Source | Paidai ID | paidaiwang Author | Jiang Shangjiu
In 2015, Pinduoduo emerged and caught traditional e-commerce platforms off guard with its core strategy of heavy subsidies and low prices. A decade later, Pinduoduo might not have expected that its once-proud low-price approach would be imitated by its predecessors, but this time the battlefield has moved from online to offline. Recently, JD.com made a high-profile move. On August 30, four JD discount stores opened in several core business districts of Suqian. On the opening day alone, the four stores cumulatively attracted 300,000 customer visits. What attracted them was not just the JD brand, but also the cost-effective prices. 30 eggs for 9.9 yuan, 24 bottles of mineral water for 7.99 yuan, and golden pillow durian at 18.9 yuan per jin... In the face of such tangible "hard discounts," people of all ages couldn't help but exclaim, "What a bargain!"
In the JD discount stores, signs reading "Everyday Low Prices" were prominently displayed.
The hard discount frenzy was not limited to Suqian. Just one day earlier, in Hangzhou, 530 kilometers away, Meituan's hard discount brand "Happy Monkey" also officially opened. Four egg tarts for 4.9 yuan, 10 jin of Wuchang rice for 39.9 yuan, and 30 sterile eggs for only 11.5 yuan—such pricing refreshed Hangzhou residents' perception of prices in a new first-tier city.
Happy Monkey's sterile eggs: 30 for only 11.5 yuan.
In this hard discount carnival, Alibaba, the veteran e-commerce player, naturally did not want to lag behind. On August 29, Alibaba's Hema announced that some Hema NB stores would be upgraded to "Super Hema NB" (a pun on "super bargain"), and on the same day, 17 stores in 10 cities opened simultaneously, launching a new exploration of hard discounts.
Some Hema NB stores have been transformed into Super Hema NB.
Why have the three major platforms chosen to lay out discount stores offline? In my view, this is a concrete manifestation of the spillover of e-commerce platforms' strong supply chain capabilities. In contrast, Pinduoduo and Douyin have relatively weaker supply chain capabilities, so they have not yet entered the fray.
The three platforms are holding high the banner of "Everyday Low Prices," and consumers do benefit, but for the e-commerce platforms, can this discount store model be sustainable?
Behind "hard discounts" lie many dividends.
According to my understanding, discount store business models can be roughly divided into two types: "soft discounts" and "hard discounts." Traditional discount brands like Hi-Tech Go and HotMaxx are called "soft discounts." Their profit logic is: buy brand-name surplus stock or off-size products at low prices, then pass on discounts to customers, and finally earn the price difference. This profit model is somewhat similar to Vipshop.
Hi-Tech Go's soft discount stores rely heavily on brand surplus stock.
Compared to "soft discounts" that rely on big brands, "hard discounts" focus more on optimizing costs in the supply chain or proactively reducing prices on private-label products, creating a cost advantage that allows them to pass on savings to customers. For example, JD discount stores leverage JD's strong logistics system to reduce overall operating costs through supply chain optimization. Similarly, Super Hema NB has a large number of private-label products; mid-to-high-end products naturally carry a premium, and proactively reducing prices on these products creates room for savings.
Therefore, unlike the logic of "soft discounts," "hard discounts" do not rely on surplus or near-expiry products. Instead, they achieve low prices by streamlining supply chains, building private labels, and compressing operating costs. Under this logic, both SKU stability and daily product supply are more stable.
In my observation, the three platforms each have their own strengths in discount retail. Who will emerge victorious? This requires analysis from multiple dimensions, including store scale, SKU count, customer positioning, and number of stores.
First, in terms of floor area and SKU count, JD discount stores are clearly the largest, with an average floor area of over 5,000 square meters and more than 5,000 SKUs, covering almost all daily life categories. In contrast, Happy Monkey and Super Hema NB are much smaller, generally not exceeding 1,000 square meters, and their SKU selection is not as all-encompassing as JD's. They are more focused, tending toward "wide categories with narrow product selection," with only about 1,200-1,500 SKUs.
Paidai compiled a comparison of store area and SKU counts among the three platforms.
