Kroger to sell groceries in China on Alibaba site

Kroger Co. will sell its products in China on an e-commerce site owned by Alibaba Group Holding Ltd., the grocer’s first foray into foreign sales amid a broader push into online retail.

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 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 executives said they have been negotiating their first overseas sales push for months.

Tougher competition in the U.S. is prompting big retailers to strike deals abroad. Walmart Inc. in May took a majority stake in Indian e-commerce giant Flipkart Group.

The new sales push in China is Kroger’s fifth e-commerce initiative in three months. The largest U.S. supermarket chain by sales and stores is trying to fend off stiffer competition from Inc., the Whole Foods grocery stores it owns, and other food sellers.

Earlier this month, Kroger started delivering directly to homes and businesses through third-party carriers. In May, Kroger took a stake in British online grocer Ocado Group PLC to run automated delivery warehouses for digital orders. It also acquired Home Chef to sell its meal kits in stores and online, and is working with electric-vehicle startup Nuro Inc. to test driverless grocery deliveries.

After focusing for years on sales at their 2,800 U.S. stores, Kroger executives have also visited India, China, Japan and Europe recently to study the habits of foreign consumers and search for technologies to use in the U.S.

"You should continue to see us doing partnerships and relationships with multiple people across the world," Chief Executive Rodney McMullen said in an interview earlier this year.

For Alibaba, owner of China’s two most popular e-commerce websites, Kroger’s products could provide a leg up in the nation’s fiercely competitive online grocery market. Walmart owns a 12% stake in Inc., Alibaba’s biggest rival in China.

Signing a deal with Kroger also adds to the list of U.S. merchants Alibaba has been seeking to woo over the past years as consumers there are increasingly shifting their purchases from brick and mortar stores online.

In 2015, Hangzhou-based Alibaba signed an exclusive deal to help Cincinnati-based department store Macy’s Inc. operate its online sales website in China.

Since then, the Chinese company has attracted retailers such as Costco Wholesale Corp., Gap Inc. and most recently Starbucks Corp., to sell their products on its e-commerce platforms. Alibaba Chairman Jack Ma traveled to Detroit last year to urge small businesses to use its platforms to reach Chinese consumers hungry for U.S. brands.

Write to Heather Haddon at [email protected] and Liza Lin at [email protected]

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