---
title: "The Giant Paths of Home Delivery Retail: Who Will Win and Who Will Lose"
description: "Alibaba upgraded its Tmall Supermarket business group to a same-city retail business group, JD.com established a large supermarket omni-channel business group and recently announced its 'Survival of the Fittest' same-city retail project, while Meituan set up a home delivery business group and a grocery shopping division, actively expanding beyond food delivery with the slogan 'Meituan Delivery, Fast Delivery of Everything.' Home delivery retail is a key focus for these giants, and this article explores their paths, gains, and losses in this sector."
author: "张陈勇"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
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published: "2020-10-16"
language: "en"
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# The Giant Paths of Home Delivery Retail: Who Will Win and Who Will Lose

> Alibaba upgraded its Tmall Supermarket business group to a same-city retail business group, JD.com established a large supermarket omni-channel business group and recently announced its 'Survival of the Fittest' same-city retail project, while Meituan set up a home delivery business group and a grocery shopping division, actively expanding beyond food delivery with the slogan 'Meituan Delivery, Fast Delivery of Everything.' Home delivery retail is a key focus for these giants, and this article explores their paths, gains, and losses in this sector.

Alibaba upgraded its Tmall Supermarket business group to a same-city retail business group, JD.com established a large supermarket omni-channel business group and recently announced its 'Survival of the Fittest' same-city retail project, while Meituan set up a home delivery business group and a grocery shopping division, actively expanding beyond food delivery with the slogan 'Meituan Delivery, Fast Delivery of Everything.'
Home delivery retail is a key focus for these giants, and this article explores their paths, gains, and losses in this sector.
**-01-**
**JD.com's Path in Home Delivery Retail**
In 2012, JD.com partnered with Shanxi Tangjiu convenience stores, making them JD's pickup and logistics points, while JD became an extension of Tangjiu's product range (a 'virtual second floor'). JD had many products but was far from customers, while Tangjiu was close but had limited products, seemingly complementary. However, for customers, pickup was less convenient than home delivery, and the two entities had different goals, making coordination difficult. The partnership's results fell short of expectations, marking JD's initial foray into O2O.
In 2014, JD tested a home delivery project called 'Pai Dao Jia' in Wangjing, which was the predecessor of JD Daojia. In 2015, it was renamed JD Daojia, with Hou Yi as its head.
Hou Yi had worked at Shanghai Kedi convenience stores for many years before joining JD in 2007, becoming one of the first external professional managers after JD's funding. He was responsible for JD's logistics planning and was a key contributor to the Asia One warehouses, achieving several firsts.
Given his convenience store background, Hou Yi was put in charge of JD's O2O efforts. After leading JD Daojia, he felt that a loose platform model couldn't solve inventory and product quality issues, and that fresh food delivery required self-operated, tightly controlled stores. He proposed a self-operated store concept, but JD's top management didn't approve it. Hou Yi later left JD, joined Alibaba, and founded Hema Fresh, which is another story in Alibaba's home delivery retail path.
JD's heavy investment in JD Daojia was partly inspired by Instacart, which is now a company with a market value exceeding $10 billion. At the time, learning from advanced foreign models and introducing them to China was a common path for Chinese entrepreneurs.
Instacart is a US project similar to JD Daojia. Its success is partly due to Americans' willingness to pay for services; for many, paying $7 per order for delivery is reasonable. In China, if customers bore the full delivery cost, there would be no orders.
JD Daojia was officially launched in 2015. Liu Qiangdong had high hopes for it, telling media he would personally oversee the project, aiming to make it as important to JD as WeChat is to Tencent. He approved significant investments. **JD's loss in 2015 was 9.4 billion yuan, the highest in its history, largely due to investment in JD Daojia.**
Initially, JD Daojia used a loose platform model with weak control over goods, leading to issues like out-of-stock after ordering and poor product quality upon delivery. In 2015, a review of JD Daojia, titled 'JD O2O Experience Report,' documented that between June 4 and August 1, out of 89 purchases, there were 18 late deliveries, 6 out-of-stock items, and 1 missed order, a problem rate of 23%. Thus, customers acquired through massive traffic spending were hard to retain, making JD Daojia an investment black hole.
