More than a decade on, the track once called 'highly promising'—online supermarkets—still has only JD and Tmall as heavyweight players. A source close to both online supermarkets told Yilan Business that Tmall Supermarket's 2022 sales were approximately 160 billion yuan, a year-on-year increase of 33%; JD Supermarket's 2022 sales were approximately 300 billion yuan, up 11% year-on-year. Meanwhile, several other industry insiders estimate Tmall Supermarket's 2022 sales at around 100 billion yuan, and JD Supermarket's at around 300 billion yuan. Either way, both have entered the hundred-billion scale. But even so, it's hard to say who is the winner. It's like a marathon: the starting gun fires, both sides sprint forward, but halfway they realize the finish line seems to have moved. For instance, the rise of instant retail has made the battle for online supermarkets more complex and competitive. More importantly, other competitors keep joining the fray. Douyin launched Douyin Supermarket in 2022, and Meituan upgraded Meituan Select to Tomorrow's Supermarket in the same year. Tmall Supermarket and JD Supermarket are no longer fixated on mutual 'hand-to-hand combat'. JD Supermarket last year elevated 'expanding same-city business and penetrating lower-tier markets' to one of its five major strategies; Tmall Supermarket positioned itself as 'medium-to-long distance' with half-day delivery, while balancing price and quality rather than focusing solely on price. At the end of last year, Liu Qiangdong initiated JD's largest personnel reshuffle in recent years, replacing several presidents and vice presidents, including the head of JD Supermarket, who was changed from Liu Lizhen to Yao Yanzhong, an 18-year JD veteran. It is understood that in the first three quarters of last year, the growth rate of the large supermarket omni-channel business group compared to 2021 sales was only single digits. In March this year, Alibaba also underwent an organizational transformation, adjusting its structure to '6+N+1'. Under Alibaba's larger system, most businesses were once loss-making and grew on money earned from Taobao and Tmall. Now these businesses are fully independent and must learn to stand on their own. Even Tmall Supermarket, which belongs to the Taobao Tmall Commercial Group, must further focus on itself and develop in a more refined direction. Subsequently, in the major adjustment of Taobao Tmall, high-frequency businesses such as Tmall Supermarket, Taocaicai, Taoxianda, and fresh food were merged into the Supermarket Business Development Center, led by Liu Yiman. Online supermarkets are almost the last field internet companies have set their sights on. Alibaba, JD, ByteDance, and Meituan all hope to make strides in this market to gain new growth curves. But after a decade of development, they've found that traffic alone is not enough. Even internet giants, facing a brand-new retail market, need to build new capabilities—not only finding the logic of offline operations but also finding a model that suits them. Exploration of Online Supermarkets In 2010, China's internet was shifting from PC to wireless, while the main retail battlefield was still in supermarket hypermarkets that offered one-stop solutions for daily household goods. In 2011, Taobao was split into three (Etao, Taobao, and Taobao Mall), which later developed into Tmall. But independent merchants on Tmall lacked the capability to comprehensively operate categories like food and beverages, grain and oil, and household cleaning, so they couldn't provide one-stop shopping for daily necessities. To solve this, Tmall Supermarket was born. From 2011 to 2016, the head of Tmall Supermarket was always Jin Cheng (flower name: Ajian). After joining Alibaba in 2007, Jin Cheng became one of the first employees of the B2C division and Tmall's first product manager. In August 2011, Tmall became an independent company, and he began overseeing Tmall Supermarket. That year, JD was still called JD Mall, and its mobile client had just launched. To help users track their online shopping delivery progress in real time, JD Mall launched a package tracking (GIS) system. Feng Yi, who later led JD Supermarket from inception to over 100 billion yuan, was still at Walmart serving as Vice President of Dry Goods and FMCG in the China hypermarket procurement department. Tmall Supermarket was seen as Alibaba's earliest exploration of the retail industry, but early on, Alibaba internally didn't attach much importance to the supermarket business. In its founding year, after participating in the Double 11 event and experiencing warehouse overflow, the business was suspended for several months. Zhang Yong even proposed shutting down Tmall Supermarket. Thanks to Jin Cheng's insistence, Tmall Supermarket survived. But for the next three years, Tmall Supermarket didn't participate in Alibaba's biggest internal event