Alibaba’s Taobao to Host Sun Art Grocery Sales


Taobao — Alibaba Group Holding Ltd.’s online marketplace — is adding one of China’s largest supermarket chains to its online-to-offline (O2O) system, as the e-commerce giant continues to move aggressively into retail.

All supermarkets of Sun Art Retail Group Ltd. will be connected to Taobao’s O2O system by year-end, including 461 existing outlets under its Auchan and RT-Mart brands, and an additional 35 are planned, RT-Mart Chairman Huang Ming-Tuan said.

Customers will then be able to order groceries from Taobao and have them delivered from a Sun Art outlet.

An initial step will take place Tuesday, when two Sun Art stores in Suzhou, in East China’s Jiangsu province, will begin taking orders through Taobao, Huang said.

Preparation — involving billing, payment, predelivery inspection and inventory systems — is expected to cost 50 million yuan ($7.9 million) per brick-and-mortar store, Huang said. But starting in 2019, the Taobao O2O business “will boom,” he added.

Alibaba bought more than a third of Sun Art shares for HK$22.4 billion ($2.86 billion) in November. The deal came with an alliance with Sun Art shareholders Auchan Retail SA and Ruentex Group, and an initial goal of establishing Taobao’s O2O operations.

Launched in 2003, Taobao has evolved into one of the world’s largest e-commerce platforms, hosting millions of third-party merchants. But its model has been challenged by smaller players, especially those that have deployed self-run logistics and O2O operations, as JD.com has.

Alibaba in recent years has adopted a “new retail” vision to leverage its digital focus and advanced technology while working closely with retailer partners to provide a seamless online and offline experience to consumers in China.

In addition to Sun Art, Alibaba holds shares in regional supermarket operator Lianhua and department store operator Intime Retail, while keeping a strategic partnership with Lianhua’s parent, department store operator Bailian.

Sun Art already has cooperation agreements with food delivery giants Meituan-Dianping, Ele.me and Baidu Deliveries.

Sun Art’s Huang said the company will focus on Taobao and another self-developed O2O system, as orders from other platforms remain modest.

Shares of Hong Kong-listed Sun Art dropped 8.02% on Tuesday, while New York-listed Alibaba shares rose 1.02% on Monday.

Contact reporter Coco Feng (renkefeng@caixin.com)