JD then made two adjustments: first, it merged JD Daojia with Dada, with JD holding 49% stake, removing it from JD's financial statements to avoid dragging down the group's results. Second, it shifted JD Daojia from a loose platform model to a deep cooperation model with retailers, focusing on improving user experience.
Dada's founder, Kuai Jiaqi, was formerly a vice president at Anjuke and founded Dada with Sequoia Capital's support, quickly growing in on-demand delivery. Dada once handled 80% of Ele.me's delivery orders, but as Meituan and Ele.me developed their own delivery teams, Dada launched 'Pai Lequ' to compete directly with Meituan Waimai.
'Pai Lequ' didn't develop smoothly. In 2016, Liu Qiangdong was considering how to handle JD Daojia, and with Sequoia's introduction, JD Daojia merged with Dada, forming New Dada, with JD Group holding 49%.
For Dada, the merger provided a more mature delivery platform and access to JD Group's last-mile delivery orders. For JD, it offloaded the costly JD Daojia project and ensured delivery capacity during promotions like 818.
JD Daojia's CEO changed from Hou Yi to Deng Tianzhuo, then to Wang Zhijun, and then to Kuai Jiaqi. New Dada's most important transformation of JD Daojia was deepening cooperation with retailers, turning the loose platform model into a close partnership model.
In 2017, JD Daojia announced an empowerment strategy, including traffic empowerment, efficiency empowerment, and user operations empowerment. Traffic empowerment meant integrating JD Daojia into the JD.com mall entrance to convert traffic. Efficiency empowerment involved developing fulfillment and inventory management tools to improve store picking efficiency and optimize inventory. User operations empowerment allowed merchants to conduct marketing and operations through the JD Daojia app.
JD Daojia had a foundation of deep cooperation with offline supermarkets. In 2015, JD invested 4.3 billion yuan in Yonghui Superstores, and in 2016, Walmart invested in JD, taking a 12% stake. JD's investment in Yonghui aimed to leverage Yonghui's supermarkets for JD's fresh O2O, but Yonghui was also actively pursuing home delivery retail, leading to significant differences in cooperation.
In contrast, JD's cooperation with Walmart was deeper. Walmart invested in JD Daojia, actively remodeled its stores for home delivery, put all stores on JD Daojia, established rapid-pick warehouses in some stores, opened the small-format 'Huixuan' smart supermarkets, and included its Sam's Club in the cooperation, setting up Sam's Club front warehouses.
The JD Daojia entrance on the JD app hasn't always been present. In 2017, Liu Qiangdong told media that JD focused on B2C scheduled delivery for fresh food, without mentioning the one-hour delivery of JD Daojia, indicating JD's attitude toward JD Daojia was still trial-and-error.
Beyond JD Daojia, JD's other major move in home delivery retail was launching 7Fresh. Hema Fresh's success in Shanghai showed JD a new solution for home delivery retail.
In early 2018, JD's first 7Fresh store opened in Beijing. It was said to be led by the former head of Guoshuhao, and unlike Hema's refinement, the first 7Fresh store gave consumers a European-American feel.
In September of the same year, Wang Xiaosong, JD Group's senior vice president and president of JD 7Fresh, announced plans to open 1,000 7Fresh stores in 3-5 years, and held strategic meetings with real estate companies like Vanke, Joy City, Poly, and Greenland to prepare for large-scale expansion.
JD 7Fresh did expand quickly, opening stores in Hebei, Tianjin, Guangzhou, Foshan, Dongguan, and Chengdu. At the time, they offered double salaries and JD stock options to poach Hema store managers, but new store performance fell short of expectations, and rapid expansion soon halted, entering an adjustment period.
New retail supermarkets require high-density stores in the same region to support backend and supply chains. JD 7Fresh's scattered multi-region expansion made it difficult to solve supply chain issues. Even Hema Fresh faced challenges in non-first-tier cities due to insufficient consumption power, leading to poor performance.
In 2019, rumors circulated about 7Fresh being spun off, laying off staff, or even sold. In April 2020, the Chengdu Momo New City store closed. Overall, JD 7Fresh's path has been bumpy and hasn't developed as expected.
