Online Retailer JD Follows Alibaba Into the Supermarket Game

(Bloomberg) -- JD.com Inc. has opened the first of a chain of high-tech supermarkets in Beijing, following arch-foe Alibaba Group Holding Ltd. into the world of physical retail.

The envisioned chain of “7Fresh” stores represent its biggest foray into traditional retail, and like Alibaba it's counting on reaching new customers and securing valuable data by connecting online and off-line shopping. JD's new stores and Alibaba's Hema chain both allow shoppers to use a mobile app and digital payments to complement their browsing.

JD, Wal-Mart Stores Inc.'s partner in China, is counting on control of its supply chain and long experience sourcing its own inventory to compete with Alibaba, which mostly acts as a platform for other merchants. The new store in Beijing's Yizhuang neighborhood offers features such as screens that display info on items that shoppers pick up, and robot carts that follow customers as they browse the aisles. Like Hema, it also offers a restaurant and imported fresh food that cater to middle-class tastes.

“JD is uniquely positioned to bring this premium-quality offline shopping experience to Chinese consumers because of our supply chain technology and scale as the country's largest retailer,” said Wang Xiaosong, chief executive officer of 7Fresh.

From Alibaba to Tencent Holdings Ltd., China's largest internet companies are bent on transforming retail by infusing stores with technology to better manage inventory and customer data. Wal-Mart and JD for instance hope to combine their network of warehouses and cold storage to shorten delivery to customers.

The over-arching idea is to connect virtual and offline worlds, boosting online orders while amassing valuable customer purchasing data. They're betting that a move into physical commerce will pump-prime its main online business, rope in millions of new shoppers, and expand its network into a relatively untapped Chinese hinterland.

Alibaba will open 30 Hema supermarkets in Beijing this year, China Daily reported Thursday.

Read more: Alibaba Bets $2.9 Billion It Can Take on Wal-Mart in China

JD also this week opened the first of an eventual chain of “unmanned” or fully automated convenience stores, in Shandong province. But 7Fresh represents a fuller retail experience and daily transactions at its maiden outlet have exceeded 10,000 in the first two days of operation, Chief Executive Officer Richard Liu said in a social media post.

To contact Bloomberg News staff for this story: David Ramli in Beijing at dramli1@bloomberg.net.

To contact the editors responsible for this story: Robert Fenner at rfenner@bloomberg.net, Edwin Chan

©2018 Bloomberg L.P.

With assistance from David Ramli