---
title: "Internet Giants Set Their Sights on Traditional Supermarket Business"
description: "A major shift in the 2025 market is internet companies entering offline retail. In August, Meituan opened its first offline hard discount store, Happy Monkey, with more planned. JD's 7Fresh is targeting 100+ 'store+warehouse' locations in Beijing and 20 in Tianjin by 2025, while Alibaba is retaining Hema's dual-format assets. This article analyzes why internet companies are entering retail and their strategic approaches."
author: "戚特"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-09-23"
categories: "Retail Formats"
language: "en"
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markdown: "https://xinjignxiao.com/en/articles/internet-giants-set-their-sights-on-traditional-supermarket-business-cdcb20c8.md"
original_source: "https://mp.weixin.qq.com/s/YW7bAUePyRHLDfgYJahAfw"
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attribution: "New Distribution — https://xinjignxiao.com/en/articles/internet-giants-set-their-sights-on-traditional-supermarket-business-cdcb20c8/"
citation: "戚特. “Internet Giants Set Their Sights on Traditional Supermarket Business.” New Distribution, 2025-09-23. https://xinjignxiao.com/en/articles/internet-giants-set-their-sights-on-traditional-supermarket-business-cdcb20c8/"
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---

# Internet Giants Set Their Sights on Traditional Supermarket Business

> A major shift in the 2025 market is internet companies entering offline retail. In August, Meituan opened its first offline hard discount store, Happy Monkey, with more planned. JD's 7Fresh is targeting 100+ 'store+warehouse' locations in Beijing and 20 in Tianjin by 2025, while Alibaba is retaining Hema's dual-format assets. This article analyzes why internet companies are entering retail and their strategic approaches.

