Hema Fresh, or Freshippo, the Alibaba-owned supermarket chain has opened its flagship store on JD.com, one of the group’s main competitors. The shop was registered in August but took its first order on the 1st of November with next day delivery. The shop mainly offers Hema MAX, Hema’s own brand of groceries. The store is also participating in the Jingdong Daojia programme, JD.com’s local delivery system that uses offline Hema shops as fulfilment centres.
Under JD’s 1-hour delivery service, Hema is already offering 1.5-hour guaranteed delivery for its merchandise, including fresh vegetables, fish and seafood. With free delivery on orders over 49 RMB (6.74 USD), Hema beats Yonghui Superstores’ minimum of 59 RMB (8.12 USD) and Sam’s Club’s 99 RMB (13.62 USD).
Indeed, Hema launching its JD.com store is interpreted by some as its next step in competing with Sam’s Club, after launching a “high-end” Premier Shop. Sam’s Club works closely with JD.com, with a flagship store and next-day delivery fulfilled by JD, as well as Sam’s own instant delivery on both 1-hour service and Jingdong Daojia. Sam’s also offers a 70 RMB (9.63 USD) coupon for purchases of membership via JD.com. Hema’s move seems to be following in Sam’s Club’s footsteps.
The market for instant-delivery retail consistently grew 50% year-on-year (YOY) in recent years, reaching 504.29 billion RMB (69.36 billion USD) in 2022. It is estimated that the market in 2025 is going to grow to 3 times its 2022 size. Meanwhile, JD.com’s instant-delivery retail branch earned 2.8 billion RMB (385.13 million USD) in the second quarter, growing 23% YOY and reversed the 350 million RMB (48.14 million USD) loss in the first quarter.
JD.com has established its reputation as the “first stop” for online grocery shopping. Most of Hema’s competitors, including Sam’s, are all on the platform. Since Alibaba was split into its current “1+6+N” model, Hema, as part of the “N”, can make its own decisions on its strategies and form partnerships as it sees fit. Working with JD.com has become an inevitable step for the brand to grow.