The investment will allow Suning, which operates 1,600 outlets in 289 Chinese cities, to sell products to Alibaba's massive online customer base, an area where the electronics retailer has struggled to expand in recent years. Alibaba will be able to boost its offering in the electronics space, something it has been trying to do for a while.
Both companies will also combine their logistics units which they claim will cover all the 2,800 districts in China. Suning says it has a nationwide logistics network covering over 90 percent of the country. Customers can expect to receive their orders in two hours "in the near future", the retailers said in a statement.
Customers can go into a Suning store and look at the physical product while also receiving after-sale services. They will also be able to pay via a mobile device using Alipay Wallet – the mobile payment system owned by Alibaba affiliate Ant Financial.
The partnership is the latest deal to be made that focuses on China's rapidly-growing online-to-offline (O2O) market – where internet retailers are offering traditional bricks-and-mortar services.
This year Alibaba and its affiliate, Ant Financial, poured nearly $1 million into a joint venture called Koubei, which connects local food merchants to consumers.
The O2O market is heating up with rivals JD.Com, Tencent and Baidu all striking key partnerships. Tencent and Alibaba are both backers of taxi app Didi Kuaidi, while Baidu last year invested in Uber's China operations.
Alibaba and Suning's tie-up comes just days after JD.com said it would buy a 10 percent stake in Chinese supermarket operator Yonghui Superstores for 4.31 billion yuan.
"Customers will be able to enjoy the vast online offerings while having convenient access to physical stores. By maximizing Suning's bricks-and-mortar assets with Alibaba's vibrant ecosystem, we are in the best position to provide the ultimate shopping experience for all our customers," Daniel Zhang, CEO of Alibaba Group, said in a statement.