Alibaba advances its 'new retail' plan: taking 18% of Lianhua Supermarket

Date : 31 May 2017

E-commerce giant Alibaba is penetrating deeper into the offline sector by taking 18% stake in Lianhua Supermarket to build its "new retail" model.

The deal

Alibaba spent an estimated but unspecified amount of over HK$630m (US$80.88m) for an 18% stake in Hong Kong-listed Lianhua Supermarket, and became the second-largest shareholder of Lianhua. Alibaba bought the Lianhua stake from Shanghai Yiguo E-commerce Co Ltd, a fresh produce marketplace. Alibaba had invested in Yiguo in 2013 and 2016.

New retail

Jack Ma, Alibaba's founder and executive chairman, floated the idea of "new retail" during a conference in Hangzhou in October last year. He said the era of e-commerce would end in 10 to 20 years to give way to new retail, a combination of online and offline sales and logistics services.

Alibaba reportedly is planning a US$1bn investment in food delivery app ele.me to complement its existing online to offline model. In February, Alibaba announced a partnership with Shanghai retail conglomerate Bailian Group. In June last year, Alibaba also became the biggest shareholder in Intime Retail Group.