Freshippo shop chain could IPO in 2024
The Freshippo grocery chain, part of the Chinese holding company Alibaba, is planning an initial public offering. The IPO will take place on the Hong Kong Stock Exchange. The advisors will be major banks: US-based Morgan Stanley and China’s CICC.
Freshippo’s speciality is the perch and lobster, which are cooked on the spot. They are taken out of the huge aquarium in the shop. In the Chinese market, the chain is called Hema.
According to Bloomberg, the company’s listing is under discussion. Analysts say an IPO could take place in 2024 or later. Freshippo’s valuation is not yet known, nor is the number of funds it plans to raise. Experts are unwilling to predict a future listing, as Alibaba’s parent company may change its mind and not pursue an IPO.
In 2022, Freshippo’s management announced that the business had reached profitability for the first time in 7 years. The network’s result is very significant not only for Alibaba but also for other grocery businesses in which technology corporations invest. That said, the Freshippo segment is considered an ultra-competitive environment, which further underlines the chain’s success.Freshippo’s management does not provide sales figures. What is known is that the company plans to increase the number of consumers to 1 billion within ten years, which would generate sales of over US$142 billion.
The chain intends to expand the number of its shops soon. By the end of 2023, the chain’s Hema Outlets shops are expected to be open in all the outskirts of Shanghai and its surrounding cities. In addition, the grocery delivery division will operate under a franchise model.
Freshippo has a particular focus on expanding its own-brand product range. In 2022, these products accounted for 35% of the entire shop range. In the near future, this figure should exceed 50%. According to the head of the company, own brands play an important role in diversifying the chain. At the same time, the business does not refuse to supply quality products from all over the world.
Freshippo has been operating in the Chinese market since 2015. To organise the business, Alibaba Holding has chosen a model in which a physical shop takes on the functions of a warehouse and a sorting centre all at once. This approach differs from most competitors, where warehouses are used separately from shops, which increases the cost of maintaining all processes. In addition, Alibaba has engaged its own logistics unit for Freshippo’s operations, which significantly speeds up product delivery.