During this period, JD 7Fresh made three adjustments: first, the head changed from Wang Xiaosong to Wang Jing, former COO of China Resources Vanguard; second, new formats '7Fresh' and '7Fan' were launched, with 7Fan led by Li Jiang, former general manager of Hema's Beijing region; third, JD announced 7Fresh would cooperate externally, preparing to open franchise stores.
In 2019, JD launched the 'Survival of the Fittest' project. When consumers search for products on the JD app, they see one-hour delivery items sourced from nearby physical stores via LBS positioning.
JD hopes that when consumers search, it can intelligently present open platform products, self-operated half-day delivery products, and LBS one-hour delivery products, letting consumers choose, hence the name 'Survival of the Fittest.'
**The author recalls that JD Daojia products were searchable on the JD app as early as 2017. After three years of operation, another promotion in 2020 suggests plans to develop more merchants.**
JD Group's two main lines in home delivery retail are JD Daojia and 7Fresh, with attempts at front warehouses in between. New Dada has gone public, 7Fresh is still seeking breakthroughs, and JD is focusing on the 'Survival of the Fittest' project, which can be seen as a continuation of JD Daojia. Overall, JD started earliest in home delivery retail with strong momentum, heavy promotion, and significant investment, but its operational results haven't been as good as Alibaba's or Meituan's.
**-02-**
**Alibaba's Path in Home Delivery Retail**
The author believes home delivery retail has three development stages: **the first is the PC internet era, with participants like eGuo.com and Linwei.com, which failed due to lack of LBS positioning and always-online infrastructure.**
**The second is the O2O melee era, where mobile internet spawned various capital investments in home delivery retail.**
**The third is the new retail era, where four models emerged: platform model (JD Daojia), traditional supermarket model (Duodian, Yonghui Life app), new retail supermarket model (Hema Fresh), and front warehouse model (Dingdong Maicai).**
Unlike ride-hailing and food delivery, capital investments in home delivery retail during the O2O melee were largely unsuccessful. Windfall projects like Aixianfeng, Shequ001, and Kuaishubao all failed. Entrepreneurs gradually realized that fresh food home delivery is complex, requiring strong operational and supply chain capabilities, and that deep restructuring is necessary to do it well.
Alibaba actively participated in the O2O melee, investing in Shandian Gou and launching Taobao Daojia, but with little publicity until Ma Yun proposed new retail and Hema Fresh emerged, drawing more attention.
As mentioned, Hema Fresh's founder Hou Yi came from JD. In 2015, when Hou Yi communicated with Alibaba's Daniel Zhang, they agreed on Hema Fresh's top-level design: offline stores drive online traffic, online sales exceed offline, and 30-minute delivery is achieved. These agreements shaped Hema Fresh's prototype.
When Hema Fresh's Jinqiao store opened in 2016, many peers criticized it for violating basic retail logic, such as not accepting cash, too few non-food items, and expensive fresh products. However, from the perspective of the top-level design agreed by Zhang and Hou, these choices make sense.
Traditional supermarkets use fresh products as traffic drivers to meet one-stop shopping needs, so fresh prices are low. Hema Fresh meets urgent convenience needs, with a higher proportion of fresh sales, and due to different fulfillment costs, fresh products are standardized, leading to different product structures and pricing logic.
Because Hema Fresh was built around the top-level design and home delivery experience, online orders grew rapidly, leading to fast expansion. After initial success, Hema explored both self-operated stores and a platform model.
The platform model involved Hema cooperating with traditional supermarkets, empowering them with Hema's online experience. During this period, Taoxianda (formerly Taobao Daojia) was merged into Hema, and Alibaba invested in Sanjiang Shopping Club and New Huadu, and acquired RT-Mart. Sanjiang became a hot stock that year, hitting the daily limit for 11 consecutive days, ultimately rising 310%.
Hema established joint ventures with Sanjiang and New Huadu to open Hema stores in Zhejiang and Fujian, but the cooperation wasn't smooth, and the joint ventures were eventually taken back by Hema.
