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Alibaba and Bailian Group are planning to open 500 Ego convenience stores in China this year.

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Alibaba and Bailian Group are planning to open 500 Ego convenience stores in China this year.

New Retail convenience stores

The first store, which has opened in Shanghai, operates around 500 sq m and has six key areas: coffee, bakery, foodservice, fresh, grocery retail and leisure/dining.

About two-thirds of the store area is dedicated to fresh or foodservice, including coffee, bakery and hot meals. It features three self-checkout machines in addition to Alipay checkout and Bailian wallet.

With the store almost five times larger than a typical Japanese CVS, it is able provide a greater range of products and services and meet different shopper missions. The store will also double up as a ‘fulfilment centre’ for distributing products to even smaller stores that Alibaba and Bailian plans to launch.

Two Ego formats

Media reports suggest that Alibaba and Bailian have leased space between 20 to 30 stores in Shanghai for the Ego banner. They also planning to launch two formats: larger central outlets operating between 300 and 500 s qm, and smaller stores of about 100 sq m.

Alibaba and Bailian’s strategic agreement

Alibaba and Bailian signed a strategic cooperation in February 2017 and committed to working together on using big data and new technologies to develop New Retail concept stores. It also aimed to maximise Alibaba’s deep understanding of customers and Bailian’s bricks-and-mortar experience.

Chinese retailer Yiguo has announced that it has agreed to transfer 18% of its shares in Lianhua Supermarket to Alibaba China, reportedly worth HKD780m (US$100m).

Alibaba's share in Lianhua grows further

Yiguo is a well-known Chinese fresh produce e-commerce leader and acquired all of Yonghui Superstores' shares in Lianhua Supermarket in January. The latest agreement with Alibaba is an indication of the tough trading conditions in China and the need for expertise. Only in February, Lianhua's controlling shareholder Bailian Group had formed a strategic partnership with Alibaba. Lianhua Supermarket will hope their rapid restructure will prevent similar losses seen in 2016.

Ecommerce giant Alibaba Group has formed a strategic partnership with Chinese retail conglomerate Bailian Group.

The cooperation

Alibaba and Bailian will initially cooperate on supply chain technology using Alibaba’s big data capabilities as well as integrating Alipay payments with Bailian Group’s existing membership programme. 

Alibaba has been extending its reach offline to provide a better shopping experience and achieve further growth. It has acquired a stake in retailer Suning as well as Intime Retail Group.

About Bailian

Shanghai-based Bailian Group is one of China’s largest retailers by sales, operating 4,700 outlets in 200 cities including hypermarkets, supermarkets, convenience stores and pharmacies. 

Chinese retailer Yonghui Superstores has announced that it has agreed to transfer all its shares in Shanghai-based Lianhua Supermarket to a fresh produce ecommerce operator Yiguo, in transactions worth HKD950m (US$122.4m).

Disposing of unprofitable overlapping business

Since becoming the second-largest shareholder of Lianhua in April 2015 with 21% of its shares, Yonghui has been involved in improving Lianhua’s branch-level retail management. However, Lianhua has been facing challenges since 2015 with declining sales and profits. In the first nine months of 2016, it lost RMB188m (US$27.1m).

Yonghui said in a filing on the Shanghai Stock Exchange that it made the decision because of an overlap in businesses, and that while the two parties would no longer have equity connections, there would still be potential for cooperation over store operations and purchasing.

Ecommerce operator scaling up

The sale is also an indication that Yiguo, the well-known Chinese fresh produce ecommerce leader, is mapping out its offline business strategies. Yiguo has engaged in a partnership with Suning Supermarket’s online “Su Xian Sheng” section by providing the supermarket with a variety of fresh produce products (4000 SKU in total). Meanwhile, Yiguo is also the supplier for Suning’s O2O community shops to enhance consumers’ offline shopping experience.

Last month, Yiguo celebrated its eleventh anniversary by announcing its updated business strategy and its success in C+ round financing. The total financing of Yiguo in 2016 reached US$500m.

 

We've developed a single, universal methodology for calculating food and consumer goods retail data, supported by our programme of primary and secondary research. This makes Datacentre the most reliable and robust source available for data of this type. 

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