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Kroger said yesterday that it will begin selling its Simple Truth private label brand in China, via Alibaba’s Tmall platform. It will be Kroger’s first venture outside the US.

Alibaba says that the arrangement will “meet Chinese consumers' growing demand for high-quality, organic food products.”

Yael Cosset, Kroger's chief digital officer, released a statement saying that "e-commerce enables Kroger to quickly scale to reach new customers and markets where we don't operate physical stores, starting with China.”

The Wall Street Journal reports that Kroger said the site will launch today “with an initial product offering that includes dietary supplements and private-label products, much of it natural and organic goods.”

And, the Journal adds, “Kroger increasingly sees its Simple Truth line as a way to attract new customers domestically and abroad. The goods reached $2 billion in sales earlier this year, Kroger said.

“Kroger currently sells those items online in the U.S. through Vitacost.com 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.”

USA Today writes that “Kroger is undergoing it biggest shift in strategy in two decades and has unveiled a series of online initiatives. It offers curbside pickup of groceries ordered through its own supermarket websites.

“In May, Kroger inked an exclusive U.S. deal with British online grocer Ocado to build automated warehouses to fulfill curbside and delivery orders. It also launched a beefed-up online shopping service called Kroger Ship that sends packages directly from its distribution centers via United Parcel Service Inc and FedEx Corp.”

The Journal notes that for Alibaba, “Kroger’s products could provide a leg up in the nation’s fiercely competitive online grocery market. Walmart owns a 12% stake in JD.com 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.” It also has distribution deals with Macy’s, Costco, Gap and Starbucks. Last year, the story says, “Alibaba Chairman Jack Ma traveled to Detroit … to urge small businesses to use its platforms to reach Chinese consumers hungry for U.S. brands.”
KC's View:
We’ve noted here before Kroger’s discussions with Alibaba, so this does not come as a complete surprise.

It does reflect a couple of new realities, I think.

First, Kroger knows that it does not need to have physical stores in a market to have a presence, and that is a critical insight. I can apply to China, but I also wonder if it could apply to places like New England and Florida, where it does not have stores but could have a digital impact under the right circumstances.

Second, it points to the possibility that the relationship between Kroger and Alibaba could be just the beginning of a beautiful friendship.


I wrote the other day that Albertsons, having been denied its merger with Rite Aid, ought to call Alibaba and pursue an alliance before it gets boxed out by Kroer. It may be too late.