Alibaba is investing 2 billion yuan in the Taobao Store Network.

Alibaba Group Holding Invests in Taobao Store Network

Alibaba Group Holding confirmed an investment of 2 billion yuan (approximately 281 million USD) on Friday. This investment is part of a program aimed at supporting the Taobao-branded grocery store network, which is focused on instant commerce and on-demand delivery business models.

Instead of opening new physical stores, Taobao Shangou is said to provide digital innovation to existing grocery stores. Hu Qiugen, the general manager of the instant commerce division, stated that this transformation will be achieved using Alibaba's digital infrastructure. Additionally, Alibaba also has a postal service.

Under this program, operators of partner grocery stores will receive digital supply chain support through Alibaba's local wholesale platform 1688.com, gain technical insights on product sourcing, and restock inventory through the proposed Aoxiang platform. Furthermore, these stores will be associated with the Taobao brand.

Hu noted that this technical support will enable each store to offer "single point, 24-hour, and 30-minute delivery" services. The Taobao Shangou partner grocery stores will begin operations in over 200 cities across Mainland China.

The first batch of Taobao partner grocery stores has begun operations in cities like Hangzhou and Nanjing. Hu stated, "We are determined to create a win-win within our ecosystem."

Alibaba's new initiative, based in Hangzhou, aims to encompass a broader product range and commercial network in the instant commerce sector. CEO Eddie Wu Yongming had announced that the company is increasing its user growth and that consumers prefer its platform over competitors like Meituan and JD.com.

The Taobao Shangou app continuously operates more than a third of traditional grocery stores in this process. Alibaba announced in August that Taobao Shangou's monthly active user count reached 300 million, with daily orders peaking at 120 million.

China's instant commerce market is expected to reach a size of 2 trillion yuan. This estimate was made by the Chinese Academy of International Trade and Economic Cooperation, which is under the Ministry of Commerce of China.

On the other hand, Meituan continues to expand its instant commerce operations. Beijing-based Meituan claims to have over 500 million users for its instant commerce service; on Wednesday, it announced collaborations with over 10,000 brands. The company will assist these brands in establishing virtual stores and will also provide digital tools, storage, and logistics support.