Freshippo CEO steps down amid acquisition rumours

A day after denying the most recent round of acquisition rumours, Alibaba’s supermarket arm Freshippo, or Hema, announced the retirement of its founder and CEO, Hou Yi. Company CFO Yan Xiaolei is set to take over, while Hou will be named as honorary head advisor.

Ali Group CEO Wu Yongming notified the entire company by email of the senior management change. Hou founded Freshippo in 2015 as part of Alibaba’s internal incubation project. Hou has been at the helm of the company since its founding and experimented with 12 forms of e-commerce and online-to-offline business models for the brand.

Although the retirement appears to be an honourable discharge for Hou, pundits speculate that the Freshippo CEO was taking responsibility for Freshippo’s many less-than-stellar ventures, including the Freshippo X membership which has been winding down due to a change in strategy focusing on direct discounts. Some analysts say that the trial-and-error by the adventurous founder Hou incurred unnecessary costs and missed opportunities in consolidating the supply chain.

As early as last December, Freshippo has been consistently denying rumours of being sold off. This February, the board chairman of Alibaba Group Cai Chongxin stated that the group will gradually exit “non-core” businesses, such as conventional physical retail. This statement gave fuel to the speculations and soon the grocery chain was rumoured to be part of a 30 billion RMB (4.17 billion USD) package deal between Alibaba and the state-owned China National Cereals, Oils and Foodstuffs Corporation (COFCO). Reports of Freshippo closing some shops did not help stifle the rumours. Freshippo officially denied the acquisition and clarified that they are also opening new stores on 17 March, a day before the retirement announcement.

Newly named chief executive Yan will be doubling as company CFO during the transition. Yan has worked at Freshippo as CFO for 6 years after transferring from parent company Alibaba in 2018. To some commentators, having the CFO double as CEO of the company further proves Alibaba’s intention of selling the company as the CFO is more familiar with the financial performance of the company. Alibaba has sold around 1.7 billion USD of its non-core assets such as its stake in XPENG. On 26 February, Alibaba also announced the closure of Taote, its discount platform that competes with the likes of Pinduoduo by PDD Holdings. The master plan is for the group to refocus on Taobao and e-commerce, and the probability of a non-Alibaba Freshippo.


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