Alibaba’s $161M Same-Day Grocery Delivery Play

Alibaba’s Tmall.com is getting serious about its grocery delivery services.

Tmall announced late last week (July 24) that it has launched a $161 million (RMB 1 billion) online grocery promotional campaign aimed at convincing its Beijing users to take advantage of its same-day grocery delivery services.

Tmall is also running a three-day promotion for its Beijing users that allow them the opportunity to win “red packets” that can help pay for their grocery purchases. Same-day delivery is available to users who order on Tmall’s online supermarket before 11 a.m. Eventually, Tmall has plans to launch same-day delivery services in Shanghai and across China.

Statistics from Kantar Worldpanel show that particularly in China, online grocery shipping is a major point of growth in eCommerce. In the fast moving consumer goods (grocery) in China, the eCommerce penetration rate was 36 percent last year. Data from McKinsey indicates that buying food online is used by 40 percent of Chinese consumers.

According to Jeff Zhang, President of Alibaba Group’s China Retail Marketplaces: “Tmall Supermarket will draw on Alibaba Group’s complete eCommerce ecosystem — including Alibaba’s advantage in logistics, strength in online payments, big data and cloud computing, to bring consumers the most convenient and secure online shopping experience for quality products.”

And according to stats provided by the company, the GMV of Tmall Supermarket’s in the Beijing area grew by more than 700 percent in the past year alone, with 90 percent of consumers using mobile phones for the purchases.

What Tmall is executing in China is very much in line with what’s been seen trending in the U.S. with everyone from Peapod to Amazon wanting a piece of the online grocery delivery pie. Amazon has been working rapidly to expand its Amazon Fresh grocery delivery markets across the U.S. and has plans to continue hitting new markets throughout 2015. Amazon has recently announced that its grocery delivery service would be expanding to the U.K.

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