Shares in Bubs Australia jumped after the infant formula maker announced a Merchant Service Agreement with Alibaba, the largest e-commerce platform in China, for a Flagship Store on Tmall Global.
A short time ago, they were 5% higher at $0.84, up from a low of $0.73 this month.
“Alibaba is one of the largest retailers in the world,” says Kristy Carr, Founder Managing Director of Bubs Australia.
“This is therefore an important milestone in the evolution of our cross-border e-commerce strategy, that will significantly broaden our reach to Chinese parents.”
Mother and Baby products are the second largest category on Alibaba, spearheaded by infant formula. Infant nutrition cross-border sales increased 8.8% last year on the platform, with the strongest growth drivers coming from organics, specialised formula and goat milk products.
“As the only Australian vertically integrated producer of goat milk infant formula, we will be in a unique position to offer Chinese parents comfort that we have complete control over the quality and scalability of our supply chain back to the farm gate,” she says.
Bubs Australia expects the BubsÒ store on Tmall Global to generate more than $1 million in merchandise value in the first 12 months of trading.
The deal comes with a commitment for purchase orders valued at $17 million in 2019, increasing to $24 million in 2020 and $37 million in 2021.