Chinese e-commerce giant Alibaba Group is reportedly contemplating the sale of various consumer sector assets, including popular grocery chain Freshippo and retail giant RT-Mart, according to three anonymous sources. The move is part of Alibaba’s strategic shift, led by Chairman Joe Tsai and newly appointed CEO Eddie Wu, to refocus on its core and profitable e-commerce business while divesting non-core, loss-making units.
Discussions with strategic and financial investors are underway regarding the potential sale of assets, which also include shopping mall operator Intime. The talks are in the early stages, and Alibaba may choose not to proceed, the sources indicated.
The potential sale aligns with Alibaba’s broader restructuring efforts and reflects China’s increased scrutiny over initial public offerings, complicating fundraising for startups. Wu, who assumed office after the departure of predecessor Daniel Zhang, outlined the company’s future strategy, emphasizing a more independent market approach for each business and a strategic review to distinguish between “core” and “non-core” activities.
The shift in management focus towards domestic e-commerce and investments in AI, cloud computing, and overseas expansion has prompted consideration of divesting offline businesses such as Freshippo and RT-Mart. Jason Yu, Greater China Managing Director of market research firm Kantar Worldpanel, highlighted the challenges of integrating offline businesses with Alibaba’s core online commerce operations.
Alibaba’s move to split into six units, announced in March, and its subsequent Hong Kong listing application for the logistics arm Cainiao in September, reflect the company’s ongoing efforts to streamline operations. Despite these developments, a spokesperson for Freshippo denied rumors of a potential sale, while Alibaba, RT-Mart, and Intime have not responded to Reuters’ requests for comment.
Freshippo, also known as Hema, is a Chinese supermarket chain offering diverse services, including dine-in and 30-minute home delivery. While the company intended to list in Hong Kong last year, the plan was deferred to assess market conditions. In 2022, Freshippo sought funds at a valuation of approximately $6 billion, below the initially anticipated $10 billion. Alibaba’s $3.6 billion investment in 2020 secured a controlling stake in hypermarket operator Sun Art Retail Group Ltd, the parent company of RT-Mart, as part of the group’s expansion into China’s brick-and-mortar retail sector. However, this strategy has not translated into profits, according to sources and analysts.
