Alibaba is Doubling Down its Supermarket Strategy

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Good news for the lovers of Alibaba because the Alibaba stepped to blend online and offline shopping with the opening of three new supermarkets in Beijing and Shanghai. It is announced by the company on Monday that this is the part of its “new retail.”

The qualities of these new outlets are amazing. Well, from within these outlets called Hema stores customers can shop, dine, and order groceries for delivery from their mobile phones and use Alipay to make payments. And the stores look like normal supermarkets, Alibaba said about the items that every item has barcodes that can be scanned to reveal the price and also for the product information.

Daniel Zhang, CEO of Alibaba Group, said in a statement: “We believe the future of New Retail will be a harmonious integration of online and offline, and Hema is a prime example of this evolution that’s taking place.” For the membership of the Hema, users can sign up through their Taobao or Alipay accounts.

The first introduction of the Hema supermarkets was in the year 2015 and that was an endeavor to reinvent traditional supermarkets. Now there are 13 of them in Shanghai, Beijing, and Ningbo. According to Alibaba, these supermarkets serve customers located within a 3-kilometer radius to ensure shorter delivery times.

Some of the analysts expect Alibaba’s strategy to lead the market is going after China’s large number of consumers who still shop offline.

Julia Pan, the analyst at UOB Kay Hian, said in a note last Friday: “The integration of grocery stores, food-service businesses, and restaurants with new technologies and e-commerce has formed the embryo of the (online-to-offline) new retail.”

Julia Pan further added that China’s “Online retail market is still under-penetrated at the rate of 15 percent of total retail market size, and Alibaba has an 11 percent market share of China’s retail sales.” She also said it is likely there could be an “increasing number of new retail stores launched in China,” following the introduction of Alibaba’s strategy.

Alibaba uses big data analytics to remember purchase preferences for each customer and make personalized references on the Hema app. It also provides a data-driven selection of fresh food to customers based on their locations.

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