Kroger Co. may have found a way to combat Amazon’s aggressive expansion into the grocery segment.
The supermarket giant has traveled to China to meet with senior executives of China’s online commerce giant Alibaba, according to Reuters.
The New York Post originally broke the news that talks between the two firms commenced as early as last month. The Ministry of Commerce People’s Republic of China, an executive agency of the State Council of China, confirmed the meeting, but only pinpointed the timing to 2017.
Sources told Reuters that business discussions are at an initial stage, and it is not clear if they will lead to any cooperation.
However, the Ministry of Commerce People’s Republic of China had a different take on the meeting. Last week, the organization said in a statement that “Alibaba has teamed up with Kroger … to speed up the integration of online and offline sales.”
The potential alliance could be a strong way for both companies to combat expansion efforts by a common rival: Amazon. For example, the online giant acquired Whole Foods Markets for $13.7 billion in August. The company gained another foothold into the grocery vertical this week when it finally opened the doors of its highly-anticipated Amazon Go convenience store to the public.
If the Kroger-Alibaba alliance comes together as a long-term strategy however, the two companies have another way to compete. For Alibaba, the partnership could be an easier way to get its Alipay app into the hands of Kroger shoppers — a move that will enable customers to skip grocery lines and pay for food with an app, according to cincinatti.com, a division of USA Today.
For Kroger, the potential partnership could be a way to sell goods in China. Specifically, the grocer could leverage Alibaba’s Hema supermarket chain — a test bed that blends digital and traditional retail, such as enabling customers to use mobile phones to order, pay and get information about items, according to the report.
Kroger would also be able to direct customers to the Alibaba site, where they could buy general merchandise, Cincinnati.com added.