Alibaba (BABA  ), the Chinese e-commerce behemoth, is looking to expand its already sprawling enterprise into new territory: offline shopping.

Alibaba certainly has the earnings to support such an expansion. This past Thursday, Alibaba reported that it enjoyed a one-third increase in profit for Q4. Revenue rose by more than half to reach $12.8 billion. The revenue growth rate, though the slowest of the fiscal year in part due to intensive expansion and related costs, still beat all predictions.

This run of success is only expected to continue. Alibaba's stock value nearly doubled in 2017. Though still smaller than Alphabet (GOOGL  ) and Amazon (AMZN  ), with a trillion dollar market capitalization, Alibaba is now roughly level with its competitor, Tencent Holdings. Tencent beat Alibaba to pass the $500 billion valuation mark in November 2017, but Alibaba recently joined the club, which includes giants like Facebook (FB  ), Apple (AAPL  ), and Microsoft (MSFT  ), as well as Alphabet and Amazon.

It is unlikely that Alibaba will be able to sustain a rapid growth rate indefinitely relying on the online market alone. With so many Chinese consumers already using the internet, Alibaba will have a harder time finding new customers. Alibaba's non-retail arms, like video streaming and cloud computing, and its attempts to expand overseas, are not yet profitable ventures.

Thus Alibaba is seeking to expand into brick-and-mortar retail. Even before Amazon bought Whole Foods and set up Amazon Go, its smart convenience store, Alibaba was exploring the world of what Alibaba founder Jack Ma calls "new retail," a hybrid in which tech is used to enhance the customer's in-store experience. In 2015, Alibaba bought a stake in Suning, an electronics seller. As of early 2017, it controls Intime Retail, a department store and mall manager. And in November Alibaba bought a chunk of Sun Art, a major Chinese grocery. Alibaba is incorporating its technology into the physical stores of its affiliates. But it has also established its own chain of food markets, with five locations and plans to open 30 more before 2019. Alibaba also opened a completely automated self-service minimart in July of 2017.

Alibaba is not alone. Rival Tencent is similarly branching out into non-digital retail. In December of 2017, Tencent bought a stake in a chain of supermarkets, Yonghui Superstores. Tencent is now purchasing a 14% stake for a heft $5.4 billion in Dalian Wanda Commercial Properties, a shopping mall developer. Tencent also recently backed JD.com, which has opened a supermarket with "smart" features like autonomous shopping carts. Tencent is also backing Carrefour, a France-based grocery company that has operations in China.

But while Alibaba is focused on investing in real-world retail, Tencent seems more intent on driving more users to its mobile payment service, WeChat Pay, and expanding the customer base for its cloud computing business.

But both companies will benefit from having more contact with consumers, which helps them harvest valuable user data. Both companies are investing in artificial intelligence, which can be used to sift and analyze the vast quantities of consumer data they have at their disposal.

Rivalry is expected to be fierce going forward, with analysts trying to predict which company will fare better.