A major shift in the 2025 market is internet companies entering offline retail. There has been considerable industry discussion on this topic.
First, in August this year, Meituan officially opened its first offline hard discount retail store, Happy Monkey. In addition to Happy Monkey, the large-store project being prepared by XiaoXiang Supermarket is expected to open within the year.
At the same time, JD.com's 7Fresh is anchoring its 'store + warehouse' strategy, with a 2025 target of 100+ 'store + warehouse' locations in Beijing and 20 'warehouse stores' in Tianjin, focusing on density coverage in high-tier cities, while also opening 5 large discount supermarkets in Zhuozhou, Suqian, and other locations.
On Alibaba's part, on one hand it is shrinking traditional offline assets, and on the other hand it is retaining Hema's dual-format assets: Hema Fresh (large stores) + ChaoHeSuan NB (community hard discount).
Why are internet companies all opening supermarkets? Many people probably have this question.
A while ago, I met a friend working at a major internet company. He joked: 'Internet giants can no longer compete with each other, so they might as well compete in industries that are easier to compete in.'
Do internet companies really have an advantage in competing in the offline retail market? Retail is such a tough business, so why are internet companies entering retail?
This article will break this down.
Why Internet Companies Are Entering Retail
First, we need to understand that the internet industry today has undergone tremendous changes.
How has the industry changed? We can understand it with a simple formula.
In the internet industry, there is a formula to describe the ROI (Return on Investment) of user acquisition efficiency:
LTV (Lifetime Value) refers to the lifetime value of a user, and CAC (Customer Acquisition Cost) refers to the average cost invested to acquire a new user.
In the early stages of internet development, the CAC across the industry was extremely low. When the earliest portal websites and social networking sites first appeared, there was almost no user acquisition cost; platforms relied entirely on user fission. You can think of CAC as being close to zero.
But as the internet industry began to mature and internet users gradually increased, user acquisition costs started to rise. Pinduoduo used WeChat social fission ('cut a knife') from 2016-2017, with extremely low customer acquisition costs. It can be said to be the last wave of low-CAC explosive growth cases.
Entering the late stage of internet development, the low-hanging fruit is gone. In the social e-commerce era, user acquisition costs exceeded 200 yuan per user. I vaguely remember that at the peak of online education development, companies like New Oriental Online, Yuanfudao, and TAL Education saw customer acquisition costs soar to hundreds or even thousands of yuan per user. Recalling it today is still embarrassing.
Now, the penetration rate of China's internet industry has reached over 80%, with a base of 1.1 billion netizens being a temporary ceiling. There are no new traffic pools in the industry.
All internet platforms have now formed a consensus: the era of acquiring incremental users is over. What needs to be considered now is how to increase user LTV.
The landmark events this year are:
(1) Meituan strategically abandoned its Meituan Select business, which represents Meituan's phased abandonment of further expanding its user base, choosing instead to deeply cultivate existing users for value enhancement;
(2) Alibaba integrated its Taotian business group and local life business group.
Today, for internet companies, there are roughly five ways to further increase user LTV:
  * Near-field transformation
  * Personalized recommendations
  * Ecosystem extension
  * Subscription/membership systems
  * Mindset establishment
These methods are typical ways to increase consumer LTV. Simply put, they make it easier for consumers to obtain goods (near-field transformation), better understand consumers (personalized recommendations), make consumers more dependent on you (ecosystem extension, subscription/membership), and make consumers trust you more (mindset establishment).
First, the near-field transformation of e-commerce is already a very clear trend. In Alibaba's latest semi-annual report communication, Jiang Fan and Wu Yongming clearly expressed that AI and instant retail are Alibaba's key directions. This corresponds to the near-field transformation and personalized recommendations I mentioned.
In addition, integrating the Taotian business group and the local life business group is to achieve ecosystem extension. Mining user value based on Alibaba's big membership and locking in the user lifecycle falls under the subscription/membership category. Of course, it's not just Alibaba; Meituan has its own Shen Member system, and Amazon has its Prime membership system.
These membership systems can help internet companies achieve online-offline integration. In the future, Alibaba's big membership system will be connected with Hema's membership system, and Meituan's Shen Member will be connected with Happy Monkey's membership system.
High-quality offline retail/goods supply is a strategy for internet platforms to establish user mindset. Amazon acquired Whole Foods, using Whole Foods' high quality to establish an anchor for its Prime members. Imagine if every internet platform today had a quality supermarket (like Sam's Club, Pangdonglai, or Xianfeng), the strategic significance for the platform would be immense.
Strategic Demands Breakdown
Of course, each company's demands for entering the offline retail market are different.
First, Meituan's entry into offline retail should not be viewed solely from a supermarket perspective.
Frankly, Meituan's capability in offline supermarkets is currently insufficient. But from the perspective of the entire Meituan ecosystem, it has significant implications for local life service supply.
Currently, Meituan has two offline supermarket lines running simultaneously: Happy Monkey community hard discount and a large supermarket benchmark store project.
From Meituan's ecosystem perspective, Happy Monkey is a 'visible store, hidden warehouse.' From the consumer's perspective, Meituan is opening a supermarket, but from the ecosystem perspective, it is essentially a front warehouse. Combined with delivery/flash purchase, it can further increase urban order density, reduce rider empty driving and fulfillment costs. Large stores handle city-level inventory and processing, concentrating slow-moving/large items in large stores, while fast-moving items are pushed down to Happy Monkey.