again and was jokingly called the 'most idle team' during Double 11. Regardless, Tmall Supermarket got back on track that year and gradually expanded to eastern cities like Hangzhou, Nanjing, Ningbo, and Suzhou in 2012. In 2013, it expanded to southern regions like Guangzhou, Dongguan, and Shenzhen. In 2013, JD dropped 'Mall' from its name and fully rebranded as JD, having transitioned from a 3C online retailer to a comprehensive online retailer three years prior. In May, JD also began moving supermarkets online, and the 'cat-dog war' in the online supermarket space quietly kicked off. Feng Yi left Walmart and subsequently became Vice President at Tencent, overseeing product procurement and supply chain. From the start, JD Supermarket firmly chose the self-operated model, same as JD Mall, with JD issuing invoices to consumers directly; Tmall Supermarket, on the other hand, chose a delegated operation model: the front end was run by a delegated operator, Lanhuoyi, as the retailer; Taobao provided traffic in the middle; and the back end was suppliers, with Lanhuoyi invoicing consumers. The former buys low, sells high, earning the procurement spread; the latter doesn't own the goods—suppliers do—and earns service fees like commissions, warehousing, and logistics. But both JD and Alibaba recognized the importance of logistics, distribution, and service. JD was pouring money into building its own logistics. As of December 31, 2014, JD operated 7 distribution centers and 123 warehouses in 40 cities, with 3,210 delivery stations and pickup points, and its own employees at stations in 1,862 counties and districts across China. Alibaba took the lead in forming Cainiao Network in 2013, and Tmall Supermarket began partnering with Cainiao to offer differentiated, humanized innovative services to consumers. In 2014, Tmall Supermarket launched a service where couriers would proactively take away consumers' household trash when delivering packages, with consumers in 11 cities nationwide experiencing this service first. That same year, Tmall Supermarket officially opened its Beijing station and had already launched in 46 cities in Jiangsu, Zhejiang, Shanghai, and Guangdong, with annual sales reaching 2.5 billion yuan, while Tmall's overall first-quarter GMV had already reached 135 billion yuan. At that time, neither Tmall Supermarket nor JD Supermarket held a prominent position within their groups. Tmall Supermarket was just a business line under the Tmall division among Alibaba's 25 business units, and JD Supermarket was just a business segment under JD Mall. In 2014, JD and Alibaba listed on NASDAQ and NYSE respectively, with stock prices climbing, and Chinese e-commerce began to shine globally. That year, Feng Yi officially joined JD as Vice President of the JD Group. Tmall Supermarket and JD Supermarket Go Separate Ways The change came in 2015. In May 2015, Zhang Yong took over as CEO of Alibaba Group, and Alibaba announced its full entry into the supermarket sector. In July, Tmall Supermarket publicly announced a 1 billion yuan subsidy for Beijing users. In September, Tmall announced the launch of a 'Hangzhou + Beijing' dual-home strategy. In the following three months, Tmall Supermarket announced that mobile transaction volume in the Beijing market grew 15 times year-on-year, and digital appliance mobile sales grew over 200% year-on-year. It also claimed to have an absolute leading advantage in Beijing in both product pricing and service experience. Facing the flames of war burning at its doorstep, JD didn't sit idly by. In August, JD Group split its original procurement and sales business into four autonomous business units, attempting to motivate them to expand scale and increase sales by delegating power. At this time, Feng Yi officially took over the Consumer Products Division. Among them, JD Supermarket, under the Consumer Products Division, was highly anticipated due to its high-frequency consumption and huge market potential. The division also launched the O2O business 'JD Daojia' and invested in Yonghui Superstores. Before Double 12, JD Supermarket lit up the landmark Global Center in Hangzhou, Alibaba's home base, with advertisements—a direct challenge to Tmall Supermarket. The war had begun. 