.91 billion U.S. dollars), up 2.2 percent year on year, and a net profit of 2.33 billion yuan (351.14 million U.S. dollars), and a year on year increase of 14 percent.

Sun Art ranks first in terms of revenue among 12 supermarkets in China and its revenue is almost twice as much as that of Yonghui Superstore at the second spot, according to the statistics from Linkshop.com. 

Alibaba also inked a cooperation agreement with Auchan China, RT-Mart China and Sun Art, to provide them with its on-demand delivery service — “Taobao Daojia”. The chain stores of the supermarket operator will have access to Alibaba's online platform to realize the data sharing, with integrated of systems and Point of Sale hardware offered by the Internet giant.

Alibaba's stake purchase is considered as a part of its "New Retail Strategy" put forward by Jack Ma, founder of the Group.

The new deal came within one week after the Double 11 Shopping Festival. Zhang Yong, CEO of Alibaba, told NBD that Alibaba's New Retail Strategy makes it clear that the company will work in collaboration with offline retailers in important industries. 

Depite the strategic cooperation the e-commerce giant has forged with Intime Retail, Suning, Sanjiang Shopping Club and Bailian Group and other traditional retailer giants, its supermarket business still seems to be a shortcoming aspect to some industry insiders.

Since Sun Art owns a large number of chain stores and a complete offline system, said Cao Lei, Director of China E-commerce Research Center, the deal will help Alibaba quicken the deployment of New Retail Strategy in the offline market.

In addition, Alibaba's supply chain will be improved through the new partnership, Cao added.

He further noted that the E-Lufa service as RT-Mart's technology platform has advantages in supply chain, inventory, talent pool and other fields, which will help Alibaba to cover its shortages.

Cao introduced that Alibaba intended to build a new supply chain like Cainiao logistics after buying in stakes of Sanjiang, RT-Mart and Hema Xiansheng.

Since the complicity and logistics of supply chains vary from one to another especially in the fast moving consumer goods field, different supply chains are likely to complement each other as well as compete with one another. This leaves a great challenge for the e-commerce giant to integrate resources of supply chains, Cao said.

Email: zhanglingxiao@mnd.com.cn