Chinese e-commerce giant Alibaba expands number of physical grocery stores ahead of the unit’s IPO

Alibaba’s grocery unit Freshippo expanded its number of physical stores in China, the company said on Friday, as the business prepares to spin off from its parent company and go public.

Freshippo, known as Hema in China, plans to open 12 new stores across mainland China in major cities including Beijing, Shanghai and Guangzhou.

Groceries have become a battleground for China’s two biggest e-commerce firms: Alibaba and JD.com.

Last week, JD set up a new business unit to house its grocery business 7Fresh, and appointed a company veteran to lead the division.

Alibaba’s Freshippo attempts to blend the company’s strength in e-commerce and logistics with the more traditional shopping experience. Users can order online and get groceries delivered, but can also head to the physical stores known for their fresh produce such as lobsters.

The expansion comes three months after Alibaba split itself into six separate business units in a bid to get the company back to growth. These units can raise outside capital and go public.

However, Freshippo is a separate, independent business under Alibaba, not one of the six business groups. Last month, Alibaba greenlit an initial public offering for Freshippo, but did not give a timeline.

Freshippo has more than 300 stores in China across 27 Chinese cities.