Liu Qiangdong wants to create another JD.com

Author | Liu Baodan

Editor | Zhou Zhiyu

After 10 years of development, the importance of JD Supermarket within JD.com has reached an unprecedented height.

Recently, at the 10th-anniversary celebration of JD Supermarket, JD.com announced a 10 billion investment to support the 10 billion agricultural subsidy project and new product launches for JD Supermarket. In addition, JD.com will support the rapid growth of brands in operations, marketing, and other aspects.

Behind the 10 billion investment, JD Supermarket is embracing new development opportunities. At the event, JD.com CEO Xu Ran stated that JD Supermarket is one of the important battlefields for JD.com to win in the next decade.

Xu Ran is very optimistic about the development potential of the retail business. She believes it is a very large track with a sufficiently large market space. "Whenever I meet investors and shareholders, I am often asked what the most important business growth driver for JD.com in the next few years is. Every time, I will unhesitatingly answer, it is JD Supermarket."

"I firmly believe that given time, JD Supermarket will definitely create another JD.com," emphasized Xu Ran at the event.

In the midst of the fierce competition in the e-commerce market, for JD.com as a traditional e-commerce giant to win more market share in this market reshuffle, JD Supermarket is undoubtedly one of the most important leverage points.

In 2013, JD Supermarket was established to meet the demand for JD's retail category expansion. Over the past 10 years, JD Supermarket has served nearly 600 million users of JD.com, with over a hundred billion orders placed. In recent years, with a soft consumer environment, the supermarket category has shown good growth potential due to its strong essential nature.

According to JD's data, in the first half of this year, JD Supermarket continued to grow rapidly, with new user growth of 20%, order volume growth of over 30%, and revenue achieving high double-digit growth. By the end of 2023, JD Supermarket has already produced over 50 super brands with annual sales exceeding 1 billion yuan, as well as over 100 brands with sales over 500 million yuan and over 500 brands with sales over 100 million yuan.

At the second-quarter performance meeting, JD stated that it will continue to focus on accelerating revenue growth in the second half of the year, aiming to exceed the growth rate of China's retail sales for the whole year. JD will continue its low-price strategy, based on its strong supply chain capabilities, to provide users with more cost-effective products and services.

This is also JD's expertise, and the supermarket business will become the focus of JD's strategic implementation.

Firstly, in terms of investment intensity, JD Supermarket has been clearly identified as a strategic focus for the group and will receive a 10 billion investment. Yao Yanzhong, Senior Vice President of JD Group and President of JD Retail's Supermarket Business Group, revealed at the event that the procurement and sales staff of JD Supermarket will also double.

Secondly, strategically, Yao Yanzhong believes that in the face of intense market competition, brands need to shift from catching the wind to cultivating internal strength, focusing on the three core capabilities of restructuring the supply chain, rebuilding product strength, and reshaping quality-price ratio. JD Supermarket will also focus on these three capabilities.

Regarding the restructuring of the supply chain, Yao Yanzhong stated that JD Supermarket will use digital capabilities to reduce the repeated handling of brand warehouses and JD warehouses, and will also directly build JD Logistics warehouses at the source of fresh produce, enabling direct nationwide distribution of fresh produce from the source In terms of enhancing product capabilities, JD Supermarket will use industry-leading product planning methodologies and insight tools to help brands quickly identify consumers' pain points and needs, identify fast-growing and high-potential niche product tracks, and create a large number of innovative explosive products.

Cost-effectiveness represents quality assurance at a low price. To this end, JD Supermarket has established safety monitoring laboratories in 45 Asian No.1 warehouses nationwide, building the foundation of cost-effectiveness through three lines of defense: safety testing, genuine identification, and on-site experience.

In fact, the launch of the billion-yuan agricultural subsidy and new product explosion is the most important practical implementation of JD Supermarket's new strategy.

Taking the billion-yuan agricultural subsidy as an example, JD will invest billions of resources over the next three years, focusing on promoting the direct sales model of agricultural products through subsidies, which can balance quality, price, and service.

For example, JD Supermarket has collaborated with Longzhou County in Guangxi and Three Squirrels to customize a new product, Hawaiian fruit, picking high-quality "Guire 1" fresh fruit, which will be directly supplied to JD Supermarket after processing, with a selling price reduced to 19.9 yuan per catty. It is understood that to ensure quality, JD Supermarket has established a full-chain control mechanism covering pre-sales, sales, and after-sales, and also ensures quality through random inspections and other methods.

However, the supermarket business has become a battleground for e-commerce platforms, and JD Supermarket faces many challenges in order to truly leverage its advantages.

In early 2023, Douyin Supermarket officially launched and gradually improved its supply chain construction capabilities, actively expanding offline through cooperation with offline supermarkets; its old rival Tmall Supermarket is also making efforts, launching half-day delivery services in Hangzhou last year; at the end of last year, Meituan Buy officially changed its name to Xiaoxiang Supermarket and began to expand to all categories.

From category coverage to delivery efficiency, from online-offline integration to visiting the source factories and agricultural product bases, the competition in the supermarket business among e-commerce platforms is intensifying, entering a new round of competition.

As a key piece for JD to win in the e-commerce market, JD Supermarket must go all out in the future