JD.com Enters the Physical Pharmacy Market: Internet Giant Dives into the Competitive Retail Pharmacy Sector

Recently, physical pharmacies named “JD Pharmacy” have appeared in Qingdao, Shandong Province. It is reported that JD.com has acquired Shandong Qingdao Anjitang Pharmacy Co., Ltd., which has been officially renamed JD Pharmacy (Qingdao) Chain Co., Ltd., with its offline pharmacies also undergoing the same name change.

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On May 31, 2016, JD.com’s self-operated pharmacy, “JD Health Pharmacy,” officially launched. Leveraging JD.com’s brand recognition and traffic advantages, the pharmacy saw overwhelming popularity on its opening day, with daily online sales orders exceeding 10,000.

For the pharmaceutical e-commerce market with a potential sales volume reaching trillions, JD.com has been planning for a long time. The opening of JD Pharmacy marks JD.com’s official entry into the self-operated pharmaceutical retail business.

It is reported that the primary operator of JD.com’s self-operated pharmaceutical business is Anjitang, a pharmaceutical retail chain controlled by “JD Shanyuan (Qingdao) E-Commerce Co., Ltd.,” a subsidiary under the JD.com Group. Anjitang officially obtained its Drug Operation License on May 24.

It can be noted that JD.com’s current pharmaceutical business primarily comprises several key segments:

As early as last November, JD.com launched its pharmaceutical B2B platform, which is primarily operated in collaboration with Shanghai Pharmaceuticals.

Previously, JD.com’s pharmaceutical business primarily focused on building a platform for third-party B2C vendors to list and sell products. Currently, by entering into partnerships with offline pharmacy chains to obtain the Drug Operation License and the Internet Drug Transaction Service Certificate (Class C), JD.com has officially launched its self-operated pharmaceutical B2C business.

Last August, JD Daojia officially launched its “Health at Home” service, covering five major categories: nutritional supplements, home medical devices, cosmeceuticals, family planning products, and eyewear. It is reported that JD Health at Home provides door-to-door medication delivery services through partnerships with offline chain pharmacies.

Although Alibaba had previously acquired “Guangzhou 5000 Years Pharmaceutical Chain Co., Ltd.,” JD.com can be considered the first internet giant to truly plunge into the red ocean of chain pharmacies, but it will certainly not be the last.

It is understood that JD.com’s foray into the pharmaceutical sector has been quite tumultuous. In 2011, JD.com formed a joint venture with Jointown Pharmaceutical Group, China’s largest private pharmaceutical distributor, to establish the pharmaceutical e-commerce platform “JD Haoyaoshi.”

In July 2013, JD.com transferred its entire 49% equity stake in Haoyaoshi to Jointown Pharmaceutical Group. “JD Haoyaoshi” subsequently became a thing of the past, while JD began laying the groundwork for a new pharmaceutical B2C platform, “JD Medicine City.”

Not long ago, JD Health signed a strategic cooperation agreement with “Da Tang Yi,” an intelligent cloud platform for diabetes management. The two parties will collaborate in the fields of diabetes medical services and pharmaceutical e-commerce to build a closed-loop service system for diabetes management.

Both O2O integration and B2C sales are aligned with JD.com’s current overall business model.

Regarding JD.com’s expansion into the pharmaceutical sector, industry analysts note that pharmaceuticals are among the few categories in which JD.com conducts substantial offline operations. While JD’s milk tea stores are operated by third-party teams and its maternal and infant care section follows an asset-light model, JD Pharmacy has adopted a more asset-intensive approach. This underscores JD.com’s strategic emphasis on its pharmaceutical business and its ambition to capture a share of the broader healthcare market.