Why online retail firms like Amazon, Alibaba make offline buys

Until now they defined their identity and earned their spurs by differentiating themselves in convenience and pricing from their brick-and-mortar cousins, but can online retailers look to subsume them for the next stage of their evolution?

India’s fast-growing online retailers, who are bubbling with energy and flush with investor money secured at eyepopping valuation multiples, could potentially buy department store chains, a move observers say, will precipitate consolidation in the market and redefine the sector.

Such an outcome would be a logical step, some argue, because online retailers are rapidly gaining market share as well as mind-share, putting them in a position to take over leadership of the industry.

“I think online players should make offline acquisitions as the momentum is with them right now,” said Arvind Singhal, chairman of retail advisory firm Technopak. “A big chunk of customers still buy offline and acquiring a brick-and-mortar chain could be a powerful customer acquisition tool for online sites in certain categories.”

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