Kroger partners with Alibaba to sell groceries online across China

CHINA – Kroger, an American retailing company, has made plans to sell products on Chinese e-commerce site Alibaba, the latest decision in a series of initiatives to bolster its digital business.

According to CNBC, Kroger will open an online storefront on Alibaba’s platform for international brands, Tmall Global, as its focus will include dietary supplements and private label products.

There has been a growing interest in China for overseas nutrient products, fueled by the country’s increased focus on health and wellness and amid limited confidence in its own safety standards.

An Alibaba spokesperson told CNBC the company is “pleased to work with Kroger to bring their Kroger Simple Truth products to the Chinese market through our Tmall Global platform to meet Chinese consumers’ growing demand for high-quality, organic food products.”

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Reuters also reported that shares in Kroger, the largest U.S. supermarket operator with US$123 billion in 2017 sales, closed up 2.35% at US$30.45 on news of the deal.

Kroger’s arrangement with Alibaba raises the stakes for rival U.S. grocery seller Walmart Inc, which along with its Chinese partner JD.com Inc, is already fighting Alibaba for dominance in the world’s second biggest economy.

“E-commerce enables Kroger to quickly scale (up) to reach new customers and markets where we don’t operate physical stores, starting with China,” Yael Cosset, Kroger’s chief digital officer, said in a statement.

Kroger responded with its biggest strategy shift in two decades and already has unveiled a series of online initiatives.

Those include inking an exclusive U.S. deal with British online grocer Ocado to build automated warehouses to prepare curbside pickup and delivery orders, and launching a beefed-up U.S. online shopping service called Kroger Ship that sends packages directly from its distribution centers.

Kroger said its Simple Truth natural and organic products, which generated US$2 billion in sales last year, will be sold in China.

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Walmart and JD have been tightening their alliance to counter Alibaba’s dominance in China’s grocery sector, where the share of online business is expected to more than double to 6.6% by 2020, according to research firm IGD.

JD.com, the second-largest e-commerce retailer in China, serves as an online shopping platform for many Walmart stores in the country.

The U.S. retailer holds a 12% stake in the Chinese company.

Earlier this year, Walmart opened a small high-tech supermarket and partnered with JD to deliver groceries from the store, in a bid to compete with delivery from Alibaba’s Hema Fresh stores.

Walmart and JD also co-invested US$500 million in a Chinese online grocery and delivery firm to check Alibaba, which is rapidly expanding its retail network, investing in brick-and-mortar stores and cutting deals to combine shoppers’ online and offline experience.

The Kroger/Alibaba partnership is the latest effort of a U.S. retailer to rethink its global footprint.

In May, Walmart agreed to a US$16 billion deal to acquire a majority stake in India’s Flipkart, beating out Amazon in the process.

A month later, it announced the sale of its Brazil unit to private equity firm Advent International.

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