JD.com Launches New Groceries Unit to Compete with Alibaba’s Freshippo

JD.com Launches New Groceries Unit to Compete with Alibaba’s Freshippo

UTC by Babafemi Adebajo · 2 min read
JD.com Launches New Groceries Unit to Compete with Alibaba’s Freshippo
Photo: Shutterstock

While JD.com’s revenue rose 22.9% year-over-year to 150.28 billion yuan from 122.29 billion yuan, Alibaba’s revenue rose 3% year-over-year to 29.1 billion yuan.

Chinese e-commerce merchant JD.com may be planning to create a new groceries unit to rival Alibaba‘s Freshippo unit, according to reports. While the restructuring is yet to be made public, emerging reports suggest the new unit will combine 7Fresh supermarket chain group-buying platform Pinpin and its online services.

New Groceries Unit of JD.com

The new unit ‘Innovative Retail’ will have Yan Xiaobing, the former head of JD.com’s international business, as its leader. Xiaobing will report to Sandy Ran Xu, the new CEO of JD.com.

JD.com announced a record haul of $42 billion at its 2023 gala. The firm hopes to establish itself as a retailer of fresh food and groceries. By leveraging its existing online platform and logistics network, the e-commerce giant hopes to serve millions of customers nationwide. The firm hopes to create seven listed firms that will each be worth at least $14 billion apiece within the next twenty years.

According to Sandy Xu, they “are confident that our innovative retail business will continue to grow rapidly and become an important driver of our future growth.”

JD.Com vs Alibaba: The Battle for Dominance

While JD.com’s revenue rose 22.9% year-over-year to 150.28 billion yuan from 122.29 billion yuan, Alibaba’s revenue rose 3% year-over-year to 29.1 billion yuan. Despite facing regulatory scrutiny and pressure from the Chinese government, both companies are expanding their footprint and services into physical retail.

With data from Mintel suggesting the Chinese groceries market will be worth $1.4 trillion by 2024, JD.com and Alibaba are both vying for a larger share of the market. Consequently, Freshippo is in the process of raising funds and potentially listing separately in Hong Kong. Local media reports suggest that Freshippo will apply to the Hong Kong exchange for approval as a spin-off soon. Despite taking seven years to achieve profitability from its main grocery brand Hema Xiansheng, Freshippo now has a market value of about $30 billion. It could also raise to $10 billion in its IPO.

Will JD.com’s new unit also spin-off from its parent company? This is a question several investors and analysts are asking while comparing the two rivals’ strategies and prospects. However, it remains to be seen whether JD.com can replicate Freshippo’s success.

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