So Meituan is ostensibly opening offline supermarkets, but it is improving and supplementing the high-quality offline supply within the entire ecosystem, while also further optimizing regional order density.
At the same time, Meituan's launch of the Happy Monkey project is, to some extent, a defensive strategy against Hema NB.
Hema NB's average order value in East China is about 60 yuan, which largely overlaps with XiaoXiang Supermarket's target order value, customer base, and categories, and it has lower gross margins and faster turnover, which will inevitably put pressure on XiaoXiang Supermarket's business in the future. Therefore, Meituan also needs to make early arrangements.
Now let's look at Alibaba.
Alibaba currently retains two assets in offline retail: Hema Fresh and Hema NB (ChaoHeSuan). These two assets will play an important role in the future near-field transformation of the Taotian e-commerce ecosystem.
According to Jiang Fan's recent statements, Alibaba divides the non-meal instant retail sector into two parts:
> 1. Near-field native model, i.e., lightning warehouse + Hema's front warehouse;
>
> 2. Near-field and far-field combined model, i.e., transforming Tmall Supermarket into near-field + order flow to brand offline stores.
Hema's store-warehouse integration covers a 3km radius. In the Taotian system, it naturally serves as a supplement and enhanced version of the lightning warehouse system, especially for difficult categories like fresh produce, cooked food, and prepared vegetables.
NB focuses on hard discount, streamlined SKUs, high private label ratio, and emphasizes low prices and fast turnover. In the future, it is naturally suitable as a lightning warehouse node, filling the gaps in Hema Fresh's price band, gross margin structure, and turnover speed.
Ultimately, combining Tmall Supermarket's long tail + Hema Fresh's fresh products + NB's low price and fast turnover into one assortment to serve consumers should be Alibaba's current strategic focus.
Finally, let's look at JD.com.
JD.com entered offline retail not late, but its strategy has been very lost until today.
JD retail is essentially B2C e-commerce + self-operated supply chain, and it was initially known for 3C home appliances and large durable goods, lacking entry points in high-frequency consumption.
So as a platform with natural shortcomings, JD must defend, but it is difficult to organize an effective defense. Meituan is attacking instant retail, so JD must establish offline nodes, otherwise the home delivery scenario will be completely taken away. Alibaba has Hema + Tmall Supermarket, so JD also needs offline anchors to maintain equal bargaining power with brand owners on the supply chain side.
Above, we discussed the different strategic demands of internet e-commerce companies in the offline retail field.
But in terms of specific strategic paths, internet companies have shown a high degree of tacit understanding and consistency.
Simply put, the standard strategy for internet e-commerce in offline retail today can be summarized as: 'benchmark store + community store + front warehouse + instant retail.'
That is, use **one** regional benchmark large store to establish consumer brand mindset, **several** community stores for density coverage, **N** front warehouses for consumer reach, and **∞ (infinite)** lightning warehouses + direct-operated e-commerce for long-tail product reach.
The three images above summarize the offline + near-field business formats of Alibaba, Meituan, and JD.com. The commonality is that large stores establish mindset and increase average order value. Community stores increase density and also serve as front warehouses. Front warehouses enable 30-minute consumer reach and increase repurchase, while long-tail products are supplemented by the near-field e-commerce model.
We mentioned that Tmall Supermarket's long tail + Hema Fresh's fresh products + NB's low price and fast turnover combine into one assortment to serve consumers. This is likely a cross-industry disruption for the offline supermarket industry. The long-tail standard products, fresh produce, and fast-moving products in traditional supermarkets are being segmented by near-field e-commerce.
A New Cycle of Change in the Internet Industry Has Arrived
So today, the development of internet companies has far exceeded our past understanding.
The earliest internet companies attempted e-commerce, such as Webvan after 2000. Although it failed due to the times, it was the first attempt in Silicon Valley to connect internet tools with consumers. But over the past two decades, the thinking of all internet e-commerce has been how to further migrate consumer behavior online.
However, today the laws of internet industry development may have entered a new node, where online and offline will give rise to a new round of integration.
There are reasons for changes in the competitive landscape and the complete peak of online traffic. This round of internet industry transformation is about achieving a closed loop of online traffic + offline scenarios + instant fulfillment, realizing unified home delivery, store visits, and far-field user mindset, thereby completing near-field transformation to increase user LTV and drive new growth.
At the same time, Alibaba is currently fully integrating the core AI functions of its applications. If a Super Agent truly emerges in the future, achieving a super dialog box for C-end users and aggregating all user scenarios with online and offline product supply, this would undoubtedly be another disruption for offline retail.
Agents would make optimal path decisions among lightning warehouses, Hema front warehouses, Tmall Supermarket, brand stores, and third-party stores based on cost, timeliness, and availability. Orders would no longer be fixed to a specific business format, and stores would adapt to instant delivery, self-pickup, or in-store services. This would be truly disruptive for offline store operations.
This round of internet industry transformation has just begun, and its impact on offline retail will be extremely profound. From the current perspective, the future is still uncertain.
But the important thing is, while you are still studying how to make candles brighter, you fail to realize that electric lights have already illuminated the entire city.


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## Citation metadata

- Publisher: New Distribution
- Author: 戚特
- Published: 2025-09-23
- Canonical: https://xinjignxiao.com/en/articles/internet-giants-set-their-sights-on-traditional-supermarket-business-cdcb20c8/
- Original source: https://mp.weixin.qq.com/s/YW7bAUePyRHLDfgYJahAfw

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