IDG Contributor Network: Faustian bargain: Regret awaits Metro/Alibaba deal
Last week, one of the world's largest retailers cut a deal with Alibaba, China's global e-commerce giant. German retail chain Metro Group will turn over its online operation in China to Alibaba. Unfortunately, this is becoming a familiar tale in e-tail, it just about never ends well.
This kind of alliance only makes sense when the retailer doesn't mind surrendering the territory involved forever. Alas, retailers generally use these kind of deals in the opposite way — for extremely important segments, assuming they can move in directly down the road, after their partner has done the dirty work for a while. Gee, what's wrong with this picture?
Metro is an extremely influential chain, and it's the planet's seventh-largest merchant, with about 2,200 stores in 30 countries. It ka-chinged the equivalent of $87 billion last year and has a quarter-of-a-million people on its payroll. In short, this is a powerhouse retailer with substantial global reach and, perhaps more to the point, one of the most revered IT operations anywhere in retail.
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