7Fresh, a supermarket chain under JD.com, is doubling down on its warehouse store model, with plans to open 20 new locations in Tianjin by the end of June. Multiple sources have confirmed to 36Kr that similar expansions are also underway in Beijing and other key cities.
Last September, 7Fresh launched a warehouse store in Fengtai, Beijing, promoting a 30-minute delivery service. A Linkshop report revealed that the store employs over 20 couriers, each handling around 50 deliveries per day.
Currently, 7Fresh operates in commercial districts, office buildings, and residential areas, leveraging a combination of fresh food supermarkets and warehouse stores. The company has a total of 68 stores across China, including 37 in Beijing, ten in Tianjin, 19 in Guangzhou, six in Shenzhen, two in Shanghai, two in Langfang, and one in Foshan. However, 7Fresh’s frontend warehouse operations are not mentioned on its official website.
A recent visit by 36Kr confirmed that 7Fresh warehouse stores are already open in several Beijing locations, including Shahe, Yaojiayuan, and Shilihe. Job postings on recruitment platforms also indicate ongoing hiring for warehouse staff at various locations. A 7Fresh employee told 36Kr that the Shahe location is part of a larger warehouse network that supports fresh food deliveries.
In 2025, JD.com plans to open dozens of new 7Fresh supermarkets and warehouse stores in Beijing. However, when 36Kr reached out for further details on the expansion strategy, the company declined to comment.
JD.com’s warehouse expansion extends beyond 7Fresh, reflecting the company’s broader shift toward hybridized retail.
The company first entered the offline fresh grocery market in January 2018, launching its first 7Fresh store at Han’s Plaza in Yizhuang, Beijing. At the time, Alibaba-backed Freshippo (Hema Xiansheng) had already secured a leading position, operating 25 locations nationwide.
Rather than rushing to scale, JD.com took a cautious approach, fine-tuning its business model before expanding.
The Covid-19 pandemic reshaped consumer habits, driving demand for grocery deliveries. Hybrid supermarkets like Freshippo and warehouse-driven grocery platforms saw a business surge. But as the market expanded, the frontend warehouse model faced scrutiny for its scalability and profitability challenges.
Freshippo’s founder, Hou Yi, has long been a vocal critic of the model, pointing out issues such as limited product variety, lower order values, thin profit margins, and high spoilage rates. Without high delivery fees to offset costs, he argues, the model struggles to remain profitable.
A stark example of these risks was Missfresh’s collapse in July 2022. Once a venture capital darling, Missfresh raised billions of RMB and expanded to over 600 frontend warehouse stores, only to crash due to overexpansion and financial mismanagement. Its downfall sent shockwaves through the industry.
Other internet-driven fresh grocery brands have also struggled, particularly in China’s top-tier cities, where customer acquisition costs were steep. Even leading players like Meituan’s Xiaoxiang Supermarket and Dingdong Maicai began rethinking their market positioning.
In June 2023, JD.com established a dedicated “innovative retail” division, integrating 7Fresh and its frontend warehouse operations under one umbrella. The new division focuses on offline retail and quick commerce, enhancing convenience and efficiency. By this point, JD.com was already piloting two frontend warehouse formats in Beijing.
By October 2023, 7Fresh had fully integrated its warehouse store operations, reportedly reducing delivery times to under 30 minutes. To boost demand, it also launched aggressive price promotions, offering discounts of up to 50% on select products.
Meanwhile, Freshippo reintroduced its own frontend warehouse operations in August 2023, using them to fill service gaps in areas underserved by its larger stores. The move was part of a broader strategy to expand market share.
According to China Entrepreneur, Xiaoxiang Supermarket had 680 frontend warehouse stores by Q2 2024, with 550 concentrated in tier-one cities such as Beijing, Shanghai, Guangzhou, and Shenzhen. However, some Meituan insiders have questioned these figures, suggesting a more cautious expansion strategy than officially reported.
Dingdong Maicai, which has traditionally focused on the Yangtze River Delta region, recently announced full-year profitability for its 2024 fiscal year.
During an earnings call on March 7, Dingdong Maicai’s founder and CEO, Liang Changlin, credited the company’s growth to higher user penetration, improved conversion rates, and increased average revenue per user (ARPU) in existing markets.
Dingdong Maicai has also built its own supply chain, enabling end-to-end product development and iteration. Moving forward, the company plans to resume expansion by opening new warehouses and strengthening its supply chain. Although its initial goal for 2024 was to open 110 new frontend warehouses, it ended up launching 130.
As of that day’s market close, Dingdong Maicai’s stock surged 13.38% to USD 3.56 per share, signaling renewed investor confidence in its business model. The frontend warehouse model, which had appeared to be in decline, now seems to be experiencing a resurgence.
During a recent 36Kr visit to a 7Fresh store in Beijing, discount shelves drew large crowds. Some products were said to be priced about 10% lower than those on competing platforms.
Ahead of Lunar New Year, 7Fresh further lowered its free shipping threshold, offering exclusive free delivery perks for JD Plus members.
As competition heats up, the grocery industry may see another round of price wars. But whether the frontend warehouse model can sustain profitability in the long run remains uncertain.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Xie Yunzi for 36Kr.