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MKV@Week28 – E-commerce from Online to Offline and a Tale of Two Taxi Services

This past week has seen a move against the tide as Suning has revealed ongoing construction of its RedBaby’s brick-and-mortar store and some interesting developments have begun in the taxi app arena, even after the big ban.

RedBaby Offline Stores Coming Soon

Big box stores, including the likes of Walmart, Bestbuy and others, have had a hard time since the incarnation of ecommerce. There has been a significant increase in online shopping competing with offline markets during the Thanksgiving shopping season over the past few years. As many as 40% of Americans admitted in a TIME’s report that they go to offline stores to check on the quality and price and then make purchases from online channels.

Things aren’t any easier for Chinese malls. A string of news has recently revealed that many of the brick-and-mortar shopping stores are announcing widespread store closings due to declining revenue and rising costs (mostly related to rent).

While traditional shopping centers are suffering from the commerce climate change, online retailers are enjoying a regular feast of customers brought on by the upbeat nature of ecommerce market. China’s TMall and its iconic annual shopfest embodied this in its Double 11 sales promotion day. According to reports, TMall and Taobao’s last Double 11 day saw transactions worth RMB 19.1 billion (US$ 3 billion). This is twice as much as the American counterpart “Cyber Monday”, which saw proceeds of US$ 1.25 billion in 2011.

And as everyone is going online, one company is looking to do things the other way around. Brace yourself, as Suning is about to construct the first group of brick-and-mortar stores for its children-maternity product subsidiary RedBaby, a company that was acquired by Suning a while back.

Though Suning began to sell RedBaby products in its retail outlets before it finally decided to build dedicated offline stores, I don’t think Suning is really turning RedBaby offline stores into a real business. Still, the step seems to be a natural extension to bring more brand awareness/visibility to RedBaby by way of offline customer interactivity. Also, these stores could provide many value-added services to some of RedBaby’s core users to enhance engagement.

Didi & Kuaidi to forge Alliance

I wrote about China’s recent big ban on taxi apps last week, when local authorities concerns led to a shutter on the services. That said, running into obstacles doesn’t necessarily mean taxi apps are dying soon. Some of them aren’t going without a fight. Kuaidi and Didi are reportedly in talks about an equity partnership.

It makes sense for the two to forge some sort of alliance, as they are the leaders in their respective markets and such a team-up could go a long way to benefit and scale the business altogether.

Additionally, Kuaidi is providing a free self-service taxi ordering terminal in big cities like Beijing, Shanghai and so on. The terminal is quite simple: an Android-based device placed on a cardboard stand.

Briefings

The 360-Sogou deal was said to be ‘true and false’ back and forth over several rounds. Still, the latest development is that Sohu’s CFO Yu Chuyuan and Qihoo’s fearless leader Zhou Hongyi may have held secret talks in the U.S. related to Qihoo taking full control of Sogou for US$ 1.4 billion.

AppChina claimed to turn profitable

Most Android markets in China are still operating at a great loss; however,  AppChina, an Innovation Works portfolio company, recently announced that it has turned a profit. They claim that half of their proceeds are generated via mobile game downloads/co-operating, which is not a surprise given the heated mobile games market.

ETao to offer up hotel metasearch

ETao, the pricing engine from Taobao recently launched a new service similar to Kayak. This could pose a serious challenge to Qunar in China. Qunar should speed up its IPO process to raise more money and expand quickly to respond to its new rival.

Starting this week, mobiSights and MKVentures will be working together to create a weekly newsletter of Chinese tech news. The content will be distributed via multiple channels including MKVentures’ WeChat public account and on mobiSights.

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(Edited by Matt Johns0n)

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