JD, Alibaba expand grocery offerings

Dive Brief:

JD announced a new, tech-enabled physical store chain under its JD Fresh grocery banner. The first, 4,000-square meter store, dubbed 7Fresh, opened Thursday in Yizhuang, according to an email from the Chinese e-commerce company to Retail Dive. The average daily store traffic during test operations from Dec. 29-Jan 3 was 10,000 people, according to a company spokesperson.
The stores are equipped with smart carts that follow customers and mirrors that give information as they pick up goods, according to a company blog post. JD plans some 1,000 locations in the next three to five years, according to the email from JD. Three quarters of the products are fresh — eggs arrive in the store within 12 hours of being laid by chickens — and 30-minute delivery is available, the company told Retail Dive.
Meanwhile, on the same day, Alibaba's Hema supermarket said it would add 30 locations in Beijing by the end of this year, expanding its presence to 35 stores, according to a company blog post.

Dive Insight:

China's major e-commerce players are both moving assertively offline with experience- and technology-rich physical stores—a sign that their rivalry is heating up. JD is helped by its partnership with Walmart after buying the U.S. retail giant's Chinese e-commerce platform Yihaodian last year, and the two have cinched their ties tighter since, with integrated loyalty programs, for example.

"JD is uniquely positioned to bring this premium-quality offline shopping experience to Chinese consumers because of our supply chain technology and scale as the country's largest retailer," Xiaosong Wang, CEO of 7Fresh and President of JD Fresh, said in the blog post that announced the venture. "With the highest efficiency and the greatest knowledge of consumer preferences, as well as access to the highest-quality products, we can invest in a premium experience far beyond anything Chinese consumers have experienced before."

Not to be outdone, Alibaba insists that its own grocery stores, through the conglomerate's ongoing integration of on and offline retail and expanding partnerships, will "eventually use New Retail technology to upgrade China's entire retail sector."

JD.com is also presenting Alibaba with serious competition during Alibaba's own signature red-letter shopping event, Singles Day, which has delivered record-breaking sales each year. JD.com brought in a whopping $19 billion in sales. "JD.com's performance will be a cause for concern for Alibaba," Maggie Gilliam, director of executive education at global intelligence and advisory firm PlanetRetail RNG, told Retail Dive in an email. "JD is rightly making much of its [approximately] 50% sales growth, and it needs to be noted that its biggest-selling brands were all tech/mobile telecoms brands."