Accelerating the layout of front warehouses, what kind of battle is JD planning to fight? | Krypton·Major Events

Author | Xie Yunzi

Editor | Zheng Huaizhou

Recently, 36Kr learned from multiple sources that JD.com's self - operated supermarket, "JD 7FRESH", is accelerating the layout of warehouse - stores. It plans to add 20 warehouse - stores in Tianjin by the end of June this year, and there are also relevant layouts in Beijing and other places.

In September 2024, the Songjiazhuang warehouse - store of JD 7FRESH Supermarket in Fengtai District, Beijing opened. It features "delivery in as fast as 30 minutes" and attracts consumers with high - quality products, low prices, and high timeliness. According to a previous report from Lian Shang Wang, there are more than 20 deliverymen in this store, and each person can deliver about 50 orders per day on average.

Currently, JD 7FRESH focuses on areas such as business districts, office buildings, and residential areas, and provides services through large - scale fresh food supermarkets and warehouse - stores. There are 68 queryable stores nationwide, including 37 in Beijing, 10 in Tianjin, 19 in Guangzhou, 6 in Shenzhen, 2 in Shanghai, 2 in Langfang, and 1 in Foshan. However, there is no display of the front - warehouse business on the official website of JD 7FRESH.

During a recent visit by 36Kr, JD 7FRESH warehouse - stores have opened in many places in Beijing, such as Shahe, Yaojiayuan, and Shilihe. On recruitment platforms, multiple warehouse - stores, including Yicheng Jingyuan and Hexie Store, have also posted social recruitment notices for positions such as stock clerks. A JD 7FRESH staff member told 36Kr that the Shahe warehouse - store is also known as "the fourth warehouse of Wucai City Store". Except for this warehouse - store, the other three warehouses all have fresh food delivery services.

According to the same source, in 2025, at least dozens of new stores, including JD 7FRESH supermarkets and warehouse - stores, are planned to be opened in the Beijing area. Regarding this, 36Kr inquired about the specific store - opening situation of JD 7FRESH warehouse - stores but has not received a response yet.

The Shahe warehouse - store of 7FRESH Supermarket. Photo from 36Kr

It is worth noting that JD's front - warehouses are not limited to 7FRESH Supermarkets. To some extent, JD 7FRESH has also found a key direction for development through the layout of its warehouse - store business.

In January 2018, JD's first offline fresh food supermarket, 7FRESH, officially opened in Dazucheng Plaza in Yizhuang, Beijing. This was a new attempt by JD in the fresh food field. At that time, Hema, the "pioneer" of new retail highly anticipated by Alibaba, had already opened 25 stores nationwide.

However, "to ensure the maturity of the model before replication", JD 7FRESH did not expand rapidly in the following years.

An undeniable fact is that against the backdrop of the pandemic, whether it was the store - warehouse integrated fresh food supermarkets led by Hema or the fresh food e - commerce platforms in the context of front - warehouses, the consumer demand for "home delivery" of groceries reached its peak. After the consumption habits were formed, the fresh food industry expanded rapidly, but the front - warehouse model was controversial due to the inability to balance scale and efficiency.

On many occasions, Hou Yi, the founder of Hema, has publicly expressed his doubts about the front - warehouse model. He once said bluntly that the front - warehouse model has difficulty overcoming stubborn problems such as category breadth, customer unit price, gross profit margin, and loss. In his early view, the front - warehouse business model is difficult to be profitable unless it can charge large - scale logistics fees to cover costs.

In July 2022, Meicai, a US - listed company, went bankrupt due to blind expansion and a broken capital chain. This star enterprise, favored by capital, had attracted tens of billions of dollars in financing and had more than 600 front - warehouse stores nationwide.

The collapse of Meicai cast a shadow over the entire industry. It was also during this period that many fresh food supermarket brands with an Internet background in first - tier cities were in a dilemma of being unable to penetrate into lower - tier markets and prove their business models. Leading players such as Meituan Xiaoxiang Fresh and Dingdong Maicai also began to adjust the store types and market layouts of their front - warehouses.

In June 2023, JD Group established the "Innovative Retail Department", which integrated businesses such as JD 7FRESH and front - warehouses. This department focuses on offline and instant retail scenarios and is committed to providing consumers with a more convenient and efficient shopping experience. At this time, JD had already pilot - operated two front - warehouse formats in Beijing.

In October last year, JD 7FRESH completed the integration of stores and warehouses and improved the fulfillment time to within 30 minutes. At the same time, JD 7FRESH also fully launched the activity of "unbeatable low prices, no fear of comparison", and some products were even discounted up to 50%.

At this time, its "old rival" Hema restarted its front - warehouse business in August last year. The purpose was to take advantage of the front - warehouse to fill the gaps in the service coverage of large stores, further expand market share, and meet the needs of different consumer groups.

According to a report from China Entrepreneur, as of the second quarter of 2024, Xiaoxiang Fresh had 680 front - warehouse stores, of which 550 were located in first - tier cities such as Beijing, Shanghai, Guangzhou, and Shenzhen. However, some people close to Meituan questioned this data, believing that Xiaoxiang's progress in opening front - warehouses was relatively cautious.

It is also worth noting that Dingdong Maicai, which has a strong presence in the Jiangsu, Zhejiang, and Shanghai regions, recently announced its full - year profit for the 2024 fiscal year.

At the earnings conference call on March 7, Liang Changlin, the founder and CEO of Dingdong Maicai, said: "The rapid growth of the company's performance is mainly due to the continuous improvement of user penetration rate, user conversion rate, and user ARPU (average revenue per user) in the existing regions."

Currently, Dingdong Maicai has built its own supply chain and basically has the ability to develop and continuously iterate products across the entire value chain. In the future, Dingdong Maicai will restart its expansion strategy, continuously open new front - warehouses, and strengthen its supply chain and product capabilities. Its original goal of opening 110 new front - warehouses in 2024 was actually exceeded with 130 new front - warehouses opened.

As of the close of the US stock market on that day, Dingdong Maicai's closing price was $3.56, up 13.38%. After proving its viability, Dingdong Maicai has entered a new development cycle. The front - warehouse format, after a period of dormancy, is showing a strong recovery momentum.

Judging from JD 7FRESH's current strategy, it may hope to build brand competitiveness and reputation through more cost - effective products and special services.

At a JD 7FRESH supermarket in Beijing, 36Kr found that there were many promotional and discounted shelves in the store, attracting local residents to stop and buy. According to data provided by JD, the prices of its "unbeatable low - price" products are about 10% cheaper than those on other platforms. In addition, JD 7FRESH also lowered the free - shipping threshold before the Spring Festival, and JD PLUS members also have exclusive free - shipping rights.

Not long ago, Yan Xiaolei, the CEO of Hema, also told the media bluntly: "Hema will not be sold. It will be unique." Behind this statement is a major strategic adjustment, that is, "Hema will abandon the comparison with Sam's Club, reduce the number of X - member stores, implement full - scale discounting, and focus on the parallel development of large fresh food stores and NB discount stores."

It is still unknown whether the fresh food industry will start another price war, and whether the front - warehouse business model will fall into the dilemma of short - term scale and profitability after it is truly proven.

From the perspective of JD Group, JD 7FRESH's increased investment and layout in warehouse - stores are just one part of the group's plan to build a large "instant retail" ecosystem, and it may also become the most critical battlefield.

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This article is from the WeChat official account "36Kr Finance and Economics". The authors are Xie Yunzi and Zheng Huaizhou. Published by 36Kr.