As a result, Alibaba will become Suning's second largest shareholder, with a 19.99% stake.
Suning also said that it would invest $2.25bn in Alibaba in return for a 1.1% stake in the company.
The two firms said in a joint statement that it would combine their strengths in both online and offline commerce.
Suning,
which has about 1,600 shops in China, said customers would be able to
browse electronics in its stores before purchasing the item on Alibaba's
site.
It also said its network of physical stores would join
forces with Alibaba's distribution operations to cut the delivery time
of goods to customers - to as little as two hours.
Zhang Jindong,
Suning's chairman, said: "The collaboration between Alibaba and Suning
is a milestone in China's retail industry and its influence on
e-commerce and offline retailing will be enormous.
"[The deal]
signals a new trend in the internet age: strengthening China's
traditional industries by leveraging the power of [the] internet."
Alibaba
has been seeking to expand its reach into home electronics, teaming up
with retailers Gome and Haier to offer more appliances on its online
marketplace, which is the largest in the world.
Alibaba, founded by Jack Ma, also owns China's largest online shop, Taobao.com.
Under
the collaboration, Suning will open a flagship store on Alibaba's
Tmall.com platform, which focuses on consumer electronics, home
appliances and baby products.
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