JD.com Qixian accelerates, instant retail ignites the battle again

Author | Liu Baodan

Editor | Zhou Zhiyu

After officially launching its takeaway business, JD.com has turned its attention to the instant retail sector, with its self-operated supermarket JD Qixian accelerating again after a six-month pause.

On March 10, Wall Street News learned from insiders close to JD.com that the construction of JD Qixian's warehouses will fully accelerate this year, with 20 new warehouses planned in the Tianjin area by the end of June. Relevant layouts are also planned for Beijing and other regions.

This means that JD.com is once again increasing its investment in the instant retail business. Since the second half of last year, JD Qixian has entered a fast development track, first opening its first front warehouse in Beijing, then merging with JD Maicai. Now, JD.com is accelerating its store opening pace, indicating that the company's capabilities in supply chain and delivery efficiency have matured.

However, to capture a larger share of the instant retail market, JD Qixian still faces many challenges, especially competitive pressure from Hema and Meituan Xiaoxiang. Whether JD can embark on a path of scaled growth will be a key battle in 2025.

"Heavy Investment" in Beijing and Tianjin

JD.com is making another move in instant retail.

Wall Street News has learned that JD plans to add 20 new warehouses in Tianjin in the first half of the year. A warehouse is a new business model that integrates warehousing and retail functions, and it is also the mainstream model of new retail. Currently, JD Qixian has 10 stores in Tianjin, and after this layout, the number of stores in Tianjin will reach at least 30.

JD Qixian's business mainly focuses on the Beijing-Tianjin area, with 28 stores in Beijing, making it the city with the most stores. JD Qixian also has 10 stores in Tianjin. Additionally, there are a few stores in Shenzhen, Guangzhou, and Shanghai.

This increased focus on the Beijing-Tianjin layout indicates that JD is choosing to continue deepening its efforts in advantageous regions, which is also beneficial for leveraging its supply chain and delivery advantages. Retail e-commerce industry expert Zhuang Shuai stated that instant retail requires a certain store density; the higher the store density, the more regional orders there are, and the lower the regional delivery costs.

JD has been exploring instant retail for many years. JD Qixian was established in 2017, primarily serving consumers within a three-kilometer radius of its stores. The pandemic has spurred demand for instant delivery of fresh products, and in 2021, JD Qixian began to accelerate its layout, focusing on expanding in the Beijing-Tianjin-Hebei and Greater Bay Area. However, as the new retail industry entered a strategic adjustment period, JD Qixian paused its national expansion pace.

Until 2023, JD established an innovative retail department, led by veteran Yan Xiaobing, reporting directly to CEO Xu Ran. Subsequently, JD Qixian accelerated its store opening plans. Since the second half of last year, JD Qixian has launched a series of layout actions, re-entering an expansion rhythm.

In September last year, JD Qixian opened its first store in Shanghai, with daily foot traffic exceeding 10,000 people in the two weeks before opening. In October last year, JD Qixian completed the integration of stores and warehouses, improving delivery efficiency to within 30 minutes. At the same time, relying on efficient supply chain models such as "direct sourcing from production areas" and "direct delivery from sea catches," it launched low-price IP "breakthrough prices."

On the eve of the Spring Festival, JD Qixian announced a reduction in the free shipping threshold: online orders within five kilometers have a maximum free shipping threshold of only 39 yuan; if the order amount does not reach the free shipping threshold, a basic delivery fee of 3 yuan will be charged. In addition, JD PLUS members can enjoy free shipping benefits when shopping at JD Qixian After a series of preparations and explorations, JD.com has significantly accelerated the pace of its store layout.

An insider from Qixian told Wall Street Insight that Qixian's positioning mainly serves the surrounding residents, leveraging the procurement and sales team to tap into the supply chain potential, focusing on low-priced quality goods to build its differentiated capabilities. At the same time, JD Qixian continuously improves store sales through an online and offline dual-channel model.

After 8 years of development, JD Qixian is once again launching an attack on the instant retail market, demonstrating its determination. However, the internet industry has already ended the phase of aggressive expansion, and JD.com will need more patience to capture the instant retail market.

The Flames of War Spread

As a potential track beyond pure e-commerce, instant retail combines the advantages of online and offline, and has always been a favored area for major internet companies.

According to the "Instant Retail Industry Development Report (2024)" released by the Ministry of Commerce's International Trade and Economic Cooperation Research Institute, the scale of China's instant retail reached 650 billion yuan in 2023, a year-on-year increase of 29%. It is expected that by 2030, the industry scale will exceed 2 trillion yuan, with a corresponding CAGR of over 17%.

However, instant retail always faces profitability challenges, with representative companies like Hema experiencing a very tortuous development process. CITIC Securities analyst Jiang Ya believes that the previous market concerns about the front warehouse model stem from the "impossible triangle" of customer unit price, order density, and scalable expansion. However, with measures such as brand ownership and upstream supply chain extension boosting gross margin growth, the formation of consumer mindset in lower-tier cities promotes order density, thus breaking the deadlock for fresh food front warehouses.

For JD.com, launching another attack on instant retail largely indicates that the company is well-prepared.

Whether focusing on low prices or lowering the free shipping threshold to 39 yuan, these reflect JD Qixian's supply chain and delivery efficiency. Zhuang Shuai believes that JD has successfully implemented the innovative model of "store-warehouse-network" integration, gaining more confidence in efficiency and scale, which will translate into JD's price advantage.

"The physical stores of self-operated supermarkets ensure the quality of goods as seen, combined with self-operated front warehouses covering more areas to ensure fulfillment achieves the same delivery timeliness as Xiaoxiang Supermarket and Dingdong Maicai. The 'self-operated grocery shopping' on the JD APP main site can also enhance the overall supply chain scale through the hundreds of millions of users on the e-commerce platform."

However, challenges should not be underestimated. Currently, the instant retail track has entered a critical positioning period. Offline, traditional agricultural markets, fresh food supermarkets, and warehouse membership stores are becoming increasingly diversified; online, fresh food e-commerce, O2O platforms, and group buying platforms are accelerating supply chain integration, leading to intensified competition.

Hema and Meituan are also aggressively attacking the instant retail market. Hema restarted its front warehouse business last August, while Meituan Xiaoxiang is leveraging its parent platform's traffic advantages to accelerate penetration into lower-tier markets and test overseas business. Sam's Club is also laying out front warehouses, with online and offline sales basically balanced, which undoubtedly adds competitive pressure on Qixian.

As of now, Hema's number of stores has exceeded 400, and Meituan Xiaoxiang's front warehouse stores have also surpassed 600. In comparison, Qixian's store count of over 50 is not on the same scale as the former two JD.com Qixian chose to establish its presence in the Beijing-Tianjin region, largely avoiding close combat with competitors. Hema's main battlefield is in first- and second-tier cities in East China and the sinking market in counties, while Meituan's Xiaoxiang focuses on first-tier cities and the Yangtze River Delta and Pearl River Delta regions.

In 2025, JD.com, Meituan, Alibaba, and others will face the fiercest competition on the battlefield of instant retail. For JD.com Qixian to capture a larger share of the market, it needs to outperform its rivals and prove itself on the battlefield, which is not easy