Illustration: Chen Xia/GT

Chinese e-commerce giant Alibaba Group Holding Ltd announced last week that it will invest HK$5.37 billion ($692 million) in Hong Kong-listed Intime Retail (Group) Co, one of China's leading department store operators. The deal will immediately give Alibaba a 9.9 percent stake in Intime as well as HK$3.7 billion worth of convertible bonds which will raise its equity position to at least 25 percent upon maturity.

Both companies have high hopes for the tie-up, which, according to reports, will see the two sides share client data and logistics resources while also improving their payment services. The terms of the deal are expected to push Alibaba and Intime to the forefront of China's burgeoning online-to-off-line retail market, an important new space where the benefits of e-commerce and traditional bricks-and-mortar shopping are brought together into a cohesive consumer experience. For many in China, the trend toward integration can't come quickly enough - according to a report issued Tuesday by PricewaterhouseCoopers, the popularity of online shopping combined with the spread of mobile technology means that a growing number of local shoppers now demand a "total retail" approach that unites the digital and physical shopping experience.

China's retail market has always been fraught with intense competition, and the scramble to win favor with the country's increasingly savvy shoppers is only becoming more intense as the slowing domestic economy weighs on consumer spending growth. In my opinion, Alibaba and Intime are poised to become early pioneers in an important new area which has the potential to transform the retail shopping experience. Although this is not the first online-to-off-line collaboration seen in China, the size of the deal as well as the profile of Alibaba will likely force others in the country's e-commerce sector to take notice and plot online-to-off-line moves of their own.

Indeed, Alibaba and Intime have already taken early steps toward integrating their business models. On November 11, 2013 - also known as Singles' Day, an annual observance which has quickly grown into the biggest online shopping day of the year in China - shoppers were allowed to pay online for goods inspected at several of Intime's physical locations.

The implications for deeper cooperation between the two businesses are enormous considering the resources each can offer the other. For instance, Alipay, the third-party payment platform run by Alibaba, reportedly had some 300 million registered users by the end of 2013. By the same time, Intime was operating 28 department stores and eight shopping malls across China. By sharing information on the shopping and spending habits of their respective consumers, the two companies can better understand the demands of shoppers and use this information to build market share.

Speaking generally, off-line vendors and physical retail operators can help e-commerce companies overcome several of their long-standing disadvantages. By this, I mean that online-to-off-line ventures can give shoppers the chance to physically inspect and handle goods prior to purchase - something that has long been next to impossible for Internet-based sellers. Real-world shopping also opens the door for face-to-face communication between buyers and merchants. These exchanges can provide retailers with more thorough knowledge of customers' needs while also allowing for more convenient and attentive service.

However, problems are inevitable as online and off-line retailers seek greater connectivity. Pricing will likely be a major stumbling block, at least at first - as many know, online retailers can undercut physical stores owing to their lower overhead costs. Unless bricks-and-mortar sellers can stay competitive in this regard, their stores could become little more than showrooms where buyers can experience products up close before later purchasing them online.

Price strategy breakthroughs could soon be on the horizon though as more companies test the waters with online-to-off-line ventures. Shortly before news broke of Alibaba's deal with Intime, jd.com, another leading e-commerce company, announced plans to integrate its online business with 11,000 convenience stores. Looking ahead, global retailers like Amazon, Wal-Mart and Ikea are also said to be exploring their own strategies to meld online and off-line services. With time, other big retail names are expected to get into the act, thereby creating a rising market tide that could be hard for the industry to resist.

The author is a reporter with the Global Times. bizopinion@globaltimes.com.cn