Freshippo, the Alibaba-owned grocery chain, will close all of its warehouse-style membership stores by the end of August, according to Chinese media outlet Caixin. The last remaining store, located at Shanghail, will cease operations on Aug. 31, following recent closures in Beijing, Suzhou, and Nanjing in July.
Why it matters: Warehouse-style membership stores modeled after Costco and Sam’s Club have gained traction in China as traditional supermarkets face mounting pressure from sluggish consumer demand and e-commerce competition. Domestic retailers such as Freshippo, Yonghui, and RT-Mart sought to replicate the format to tap into middle-class demand with low prices and exclusive offerings. However, analysts say the market is limited, and many Chinese consumers are still reluctant to pay upfront membership fees or travel long distances to shop. Freshippo’s withdrawal underscores the difficulties local players face when going head-to-head with global giants in a niche yet competitive segment.
Details: Freshippo launched its first X Membership Store in October 2020 at Shanghai’s Senlan Mall, positioning it as a direct rival to foreign warehouse retailers. By the end of 2023, it had opened 10 such stores – six in Shanghai and four in Beijing, Suzhou, and Nanjing.
- In a late 2024 internal letter, Freshippo CEO Yan Xiaolei said the company would focus on its core formats: Freshippo Fresh and Freshippo NB (Neighborhood Business). Since early 2025, the retailer has been winding down its membership operations. On Feb. 28, it announced that three Shanghai locations would close in April, followed by further shutdowns in Beijing and Shanghai in the months that followed.
- A person familiar with the matter told Caixin that X Memberships, which provided access to both membership and standard Freshippo stores, can either be refunded or used at non-membership locations.
Context: Freshippo’s pivot comes amid Alibaba’s broader corporate restructuring under its “1+6+N” model. In May 2023, the company announced plans to take Freshippo public, but the IPO was later paused. In its November 2023 earnings report, Alibaba said it was evaluating market conditions and other factors to ensure long-term shareholder value.
- Compared to Freshippo’s membership-based warehouse stores, its main format remains the Freshippo Supermarket, which has broader geographic coverage and deeper market penetration. As of Q1 2025, Freshippo Supermarket operated over 420 stores across nearly 50 cities, with more than 60% of its gross merchandise volume (GMV) generated online. In 2024 alone, 72 new Freshippo Supermarkets were opened – one-third of them in lower-tier cities and counties.
- Freshippo NB, on the other hand, targets price-sensitive consumers with a discount-store model. It mainly sells near-expiry and damaged fresh goods from nearby Freshippo Supermarkets, while also expanding its private-label offerings. The format has expanded to 12 cities across Shanghai and its surrounding cities.
Rumors of a possible Freshippo sale have circulated, but during Alibaba’s Q4 2024 earnings call, CFO Toby Xu said the retailer remains profitable and on a steady growth path. He added that while there are no current plans to sell Freshippo, the company may consider bringing in strategic investors to better reflect its value within Alibaba’s overall portfolio.