'One asset-light, one asset-heavy; at the time, both sides thought their own model was the best,' an industry observer told Yilan Business. Shortly after Feng Yi took over JD Supermarket, Jiang Pan, who also had Walmart experience, joined Alibaba in February 2016 as Vice President of Alibaba Group, working alongside Jin Cheng, and officially took over Tmall Supermarket in July of that year, while Jin Cheng was transferred to lead Alibaba's luxury discount e-commerce platform 'Mei Hui Hui'. The switch from tech-savvy Jin Cheng to traditional supermarket veteran Jiang Pan was dubbed a 'civil-military swap'. Two executives from Walmart becoming heads of Alibaba's and JD's online supermarkets was seen by an industry insider as the starting point for both sides to ramp up efforts in online supermarkets. It was also during this period that Zhang Yong positioned Tmall Supermarket as the fourth consumer platform under the Taobao system, after Taobao, Tmall, and Juhuasuan. In June 2016, JD announced a deep strategic partnership with Walmart, where Walmart would acquire 5% of JD's equity, and JD would take over 1号店 (Yihaodian), which Walmart had acquired. As one of the earliest e-commerce companies in China, 1号店 was positioned as a 'B2C-based online supermarket' and had grown rapidly since its inception, with very high market penetration in East China, especially Shanghai, where its share exceeded 30%. Under JD's arrangement, 1号店's main role was to join forces with JD and Walmart as the vanguard against Tmall Supermarket in East China. In July, Tmall Supermarket announced in Shanghai that it had grown into the largest online supermarket in China in terms of scale, imported goods, growth rate, and user base. It also said it would double investment and launch a 'Double 2 Billion Plan' to subsidize both consumers and services. Subsequently, an article titled 'A Letter from JD Supermarket Employees to Mr. Jiang Pan of Tmall Supermarket' appeared, protesting Jiang Pan's claim of being the 'largest supermarket' and challenging him on three dimensions: sales scale, delivery coverage, and merchant recruitment. In September, JD Supermarket also declared it would strive to become the absolute number one in sales, market share, and consumer satisfaction in China's online and offline supermarket sector within three years. Of course, the competition wasn't just a war of words. Like any previous battle between JD and Alibaba over a market segment, the online supermarket space didn't escape price wars. Two months after being integrated into the JD system, 1号店 announced it would invest 1 billion yuan over the next three months to compete on price with Tmall Supermarket, aiming to quickly outpace it and double its sales target. Then Tmall Supermarket announced that in Beijing and Shanghai from September 1 to 9, it would offer 100,000 orders per city per day at '50% off order value', consolidating its leading position in first-tier cities. This period was also seen by outsiders as the largest discount in supermarket history. At the end of December, 1号店, after the previous 3-month 1 billion yuan investment, announced an additional 500 million yuan through the Spring Festival, focusing on East China, especially Hangzhou, Tmall Supermarket's home base, with large-scale promotions like the New Year goods festival. In 2016, beyond price wars, competition was evident in every detail. On the same day at the end of August, Tmall held the 9.9 Global Wine Festival, with Zhang Yong saying Tmall intended to create new festivals in sub-categories and industries on top of Double 11; JD Supermarket that day announced it would partner with domestic and international liquor brands like Moutai and Wuliangye to establish China's first 'Authentic Liquor Alliance'. Wang Zhiqiang, then General Manager of JD Supermarket's Liquor Procurement and Sales Department, said JD hoped to create 10 liquor brands with annual online sales exceeding 1 billion yuan within three years. The results of that battle were unknown to outsiders. A brand owner operating on both Tmall Supermarket and JD Supermarket told Yilan Business that while both sides invested heavily and grew rapidly, compared to JD Supermarket's simple and straightforward process of selling goods to JD, Tmall Supermarket's operational process was more complex and required more effort. On December 2, Tmall Supermarket adjusted its organizational structure again: the original general manager Jiang Pan was moved to the CEO's office, and the Tmall Supermarket business unit was put under Jing Jie's management. For a while afterward, Tmall Supermarket didn't communicate much to the outside world, and speculation grew that its status might have been downgraded. Jiang Pan himself left Alibaba shortly after. An insider close to Alibaba told Yilan Business that the hottest projects inside Alibaba at the time were Hema and Taobao Live, and later Ele.me, acquired in 2018. In December 2016, the first Hema market opened, and Hema was seen as a benchmark for new retail; Taobao Live also launched that year, and the unprofitable supermarket business naturally received less attention. On the JD Supermarket side, Feng Yi continued to lead it forward according to Liu Qiangdong's goal set at the time—to become the number one online and offline supermarket within five years. In February 2017, JD Supermarket, entering the hundred-billion era, proposed the 'Double Hundred Billion Club' plan, aiming to help at least 10 brands exceed 1 billion yuan in sales and 100 brands exceed 100 million yuan