Alibaba’s grocery subsidiary Freshippo has undergone restructuring amid a price war in the new retail market in China,Naked Poison II according to an August 25 report by Chinese news outlet 21CBH. The company has consolidated its in-house brand business team, global sourcing team, and category procurement team, with a strong focus on leveraging its in-house brands, as per 21CBH. Additionally, Freshippo will gradually phase out the traditional key account (KA) model and replace it with a direct procurement strategy. Product costs from other distribution channels are 20 to 30 basis points lower than in the KA business model, Freshippo’s CEO Hou Yi told 21CBH. Freshippo will establish operational systems focused on local market forecasting, planning, and pricing, to build its differentiation strategy, Hou added. Since late July, major players in the Chinese new retail market, such as Freshippo, Sam’s Club, Meituan, and Rt-Mart, have been cutting the prices of their fresh and bakery products. [21CBH, in Chinese]
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