JD.com launches new groceries unit to compete with Alibaba’s Freshippo.

The Chinese e-commerce company JD.com is reportedly planning to create a new groceries unit that will compete with Alibaba’s Freshippo unit. While the details of the restructuring have not been made public, emerging reports suggest that the new unit will combine the 7Fresh supermarket chain, group-buying platform Pinpin, and its online services.

New Groceries Unit of JD.com

The new unit, called “Innovative Retail,” will be led by Yan Xiaobing, the former head of JD.com’s international business, and will report to Sandy Ran Xu, the new CEO of JD.com. The company announced a record haul of $42 billion at its 2023 gala and hopes to establish itself as a major retailer of fresh food and groceries. By leveraging its existing online platform and logistics network, JD.com hopes to serve millions of customers nationwide and create seven listed firms, each worth at least $14 billion 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

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

With the Chinese groceries market expected to be worth $1.4 trillion by 2024, JD.com and Alibaba are both vying for a larger share of the market. As a result, Freshippo is in the process of raising funds and potentially listing separately in Hong Kong. It could also raise up to $10 billion in its IPO. However, it remains to be seen whether JD.com can replicate Freshippo’s success.