China’s home appliance retailer Suning is to buy a maternal and infant goods e-commerce website for US$66 million.
The move is intended to broaden its product offer so it can better compete with other e-commerce giants selling general merchandise.
The company’s online platform Suning.com will acquire Redbaby.com.cn adding maternal and infant goods and cosmetics to its offer, said the company’s vice-chairman Sun Weimin.
The deal is the retailer’s first acquisition of an online business and may signal the beginning of a series of buyouts aimed at expanding the company’s core business, analysts said.
In the first half of 2012, the online market for maternal and infant goods in China exceeded 20 billion yuan (US$3.17 billion) in sales, with expected annual growth of 86 per cent. It currently constitutes 4.35 per cent of the total online shopping market.
With more than 7.5 million registered customers, Redbaby.com.cn, founded in 2004, is one of China’s largest business-to-customer shopping sites.
The acquisition includes Redbaby’s binggo.com, a website that sells cosmetics and food targeted at women. The company has had a decline in sales from 2 billion yuan (US$317.36 million) in 2010 to an estimated 1 billion yuan (US$158.68 million) this year, after experiencing challenges with high operating costs and shrinking capital resources.
With Sunning’s 88 delivery centres and nearly 2000 express delivery stations, Redbaby will be able to make further inroads into major cities nationwide and lower its logistics costs, he added.
In China’s cut-throat online marketplace, Suning competes with 360buy, China Dangdang, Amazon.com and Alibaba Group’s Taobao Mall.
Earlier this month China’s appliance retailers including Suning and Gome Electrical Appliances and Beijing Jingdong Century Trading, which owns 360buy.com, became involved in a price war, prompting an investigation by the price supervision bureau of the National Development and Reform Commission, China’s top economic planning agency.
Suning operates a network of about 1700 stores and said earlier this month it will open Suning Expo Super Stores in China that will sell everything from books to daily necessities, in a move to offset slow growth in its core business. The Redbaby offer will be carried through into stores.
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