Alibaba‘s grocery chain Freshippo is seeking to raise funds at a valuation of about $6 billion, much lower than a hoped-for valuation of up to $10 billion earlier this year, Reuters reported on July 12, citing three people familiar with the matter.
The grocery chain is aiming to raise $400 million to $500 million from outside investors. The fundraising is far from being finalized and the financial terms could change.
At the beginning of this year, Freshippo was reported to be working with consultants to draw up a list of potential investors to invite these investors to join this round of financing.
In 2021, Alibaba made several adjustments to the business segment within the group, and Hou Yi, president of Freshippo Business Group, reported directly to Daniel Zhang, CEO of Alibaba. The industry believed that this change promoted the Freshippo position within Alibaba. Later, Hou set the goal of overall profit this year in an internal letter, and emphasized the importance of offline business, which shows that Freshippo is facing some pressure.
More than half of this year has passed and, combined with multiple factors such as the epidemic, it has been difficult for Freshippo to gain profit. Since May, Freshippo has accelerated the pace of “reducing costs and increasing efficiency”. According to previous media reports, the company began a new round of layoffs, mainly looking to shrink procurement and operation departments in various local areas.
Under pressure to produce a profit, Freshippo has tried a variety of business patterns and has begun to move into smaller towns, rural areas and other low-priced markets, resulting in several new divisions such as Freshippo Neighborhood, Freshippo Outlet and other business patterns. As of May 31, the company has opened more than 40 Freshippo Outlets in China.
But the fresh e-commerce industry is not the only problem faced by Freshippo. Since the second half of 2021, Meicai and Dingdong Maicai have also reduced their staff. Missfresh also remains profitless despite being listed on U.S.