NCR Voyix Digital-First Banking Tracker February 2024 Banner

Report: Alibaba Gauges Potential Buyers’ Interest in Brick-and-Mortar Businesses

Alibaba

Chinese tech giant Alibaba Group is reportedly considering selling several of its brick-and-mortar businesses, including grocery business Freshippo, retailer RT-Mart and shopping mall operator Intime.

The decision comes as Alibaba aims to focus on its core eCommerce business model and divest non-core, non-profitable units, Reuters reported Friday (Feb. 2), citing unnamed sources.

Alibaba Group did not immediately reply to PYMNTS’ request for comment.

The company has been in discussions with strategic and financial investors to gauge their interest in these assets, although it is still uncertain whether Alibaba will proceed with the sale, according to the report.

The move is part of Alibaba’s broader restructuring efforts and is influenced by China’s increased scrutiny over initial public offerings, the report said. The challenging capital markets have made it difficult for startups to raise money.

Alibaba CEO Eddie Wu, who assumed the role in September, said two months later that the company would review its businesses and determine which are “core” and which are “non-core,” per the report.

The company’s management change has led to a renewed focus on domestic eCommerce, investment in artificial intelligence, cloud computing and overseas expansion, Jason Yu, greater China managing director of market research firm Kantar Worldpanel, said in the report.

Freshippo, also known as Hema, offers groceries, dine-in services and 30-minute home delivery, according to the report. With over 300 stores in 28 cities in China, Freshippo aimed to raise money at a valuation of about $4 billion in 2022 but has not announced the completion of the fundraising.

Alibaba invested $3.6 billion in 2020 to acquire a controlling stake in RT-Mart operator Sun Art Retail Group, the report said. However, this expansion into China’s brick-and-mortar retail sector has not translated into profits.

In November, Alibaba Group said it would not spin off its cloud intelligence business. That decision was apparently the result of the U.S. government’s restrictions on cloud and AI technology imports to China.

“Given the uncertainties in the current environment, following evaluation, we have decided not to pursue a full spin-off of Cloud Intelligence Group,” Wu said when announcing the company’s quarterly earnings Nov. 16.

For all PYMNTS retail coverage, subscribe to the daily Retail Newsletter.