Source: www.alibabagroup.com
Alibaba, China's largest online retailer, has held preliminary talks with Kroger on a potential partnership, according to a report last week from the New York Post.
An Alibaba spokesperson told CNNMoney that the conversations with Kroger were about boosting Kroger’s presence in China. A CNBC report likewise said Alibaba has been seeking out U.S. and Canadian companies interested in selling in China as well as in its cloud services and payment products. Kroger declined to comment on the report.
Regardless, most reports - including those from CNN and CNBC - spent more time speculating how Alibaba could help Kroger become a fiercer competitor in the U.S.
"The value to consumers in the United States is that it would break the duopoly of Walmart and Amazon," Brittain Ladd, a retail and supply chain consultant, told CNN. "Alibaba/Kroger would give consumers additional choices. In addition, Alibaba would drive down consumer prices."
Kroger, according to reports, would be able to sell more general merchandise online to compete better with Amazon, Walmart and other rivals. It could possibly sell directly to customers on Alibaba’s site, which also includes third-party sellers.
Another benefit for Kroger would be tapping Alibaba’s online prowess, including the Alipay platform and its logistical expertise to support home delivery. Alibaba also operates supermarkets that use cashier-less technology similar to Amazon Go.
“I think this would involve two things, technology and capital, which Alibaba has in spades,” NYU marketing professor Scott Galloway told the New York Post. “Kroger has scant technology and relative to Amazon has scant capital.”
News of the conversations arrive amid reports over the last few weeks that Kroger was interested in acquiring both Boxed and Overstock.com to accelerate its online push.
Alibaba, which already has a presence in the United States with several data centers for its cloud computing business, would establish a major foothold in the U.S. In a note, according to Barron’s, Morgan Stanley called the partnership a "natural extension" for Alibaba as a third-party marketplace and could drive its newer strategy of fully integrating online, offline and logistics.