Alibaba Debuts First Brick-And-Mortar Store In Shanghai To Raise Stakes In Offline Retail Space

Alibaba and Chinese state-owned retailer Bailian kicked off their first brick-and-mortar convenience store in Shanghai on March 11.

Alibaba Group, in partnership with Chinese state-owned retailer Bailian Group, kicked off their first brick-and-mortar convenience store in Shanghai on Monday as the latest effort made by the e-commerce giant to further raise its stake in the offline retail space in China.

The offline convenience store, branded as "Yike Bianli," was the first among a chain of upcoming convenience stores. These convenience stores would be operated an RMB1 billion (US$148.73 million) worth company established by Alibaba and Bailian in November 2018.

Alibaba poured RMB430 million (US$63.95 million) into the Shanghai-based new entity in exchange of a 43% stake, while a wholly-owned affiliate of Bailian invested RMB570 million (US$84.77 million) for a 57% stake, according to information available on Chinese business data provider Tianyancha.

Bailian’s chairman Ye Yongming serves as the president of the new company. Alibaba’s chief executive officer Daniel Zhang Yong sits in the board of directors as the vice president.

Alibaba would primarily support the development of the background system, while Bailian would be in charge of the daily operation, Chinese online publication reported, citing people familiar with the matter. The sources said the new company already sealed 20 to 30 store locations in Shanghai, with a target to open an aggregate of 100 stores in 2019 given the fierce competition in the offline retail business in the city.

The convenience store chain came two years after the duo entered into a strategic partnership in February 2017. Under the partnership, the two companies sought to develop new technology and take advantage of each other’s user data to integrate offline stores, logistics, and payments to boost retail efficiency. Alibaba also picked up 18% shares in Bianlian’s subsidiary, Lianhua Supermarket chain, in May 2017.

Bailian is a Chinese state-owned enterprise founded in April 2003 with RMB80 billion (US$11.89 billion) in total assets. Its main business covers fields like department stores, shopping malls, and convenience stores involving e-commerce, logistics, consumer services, electronic information, and others. The company recorded nearly 6,000 business outlets across over 20 provinces in China, said Bailian on its website.