E-Commerce Giant Alibaba Enters the C-Store Industry

In addition to sales though, Alibaba wants customer data.

August 06, 2019

SHANGHAI, China—After success in the supermarket and department store industries, Chinese e-commerce operator Alibaba Group Holding aims to dominate the country's fast-growing convenience store industry. It’s reported that Alibaba is after a trove of data on purchases that is not available from its online shoppers, reports Asia.Nikkei.com.

In March, Alibaba quietly opened a convenience store in a shopping center in Shanghai’s largest consumer hub. Named Yike EGO, the store is a guinea pig project opened in partnership with Bailian Group, a major Chinese retailer.

With a floor space of 500 square meters (about 5,300 square feet), Yike EGO is large for a c-store and sells c-store products, including food, beverages and daily goods. But there is an array of products featuring a point-of-sale advertising message: “If you order it through an app, it will be delivered within 30 minutes.”

In addition to the new delivery service, the Alibaba store sells medical products, which is unique for convenience stores in China. Other features are an open kitchen and eat-in space near the rear of the store. Employees prepare fresh dishes, such as sautéed vegetables, and the location has a bakery section.

In July, the second Yike EGO opened inside another commercial complex about 20 km (12 miles) away. The newer Alibaba store is smaller but also has bread-making facilities.

According to insiders, a third Yike EGO is set to open soon. That outlet will be followed by a series of “flagship” stores with cooking facilities and then smaller stores in the surrounding areas. The flagship stores will provide the smaller stores with freshly prepared foods and baked goods.

At the March session of the National People's Congress, China's legislature, Premier Li Keqiang made a clear, government policy on promoting growth in the convenience store market. In China, the growth of any industry is dependent on government support. While most retailers in China are suffering from the expansion of online shopping, the convenience store segment alone continues to grow.

Last year, the number of convenience stores in China topped 120,000, with ample room for new outlets. The Chinese convenience store market has grown at an annual rate of about 20% in recent years.

For more on convenience retailing in China, see “Online and Offline Worlds Merge in China” in NACS Daily.