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Alibaba is expanding in the grocery sector

Alibaba is expanding in the grocery sector

American Whole Foods now has a Chinese counterpart

The #pandemic made companies revise how they operate – adaptability became the leitmotif in the past few months. As people had to stay indoors, the demand for online food orders increased, especially in China.

Alibaba Group – the e-commerce giant – is looking to expand its online food deliveries business. To do so, the company will invest $3.6 billion in Sun Art Retail Group Ltd. The latter operates supermarkets and hypermarkets all around China.

This isn't the first time when Alibaba is placing its bets on Sun Art. In 2017 it spent roughly $2.88 billion to own a 36.16% stake in the company. At that time, Amazon purchased Whole Foods. Now, when the second transaction goes through, Alibaba will have decisive power as it will own 72% of Sun Art.

"As the Covid-19 pandemic is accelerating the digitalization of consumer lifestyles and enterprise operations, this commitment to Sun Art serves to strengthen our new retail vision and serve more consumers with a fully integrated experience," said Alibaba’s CEO and chairman, Daniel Zhang.

All physical stores of Sun Art have already been integrated into BABA's platform, and so far, they are providing one-hour to half-day on-demand delivery. Like Amazon, Alibaba uses local stores to have fresh products that are quickly being delivered to clients.

Following the news, the company’s stock price traded 1% lower. In the past quarter, Alibaba’s stock price gained 23%, while USA500 rose 6%.

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Sources: marketwatch.com, techcrunch.com

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