by year-end. In September of the same year, JD announced the 'Double Hundred Billion Club' was achieved ahead of schedule. Judging from JD Supermarket's market size at the time, it had become, as Liu Qiangdong had planned, the 'largest supermarket online and offline'. Notably, more than a year after JD Supermarket partnered with Walmart and acquired 1号店, Alibaba spent 22.4 billion yuan to acquire RT-Mart, the largest offline supermarket in China. But after the acquisition, there wasn't much synergy with Tmall Supermarket; instead, there were frequent personnel and business changes. RT-Mart founder Huang Mingduan resigned from his director position and took some executives with him. By then, JD's partnership with Walmart was very mature, with Walmart and Sam's Club always having a traffic entry point on JD Supermarket. Plus, Feng Yi, who had built JD Supermarket, was a former Walmart executive, ensuring stability not only at the top but also in the execution layer. By this time, Tmall might have realized that a platform mindset couldn't succeed in online supermarkets, and Tmall Supermarket's model began to move closer to JD's model. A former JD Logistics employee told Yilan Business that from 2015 to 2018, Tmall Supermarket tried to poach talent from JD Logistics through Cainiao, though mostly unsuccessfully. Catching Up with JD Using JD's Model Before Double 11 in 2018, Tmall Supermarket did not renew its contract with the delegated operator Lanhuoyi, and instead made Alibaba's Zhejiang Tmall Supply Chain Management Co., Ltd. the operating entity. In November, Zhang Yong sent an all-staff letter announcing the latest upgrade and adjustment of the group's organizational system. Among changes, Tmall self-upgraded and split into 'Big Tmall', forming the Tmall Business Group, Tmall Supermarket Business Group, and Tmall Import/Export Business Division. Li Yonghe, former CEO assistant, became president of the Tmall Supermarket Business Group. Born in 1971, Li Yonghe had been involved in supply chain construction and large-scale operations in the electronics chain industry since the late 1990s. He joined JD in May 2011, serving in various roles over five years, including head of JD Mall's warehousing department and regional president for North China, and in December 2014 became Senior Vice President of JD Mall's operations system, fully responsible for its management. After taking office, Li Yonghe quickly applied JD's supply chain management experience to Tmall Supermarket. In January 2019, the Tmall Supermarket Business Group announced it would shift from a 'consignment' model to a parallel 'consignment and procurement' model. This meant the model Tmall Supermarket had adhered to for years was overturned, while JD Supermarket had been on this path for six years. In September 2019, JD Supermarket announced a strategic upgrade, launching the 'Wujing Tianze' project to achieve 30-minute delivery. The original logistics path was: from factory to JD's main warehouse—then to local forward warehouses—then to sorting centers—then to delivery stations—then to consumers. The revised path: user places order—JD uses big data and LBS weighting to assign the order to the brand's terminal stores—delivery within 3 kilometers (usually) from the partner store. In October, Tmall Supermarket also announced further supply chain upgrades. It would build near-end fulfillment centers with partners, meeting consumers' different timeliness needs through 1-hour, half-day, and next-day delivery, planning to establish a 20-kilometer three-dimensional living circle in 100 cities within six months, forming a supermarket network that meets consumers' online and offline full-scenario needs. In April 2020, JD newly established the Large Supermarket Omni-Channel Business Group, integrating the original Consumer Products Division, New Channel Division, 7FRESH, and 1号店, with Feng Yi, head of the Consumer Products Division, promoted to lead the group. Also in April, the Tmall Supermarket Business Group was upgraded to the Same-City Retail Business Group, with 'Tmall Supermarket + Ele.me + Hema' as its core. Both sides chose to integrate their supermarket businesses almost simultaneously. An industry practitioner said that the high-frequency nature of supermarket business boosts user activity and retention, and the pandemic made Alibaba and JD see the driving effect of supermarket business on the whole. But the turning point came quickly. In July 2021, Alibaba's Same-City Retail Business Group was split in two: Tmall Supermarket was separated and merged with the Import/Export Business Group, and three months later, the two were upgraded to the 'B2C Business Group', led by Liu Peng. Liu Yiman, General Manager of Tmall Global, also became General Manager of Tmall Supermarket at that time. Li Yonghe continued to oversee 'Taoxianda and Ele.me' in the original Same-City Retail