China e-commerce leader Alibaba ( BABA ) is continuing a major push into brick-and-mortar retailing with plans to add 30 supermarkets in Beijing, more than doubling its current store count.
[ibd-display-video id=3065640 width=50 float=left autostart=true] The supermarkets, under the brand name Hema, are part of Alibaba’s “New Retail” strategy that integrates online e-commerce and brick-and-mortar retailing in an effort to boost sales and convenience. Alibaba launched its Hema supermarkets chain two years ago, of which there are now 25. Five of them are in Beijing.
Hema is designed as a chain of digitized physical supermarkets . Users with a Hema app hook up to Alibaba’s e-commerce platform and payment system. They can then shop for groceries online and have them delivered or pick them up. Or they can order fresh food and have it prepared by Hema chefs. Further, they can pay for any of it using the Alibaba online payment platform Alipay.
The idea is to draw customers deeper into Alibaba’s consumer-facing ecosystem. It’s a strategy comparable to what e-commerce leader Amazon ( AMZN ) is doing with its $113.7 billion acquisition of Whole Foods Markets.
Alibaba shares climbed 2.7% to close at 190.70 on the stock market today .
Amazon also believes the future of retail is a mix of mostly online retail and some offline brick-and-mortar retailing, wrote venture capitalist Gene Munster, in his list of predictions this week. His prediction list included the idea that Amazon would acquire Target ( TGT ).
IBD’S TAKE: Alibaba is a top-ranked Chinese stock with a stellar IBD Composite Rating of 99 out of a best possible 99. China-based companies have risen to the international stage and become more appealing to investors , as China has become increasingly integrated within global markets
Amazon shares were up 0.6%, near 1,217.65.
Alibaba has been aggressively expanding investments in physical stores. In November Alibaba said it would invest $2.88 billion for a 36% stake in Hong Kong-based Sun Art Retail as part of a strategic alliance to expand opportunities in the nation’s food and grocery retailing sector. Sun Art Retail operates 446 “hypermarket complexes” in 224 cities across China.
In June, Alibaba purchased an 18% stake in Hong Kong-listed Lianhua Supermarket. Alibaba also led a $300 million, D-round investment in Yiguo.com, China’s largest online provider of fresh produce, in August. In September, Alibaba announced plans to invest $15.2 billion over the next five years to strengthen and expand its global logistics and delivery network.
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