Second, from a price perspective, a comparison of several basic items shows that JD convenience stores offer the deepest discounts among the three, while Happy Monkey and Super Hema NB are on par. It is worth noting that according to Happy Monkey's official statements, its pricing is 10-30% lower than the pre-upgrade Hema NB.
Paidai compiled a price comparison of some products at the three discount stores.
However, it is worth noting that although Super Hema NB's average prices do not have a clear advantage among the three, about 60% of its SKUs are private-label products, which are often positioned as mid-to-high-end and carry brand premiums. Once Super Hema NB chooses to offer discounts on these products, the situation could reverse.
Finally, in terms of store count, Happy Monkey is currently the most conservative, with only one store in Hangzhou and plans to open a second in Beijing soon. JD discount stores currently have 7 stores: 4 in Suqian, 2 in Fangshan, Beijing, and 1 in Zhuozhou, Hebei. As for Super Hema NB, it is special because it was upgraded from the original Hema NB. With rapid transformation, it now has over 300 stores nationwide, making it the largest among the three platforms.
Paidai compiled the location characteristics of the three discount stores.
From the city distribution, the strategic positioning of the three platforms is also evident. JD discount stores tend to open in "beyond the Fifth Ring Road" cities, aiming to replace traditional comprehensive supermarkets. Happy Monkey targets core locations in first-tier and new first-tier cities, not only serving community economies but also catering to office workers' needs. Super Hema NB, inheriting Hema NB's site selection, still focuses on community economies, with extensive coverage across cities at all levels in China.
Based on the above analysis, it is not difficult to see that although the three platforms are all operating discount stores, there are significant differences in brand positioning and target markets. So, in this layout and experimentation with "hard discounts," what industry opportunities do the platforms see? Compared to traditional retail models, what advantages do discount warehouses have?
China's offline retail is undergoing a restructuring.
In 2022, Yonghui Superstores experienced its darkest moment, closing nearly 60 stores nationwide in just one year, a phenomenon that foreshadowed the decline of traditional comprehensive supermarket retail models. At the same time, new retail models represented by Hema and Sam's Club were rapidly rising. Sam's Club successfully opened 6 stores in China that year, while Hema was even more aggressive, opening 46 stores that year, earning the title of "Store Opening Champion."
Where is the bottleneck of traditional comprehensive retail? Why can new retail continue to advance triumphantly? In my view, the biggest difference between the two is the ability to anchor customer groups. Unlike traditional comprehensive supermarkets that cater to everything, new retail focuses on a narrower SKU range, and under the membership system, stores have a natural screening ability for customers. By providing more differentiated and precise products, profit margins are created.
Sam's Club uses a membership mechanism to screen customers.
Therefore, based on the same logic, the emergence of discount stores and their layout is also about anchoring customer groups. But unlike membership stores, discount stores aim to offer extreme cost-performance. Regarding the three platforms' entry into discount stores, Zhuang Shuai, an expert at Paidai Think Tank's "Retail E-commerce" and founder of Bailian Consulting, believes that in the current consumer landscape, both traditional comprehensive supermarkets and convenience stores are at a critical juncture of transformation and upgrading. The three platforms' layout is to capture this wave of dividends.
Zhuang Shuai believes that through offline layout, e-commerce platforms can build a new "grid-warehouse integration" new retail model, thereby expanding their advantages in the retail industry.
In the observation of Xu Xiaohui, an expert at Paidai Think Tank's "Brand Marketing" and founder of Wanwu Tianze Marketing Consulting, with supply chain advantages, e-commerce platforms doing offline retail will have far greater profits and efficiency than traditional retail models. When discussing the advantages of new retail, Xu Xiaohui commented: "The high-frequency consumption of the entire ecosystem, combined with the efficiency brought by systematization, is far greater than a single discount business scenario. For traditional retail models, it will be a dimensionality reduction strike."
As long as discount stores can ensure supply chain stability, they can gain an absolute advantage in price. With the user mindset of "Everyday Low Prices" established, customer traffic will naturally shift from traditional retail to new retail. At the same time, Xu Xiaohui also noticed a phenomenon: the three platforms' layout of "hard discount" models will not only impact traditional retail models but also have a certain impact on "soft discount" retail stores on the market. "The advantage of hard discounts is extreme cost-performance and extreme supply chain logic, which soft discounts cannot achieve."
