JD.com expands its reach into online groceries
Chinese e-commerce giant JD.com has made an ambitious push into the online grocery space with a 4.58-billion-yuan (US$700 million) investment in local community group purchase platform Xingsheng Preference Electronic Business.
The move is expected to create synergy between JD and Xingsheng’s businesses in lower-tier cities through close collaboration in technology, supply chain and logistics, according to a stock exchange filing over the weekend.
Xingsheng, headquartered in Changsha, Hunan Province, is a leading community group buying e-commerce platform that serves neighborhoods with fresh foods and daily necessities.
JD officials said the company hopes to use technology to make mom-and-pop grocery stores more efficient and help them with merchandising and deliveries.
Xingsheng currently operates in 14 Chinese provinces, and lower-tier cities have become the latest battleground for e-commerce giants where delivery networks are still evolving and online shopping is still in its infancy.
Community group buyers frequently do business with small online stores such as local fresh food vendors and groceries and pick up orders from nearby community dispatch centers.
In the first nine months of 2020, online retail sales in China rose 9.7 percent year on year to more than 6.65 trillion yuan (US$977.9 billion), according to the National Bureau of Statistics. Food, clothes and apparel made up 55 percent of overall online physical goods sales.
Alibaba, Meituan and Didi Chuxing have also moved into the online grocery space either by launching their own businesses or investing in startups.
Xingsheng’s other investors include Tencent and private equity firms KKR and Huaxing Capital.