The cooperation between Taoxianda and RT-Mart was more successful. RT-Mart's online orders now account for 10% of total sales, with annual sales exceeding 10 billion yuan and overall profitability, proving that traditional supermarkets can do home delivery. RT-Mart is relatively low-key but is already the top traditional supermarket in home delivery retail.
Yonghui Superstores has actively invested in home delivery retail, trying various models: home delivery based on existing stores, Yonghui Life small stores, Super Species, Hema model (Yixian Life), and satellite warehouse model (Yonghui Maicai). This year, seeing RT-Mart's success, it has shifted focus back to fulfilling from traditional stores.
Hema's self-operated stores expanded quickly, partly due to success in Shanghai and partly due to competitive pressure.
In early 2018, JD 7Fresh opened its first store and announced plans for 1,000 stores, while Hema had just entered Beijing with few stores. Meituan's Zhangyu Fresh Supermarket also opened, and other players like Bubugao's Fresh Food, Yonghui's Yixian Life, Food Talk, Super Species, and Bailian Group were following suit, creating a competitive landscape focused on store count.
The retail industry was learning from Hema Fresh, and Hema felt competitive pressure, entering new cities faster. By the end of 2018, it had entered over a dozen cities including Xi'an, Chengdu, Wuhan, and Jiangsu.
After entering non-first-tier cities, Hema found operational challenges much higher than in Shanghai, mainly due to weaker consumption power and lower demand for convenient home delivery.
Hema's greatest value is home delivery retail, whose greatest value is saving users' time. However, different users have different time costs; some earn 20 yuan per hour, others 200 yuan. First-tier cities have more users with high time costs. If Hema can't solve operational issues in non-first-tier cities, it will struggle to scale, which doesn't align with Alibaba's goals.
In 2019, Hema launched Hema Cai Shi to address non-first-tier city operations. By 2020, Hema found a better solution with Hema Mini, designed to open stores in areas with lower consumption power.
Besides Hema Fresh, Hema Cai Shi, and Hema Mini, Hema also launched Hema Li, F2, Hema Xiaozhan, and Pick'n Go. Hema Li is a community shopping center, expanding delivery to the entire mall. F2 is a dining convenience store, somewhat like Super Species. Hema Xiaozhan is a front warehouse model, which Hema has abandoned. Pick'n Go is order-and-pickup, which the author feels aims to increase Hema app installations.
Alibaba's main layout in home delivery is Hema Fresh. Beyond that, Taoxianda was later placed under Tmall Supermarket, which is fully implementing same-city express delivery. Additionally, acquired Ele.me was upgraded from food delivery to delivering everything, with Koubei, Ele.me, and local life services merged to strengthen fresh and FMCG home delivery positioning.
Currently, Alibaba has formed a home delivery retail matrix including local life services + Ele.me + same-city retail business group + Hema Fresh + RT-Mart, giving it a strong position in home delivery retail.
**-03-**
**Meituan's Path in Home Delivery Retail**
Meituan, having gone through the group-buying war and food delivery war, has developed a methodology that is also visible in the fresh food home delivery battlefield. The author will first introduce this methodology.
**1. Strike Later**
In the group-buying war, Meituan was restrained in burning cash, maintaining good cost control and spending much less on brand advertising than major competitors. It focused funds on ground promotion and consumer experience. When competitors ran low on funds, Meituan increased investment and introduced new policies like refunds for non-consumption, gaining significant market share.
**2. Decisive Investment**
Meituan excels in cost control and cash flow management, but when decisive expansion is needed, it becomes bold. In the food delivery war, Meituan was initially weaker than Ele.me. The key move that changed the game was training 1,000 city managers to develop food delivery in third- and fourth-tier cities, surrounding the cities from rural areas and shifting market share.
**3. Consumer Experience**
In both wars, Meituan won significant market share by improving consumer experience.
In the group-buying war, Meituan maintained low gross margins, offering lower prices, and was the first to introduce refunds for non-consumption.
In the food delivery war, when Baidu Waimai took a break during Spring Festival, Meituan kept delivery riders working, invested heavily, and used the holiday to capture market share.
Meituan has tried many new businesses over the years, mostly without publicity. Below is a review of Meituan's attempts in fresh food home delivery, and readers can see which actions align with the three characteristics above.
