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An early adopter takes hands-on with the shooting game named "VR Shoot" that powered by SweetTech's "room-scale tracking" solution at the China (Beijing) Attractions Expo 2016 held in Beijing, March 15, 2016. [Liu Zheng/chinadaily.com.cn]

Chinese e-commerce giant Alibaba Group Holding Ltd on Thursday announced its own virtual reality (VR) research lab, dubbed GnomeMagic Lab, which aims to step into the "white-hot" industry.

Alibaba, which claims 400 million users across its services, said that GnomeMagic Lab will work with its shopping businesses to integrate VR into the shopping experience, according to technology website techcrunch.com. It also will explore other applications, such as video, with the company's online video arm, Youku Tudou, and entertainment via Alibaba Pictures.

"VR could enable customers to shop virtually on New York's Fifth Avenue from the comfort of their own home," said former Facebook engineer Zhao Haiping, who is on Alibaba's GnomeMagic Lab team, in a press release.

According to Alibaba, the lab's first project is to establish the world's largest three-dimensional (3D) commodity warehouse. The company's engineers have already created VR visuals for hundreds of products, and a standardization tool is expected to be developed for merchants to swiftly accomplish 3D modeling for their products.

Earlier this year, a Dow Jones report said Alibaba led $794 million in funding for Magic Leap Inc, a US company that develops technologies that show 3D images on real world objects.

According to industry consultancy firm iResearch Consulting Group, this year the Chinese VR market will exceed 5.6 billion yuan ($880 million) in revenue. That compares to revenues of 1.5 billion yuan in 2015. It also estimates annual revenue is on track to break 55 billion yuan by 2020.