The West goes East. That would be Kroger starting an arrangement with Alibaba to sell selected products on its Chinese website. As the following Wall Street Journal article reports, Kroger will gain a spot on Alibaba’s ecommerce storefront for international products.
The U.S. supermarket chain on Tuesday said it plans to open an online storefront on Alibaba’s Tmall Global site, the Chinese internet titan’s platform for international brands. Kroger said its initial product offering on the site will include dietary supplements and private-label products, with a focus on natural and organic goods.
An Alibaba spokeswoman said the company was “pleased to work with Kroger” to bring its products to the Chinese market, particularly the grocer’s Simple Truth line of natural and organic goods.
Kroger currently sells those items online in the U.S. through Vitacost.com Inc., an e-commerce site it acquired in 2014. The grocer has generated strong sales of its natural and organic products on the site, including in parts of the U.S. where it doesn’t have grocery stores, Kroger said.
Kroger has not been bashful about embarking on non-traditional brick and mortar channels such as grocery delivery, as well as international forays like the China example in this article. Another example would be investing in a UK online grocer. The grocery vertical is not only extremely competitive, but also operates on razor thin margins, so we should be seeing more deals like this from the big US chains in the near future in order to set a differentiating strategy.
Overview by Raymond Pucci, Director, Merchant Services at Mercator Advisory Group