In July 2017, Meituan's 'Zhangyu Fresh' opened, similar to Hema Fresh, half a year earlier than JD's 7Fresh. This suggests Meituan decided to open Zhangyu Fresh around January 2017.
In terms of timing, Meituan followed Hema Fresh faster than JD. Hema's first store opened in 2016 and ran for a year. It's said that in 2017, a dozen Meituan staff visited the Shanghai Jinqiao store, counted delivery orders, and concluded the model was viable, so they quickly followed.
Zhangyu Fresh's first store was near Meituan's headquarters in Wangjing Botai Commercial Plaza, about 2,000 square meters. Due to the rushed opening, it didn't obtain dining qualifications, so there was no dining area, and the store was smaller than Hema.
By May 2018, Zhangyu Fresh was renamed Xiaoxiang Fresh, and Meituan established the Xiaoxiang business unit. Later, Xiaoxiang Fresh had 7 stores: 2 in Beijing and 5 in Jiangsu.
Xiaoxiang Fresh was basically the same as Hema Fresh, with large seafood, a dining area, and brands like Xiang Dacheng Quick Dishes and Xiang Dacheng Chinese Food. It had its own dedicated delivery riders and integrated Meituan Waimai delivery resources during peak times.
Xiaoxiang Fresh's performance fell short of expectations. According to Beijing Business Today, in June 2018, Xiaoxiang Fresh's Fangzhuang store had about 600 online orders per day, while Hema Fresh's Xiaoying store in Beijing had over 3,000.
By April 2019, Xiaoxiang Fresh closed its 5 Jiangsu stores, keeping only 2 in Beijing. Meituan stated it had no store opening targets for Xiaoxiang Fresh, only iterating to improve operational efficiency.
In January 2019, Xu Xin of Capital Today announced at a conference that she had invested in Dingdong Daojia, signaling the spring of fresh food new retail with front warehouses. From then on, front warehouses became a focus, and Meituan began testing the model.
In March 2019, Meituan tested Meituan Maicai in Beijing, a front warehouse fresh food home delivery solution similar to Dingdong Maicai. Compared to Xiaoxiang Fresh, Meituan Maicai expanded faster. By November 2019, it had entered Beijing, Shanghai, Wuhan, and Shenzhen, with 70 stations.
By July 2020, Meituan had essentially abandoned Xiaoxiang Fresh, renaming the Xiaoxiang business unit to the Maicai business unit. It also established a Youxuan business unit for community group buying in fresh e-commerce.
**From Meituan's style and action path, two conclusions can be drawn:**
1. In terms of investment in innovative projects, Meituan Youxuan > Meituan Maicai > Xiaoxiang Fresh, indicating different challenges and difficulties for the three projects.
2. Meituan has always emphasized user experience, but hasn't made killer user experience changes in Meituan Maicai or Xiaoxiang Fresh, suggesting strong competition and difficulty in waiting for competitors to make mistakes.
Whether Xiaoxiang Fresh or Meituan Maicai, Meituan's investment and scale are smaller than competitors. Meituan mainly relies on its advantage in food delivery, using the platform for fresh food home delivery to capture market share. However, actual results show that food delivery platforms aren't suitable for fresh food home delivery; currently, front warehouses and new retail supermarkets are better solutions.
Meituan may face two outcomes in fresh food home delivery: first, due to smaller scale and slower action, it may lose the market to front warehouse and new retail supermarket leaders. Second, since front warehouses and new retail supermarkets are also relatively small, it may wait for technology maturity and model innovation to see who can seize the next opportunity and truly dominate the fresh food home delivery market.
**Summary**
This article reviews the paths and journeys of JD, Alibaba, and Meituan in fresh food home delivery. Beyond these giants, players like Yonghui, Miss Fresh, and Dingdong Maicai also have various explorations and stories.
To understand fresh food home delivery more deeply and better predict its development direction and possibilities, one needs sufficient familiarity with its history. I hope this article helps readers in that regard.
Source: Laozhang Talks Retail (ID: csdso2o)
Tips: 400-2000 yuan will be paid for any tip adopted.


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