Alibaba Weighs Fundraise for Its Freshippo Supermarkets at $10B Valuation

Alibaba is weighing a fundraise for its Freshippo grocery chain in China that has an estimated valuation of $10 billion, Bloomberg reported on Friday (Jan. 14), citing unnamed sources familiar with the plans.

The funding round is anticipated to take place in February. Freshippo is coordinating with an advisor regarding the strategic and financial investors that would be invited to participate in the funding, the sources told Bloomberg.

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There is no information regarding the size of Freshippo’s upcoming funding. However, Alibaba will keep a majority stake in the business, the sources told Bloomberg. The $10 billion valuation is precursory and subject to change as the talks are still in progress.

Freshippo, known as Hema in Chinese, was launched by Alibaba in 2019 as an independent project combining a grocery store, restaurant and delivery app. The high-tech concept tapped robotics and facial recognition to speed up logistics and payments.

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At the time, Alibaba planned to launch a Hema store in every Chinese city with a population topping 1 million, according to data from Caixin. There are currently close to 300 stores in China, with plans to develop a network of distribution centers, with its first hub in Wuhan. The digital groceries space is among the fastest-growing segments in China’s eCommerce sector.

Alibaba has worked to grow its market share in the digital grocery industry and has experimented with different formats, including Freshippo’s digitally supported outlets, Taoxianda, where shoppers pool orders for discounts, and Sun Art Retail Group, China’s biggest hypermart chain.

Those businesses are part of a new retail strategy, Alibaba CEO Daniel Zhang said, pointing to integrated digital and physical experiences. The company also has plans to diversify Taobao and Tmall.