Alibaba gets complete hole in Chinese supermarket operator with new investment of $ 3.6 billion


Alibaba is making another play in groceries by taking control of the Chinese supermarket operator.

www.alibabagroup.com

Alibaba Group Holding Limited is deepening its ambitions in groceries with a large investment in a Chinese supermarket company.

The company announced on Monday morning that it plans to invest $ 3.6 billion in Sun Art Retail Group Ltd., which operates supermarkets and large “hypermarkets” in China. Investment will bring Alibaba’s BABA,
-0.65%
Direct and indirect bets up to about 72% in the company, and Alibaba intends to strengthen Sun Art in its financial statements.

Alibaba’s growing stake in Sun Art highlights how the grocery industry has become a tricky frontier for Internet giants. Alibaba invested $ 2.9 billion in Sun Art in 2017 as part of an effort to expand its new-retail initiative that blends online and offline commerce. In the same year, Amazon.com Inc. AMZN,
-2.00%
Acquired Whole Foods.

The grocery industry is typically seen as a low-margin business for traditional operators, but technology companies are able to learn more about customer preferences and provide a more personalized experience, as well as connecting online and offline components together See the potential of

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Alibaba said in a release that all physical Sun Art locations in China have been integrated with Alibaba Toxianada and Tammal supermarket platforms for one-hour and half-day delivery options. Sun Art operated 481 hypermarkets and three midsize supermarkets as of June.

Alibaba also has its Fresiopo grocery stores in China, which allow for double as in-person shopping and fulfillment centers. Along with Amazon and Whole Foods, Alibaba uses local stores to quickly get fresh groceries to customers. The company says that Fresippo offers a 30-minute delivery option, as well as smaller-format stores in lower-tier cities.

Amazon has a variety of ongoing grocery-related initiatives, including management of its cashierless AmazonOG convenience store and Whole Foods locations, which are integrated with the company’s core membership and facilitate home grocery delivery.

Shares of Alibaba are down 1% in Monday trading. They have gained 23% in the last three months as the S&P 500 SPX,
-1.63%
Has soared 6% and KransShares CSI China Internet ETF as KWEB,
-1.28%
There is an increase of 9%.

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