TMTPOST--Freshippo, Alibaba Group’s proprietary retail chain for groceries and fresh goods, has reported profits for four consecutive months, marking a significant turnaround for the company.

In 2022, Freshippo sought funding at a $10 billion valuation, but the valuation halved within a year. Despite being one of the first Alibaba units planned for IPO, Freshippo postponed its listing due to poor market conditions after securing a $4 billion valuation.

Yan Xiaolei, the new CEO of Freshippo, implemented strategic shifts after the former CEO announced retirement. Under Yan’s leadership, Freshippo has focused on three key areas: reorganization, targeting core business segments, and achieving sustained profitability.

Freshippo has decided to halt the expansion of its membership stores, similar to Sam’s Club, after closing two membership stores earlier this year. Instead, the company turns to concentrate on its Fresh Stores, which serve high-density urban areas, and neighbor business discount stores, which offer hard discounts and community pickup services. Freshippo plans to open 70 new Fresh Stores and 300 neighbor business discount stores by the end of 2025.

From March to June, Freshippo recorded off-season profitability for the first time since Q4 2022 and Q1 2023, attributed to cost-slashing measures and store reductions. Freshippo’s store count has decreased by 30% since 2021, and recent employee restructuring and outsourcing efforts have further streamlined operations.

Over the past eight years, Freshippo has experimented with 12 different business models. Now, aligned with Alibaba’s broader focus on operational efficiency and profitability, Freshippo is emphasizing cost reduction and organic growth. This shift is restoring confidence among employees and consumers alike, despite past uncertainties and layoffs.

Yan has taken decisive steps to rebuild consumer trust, reinstating membership renewals and adding new benefits. He has also adjusted free delivery thresholds, balancing cost reductions with consumer satisfaction.

A long-time employee at Freshippo said that at the end of last year, he was unsure when the company might be sold or when he might be laid off. Now, he feels that the business is gradually stabilizing and that he has "started to accept the new normal of non-aggressive growth."