Business Group and also took over local life services from Wang Lei, but his tenure was short-lived: a month later, he resigned due to the 'Alibaba female employee incident', and his vision for same-city retail was shelved. In August, Feng Yi, who had built JD Supermarket, was transferred to the Fashion and Home Business Group. Liu Lizhen, who joined JD in 2011 as General Manager of the Consumer Products Division and was previously Feng Yi's subordinate, was promoted to President of the Large Supermarket Omni-Channel Business Group. Both sides faced new challenges. Instant Retail: The Final Battle for Online Supermarkets With Liu Yiman and Liu Lizhen taking over, Tmall Supermarket and JD Supermarket saw new changes again. Liu Yiman joined Alibaba in 2012, belonging to the Tmall Import/Export Business Group, reporting to its general manager Liu Peng, and had led 'Tmall Global Direct from 0 to 1'. In public information, peers describe her as 'capable and driven'. After Alibaba acquired Kaola in 2019, Liu Yiman, then a senior director at Tmall Global, became COO of Kaola Haigou, responsible for popular categories like beauty, personal care, mother and baby, digital appliances, and in 2021 took over Tmall Supermarket. An employee of Tmall Supermarket told Yilan Business that Liu Yiman places great emphasis on balancing 'users, experience, GMV, and cost'. Her first move after taking over was to cut the 3C electronics business, which, despite high sales, had no other competitive advantage. Tmall Supermarket needed to consider more than just sales; finding its own positioning was crucial. An industry practitioner believed that many of the strongest brands in supermarkets are international, with P&G and Unilever accounting for nearly half of daily chemicals, so it was natural to transfer Liu Yiman, who handled international business, to Tmall Supermarket. Notably, after Liu Yiman took office, she expanded her core user groups from the previous housewife families and new mother families to three core groups: housewife families, new mother families, and couple families, focusing more on high-quality consumers. Meanwhile, JD Supermarket focused on lower-tier markets as a development priority. On the JD side, Liu Lizhen proposed a new BOOST strategy after taking over JD Supermarket, mainly including five major strategies: 'expanding user growth, deploying same-city business, building an open ecosystem, constructing a supply chain middle platform, and penetrating lower-tier markets', to improve supply chain matching efficiency. At this time, the three-year pandemic spurred a new track to explode—instant retail (also known as same-city retail). Chinese retail enterprises rapidly improved their digital capabilities, and the pandemic's unpredictable disruptions made long-distance e-commerce and planned demand more uncontrollable, while instant retail could meet consumers' fragmented and time-sensitive needs for fresh produce and daily necessities. This led more and more offline supermarkets and convenience stores to quickly go online, posing a huge challenge to the operational logic of Tmall Supermarket and JD Supermarket. How to transform online supermarket business to meet the wave of instant retail became the focus of both sides' strategies. In the first three quarters of 2022, the growth rate of the Large Supermarket Omni-Channel Business Group compared to 2021 sales was only single digits. At the end of last year, Yao Yanzhong, who joined JD in its early entrepreneurial stage and had been with JD for 18 years, took over JD Supermarket. At the same time, JD accelerated the integration of JD Daojia with JD's main site, officially launching the 'JD Hourly Purchase' instant retail brand and adding a 'Same City' channel on the homepage. On March 7, JD Retail CEO Xin Lijun stated at JD Retail's commendation conference that same-city business was one of JD Retail's four must-win battles for 2023. In April this year, during the major adjustment of Taobao Tmall, high-frequency businesses such as Tmall Supermarket, Taocaicai, Taoxianda, and fresh food were merged into the Supermarket Business Development Center, all under Liu Yiman's responsibility. Currently, Taocaicai and Taoxianda have been merged into Taobao Buy, and the combination of the former's 'next-day pickup' and the latter's 'immediate delivery' will further solve consumers' life service problems. Tmall Supermarket also officially launched half-day delivery starting in March this year. Now, Meituan, leveraging its advantages in local life services, has secured its own share. Douyin is also continuously increasing its efforts in online supermarkets and local life, trying to get a piece of the pie in this war. Clearly, as Chinese e-commerce enters the second half, before the instant retail war ends, neither Tmall nor JD can claim victory, and the opponents are no longer limited to each other.