Freshippo: Business Model Evolution in Alibaba's New Retail Platform

This case study examines Freshippo, a retail platform of Alibaba, focusing on its business model evolution and challenges. Launched in 2016, Freshippo integrated online and offline grocery shopping, achieving rapid expansion and popularity for fresh products and fast delivery. However, the company faces issues like management problems, poor services, and delivery delays. The analysis explores the company's integrated business model, customer value creation, and market innovations, especially regarding its seafood items and neighborhood supermarket ambience. Recommendations include addressing management and production issues through expansion, partnerships, and increased human resources. The conclusion emphasizes the need for Freshippo to develop a new model to improve its competitive advantage. The company's expansion strategy is suggested as a means to overcome challenges by improving its strengths.

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1CASE STUDY
Introduction:
The Freshippo is the member-based shop, which is actually a retail platform of Alibaba,
China’s largest e-commerce company (Xu, Mi, Marshall, Xiao & Shu, 2020). Since its launch in
2016, the chain has brought down the concept of grocery shopping into a popular digital
platform. The company has been known primarily for the fresh products and the fast delivery
service. Being the first mobile shopping grocery company, along with the offline service as well,
the Freshippo has earned a great amount of reputation throughout the country. However, in
recent past, the company seems to have been losing its created brand image as well as the
profitability because of some management issues, poor services as well as long wait for the
preparation of the foods. The current challenge in front of the company is to decide whether the
company will vest time in amending their problems or will they carry on to increase their
strengths so that the problems seem insignificant in front of what they can offer.
Analysis:
The company has been responsibly integrated both the offline as well as the
online model of business in order to have a large segment of target audiences. It has to offer both
the marketing experiences that customers want. It gives the privileges of shopping from home
through online app and also for those who prefer an in store experience, they have physical
supermarkets. However, at present, the company has been facing issues in effectively tackling
both model as an integrated one and thus frequent complaints about the timely delivery as well as
the customer services in the stores.

2CASE STUDY
In order to create values for the customers, the Freshippo has tried to cater to the needs of
the target customers not only by providing the required materials to the variety of segments, but
at the same time valuing their purchase experiences (Melati, & Dewi, 2020). The main game
changer of the market is their seafood items that are fresh and carefully selected. With the
ambience of the neighbourhood supermarket, the company aimed at providing fresh and packed
items. In the mobile apps the customers preferences are auto saved.
Recommendation:
At present however, these entrepreneurial innovations have been falling short in front of their
management and production issues. Given its limited warehouse space and delivery model, a
single Freshippo store could process no more than 7,000 online orders per day. The management
has recently decided to expand their number of stores, a decision which has been criticized since
it showed no urgency in amending the fault lines arising. However, the company can still address
these issues by means of expansion (Zhang, & Zipser, 2019).. The company in the process can
gain competiticve advantages by being present at almost all locations. Moreover, by creating
partnerships with other stores they can gain the strengths of those brands which they are lacking.
The increase of the human resource will also be effective in dealing with the delivery issues. The
expansion of the stores can also give them the option of selecting few stores that will be only
dealing with online supply and marking other stores that will do the offline sales.
Conclusion:
It can thus be concluded that the Freshippo is one of the most popular retail company
which at present needs to develop a new model in order to improve their competitive advantage.

3CASE STUDY
If the company does not directly address the challenges, they can overcome the same by
improving their strengths. The expansion strategy has some of such advantageous position as
discussed above.

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Reference List:
Melati, K. R., & Dewi, S. N. K. (2020, March). Integrated E-Commerce Ecosystem in China and
Indonesia’s Giant Market. In 2nd International Media Conference 2019 (IMC 2019) (pp.
251-269). Atlantis Press
Xu, R., Mi, C., Ye, N., Marshall, T., Xiao, Y., & Shuai, H. (2020). Risk Fluctuation
Characteristics of Internet Finance: Combining Industry Characteristics with Ecological
Value. arXiv preprint arXiv:2001.09798.
Zhang, D., & Zipser, D. (2019). Speak softly, make tough decisions: An interview with Alibaba
Group chairman and CEO Daniel Zhang. The McKinsey Quarterly.