So, can discount stores, as natural front warehouses for each platform, fill the ecosystem of instant retail to some extent? In this regard, Zhuang Shuai said that these three platforms all have mature rider delivery systems, so to some extent, the existence of discount stores is not only to seize the ecological niche of retail but also to supplement the instant retail ecosystem. Xu Xiaohui holds a similar view. He told me: "Offline stores have the advantage of front warehouses, the brand advantage of the store itself, and can also meet offline sales scenarios. In fact, it is an omnichannel instant retail + front warehouse model."
However, this process still has many complex issues to be resolved. Lao Zhang, an expert at Paidai Think Tank's "Instant Retail" and author of "The Book of Instant Retail," said he remains cautious. In his view, after incorporating discount warehouses into the instant retail system, profitability will be a major challenge. In Lao Zhang's estimation, instant retail has very high requirements for product profit margins, and delivery costs alone are a significant expense. Given the positioning of discount stores, their profits are inherently limited. Therefore, Lao Zhang's attitude is: "For discount stores to engage in instant retail, whether they can achieve profitability is crucial. Whether they can truly combine remains to be verified through further store operations."
Online retail is becoming increasingly saturated, and offline may become a new breakthrough point.
Yinman founder Lao Fang once sharply pointed out in an interview: "E-commerce brands that do not go offline will not survive long." This view highlights the dilemma e-commerce platforms are facing. Since early 2025, Alibaba, Meituan, and JD.com have been locked in a fierce subsidy war in the food delivery sector, but after half a year of intense competition, they all found themselves stuck in the mud. After the second-quarter reports were released, the platforms were gloomy: Meituan's operating profit plummeted by 98%, JD.com's net profit margin halved, and Alibaba's profit margin remained stable, but its book profit also fell by about 10 billion yuan.
Image from Caijing Magazine: Comparison of profit margins of Meituan, Alibaba, and JD.com over the years.
The three platforms realized that replicating the logic of using heavy subsidies to drive growth, as they did a decade ago, is no longer viable in a stock market. They may have all thought the same thing: to break through growth constraints, the breakthrough is not online but offline.
In Xu Xiaohui's view, online and offline retail are showing a clear trend of integration. To maintain online advantages, offline layout is indispensable. In the post-e-commerce era, both online and offline retail are increasingly testing supply chain capabilities. Whoever can gain cost advantages at the source will dominate the future market. The platforms' offline layout is precisely a concrete manifestation of supply chain capability spillover.
As Lao Fang observed, the e-commerce environment is becoming increasingly competitive. Under cost pressure, small and medium-sized merchants will find it harder to survive. Looking at China's retail composition, offline still accounts for the majority, so for the e-commerce industry, there are still many opportunities offline. At the same time, Lao Fang emphasized that traditional offline retail methods will definitely not work. To break through offline, new approaches are needed. The so-called new approaches are essentially two things: either accurately segment customer groups or establish a new brand mindset. E-commerce platforms happen to possess both advantages.
Therefore, in this round of retail transformation, e-commerce platforms have naturally become the first to sound the charge. For some production-oriented merchants, this may also be a new wave of dividends. Zhuang Shuai believes that merchants with product and supply chain advantages can proactively seek cooperation with major retail brands. With long-term stable supply needs, they may find new growth opportunities. Xu Xiaohui also stated that in future retail scenarios, extreme cost-performance and controllable product quality may become new development trends, which are significant benefits for brands or merchants with strong supply chain capabilities.
In summary, the e-commerce platforms' layout of the "hard discount" business model may become an important turning point for the retail industry. With online competition becoming saturated, offline retail competition may release a new round of dividends. Whether it's membership stores, discount stores, or other business models that can accurately anchor customer groups, based on more diverse retail scenarios, more growth opportunities may be explored in the future. This is worth heavy investment by e-commerce platforms and close attention from small and medium-sized merchants.