‘Can a new entrant controlled by a global giant disrupt UK grocery?’

Amid all the talk about a possible grocery price war, it’s intriguing that an overseas Goliath is dipping its toe into the famously competitive UK market.

The newcomer is Chinese tech, supply chain and retail powerhouse JD.com, which last year pondered a bid for electricals retailer Currys and has just test-launched a UK site called Joybuy.

The site, the debut of which was originally reported by The Grocer, carries categories such as ambient food and drinks, along with health and beauty and household products, such as cleaning materials through to clothing.

So, should the established grocers, who are focused on intensifying competition, be worried by the arrival of a rival, fledging though it may be, backed by a business that last year notched up net revenues of $158.8bn (£119.2bn)? 

The management of Joybuy looks credible. JD.com UK chief merchandise officer Matthew Nobbs is a former Lidl executive and director of trading at Holland & Barrett, who also brings experience as commercial director of rapid delivery specialist Gorillas. More hires with plenty of industry experience are expected.

That said, the scale of Joybuy at present, and the motley selection on offer, indicate it has a huge distance to go before it could seriously be regarded as a rival to any of the UK’s established grocers.

It is understood that the initiative has been some time in the planning – it’s not a reaction to global trade disruption

The business is only available to customers in London for the time being. And even there, its website says there may be “some delays in delivering your orders” – not a phrase likely to hook shoppers unfamiliar with the Joybuy name and who already have access to a plethora of online retailers.

Similarly, the assortment available at present does not look compelling. Yes, there are some well-known names such as Max Factor, Madri and Nestlé. However, products seem – to me at least – much less familiar, such as hawthorn juice, and packaging is frequently in foreign languages, such as Japanese. A selection of Morrisons items that initially featured on Joybuy seems now limited to a 10-litre bag of cat litter.

More brands are promised and JD’s intent looks serious. It is understood that the initiative has been some time in the planning – it’s not a reaction to global trade disruption brought on by US president Donald Trump’s confrontational stance and tariffs on China. Most of what’s on offer is from brands (well-known or otherwise), indicating that it’s not been launched as a route to divert products that might otherwise have gone to the US.

Rapid delivery won’t be enough on its own to drive custom to Joybuy, never mind disadvantages in areas such as brand trust, product innovation and range

But, as JD seeks a UK inroad, precedent suggests it will have its work cut out. JD’s Ochama business, which has similarities with Joybuy, has failed to make much of a mark in Europe. And Amazon, despite all the anticipation over the years that it would revolutionise the UK food retail landscape, has not done so.

Amazon’s food business falls under the scope of the Groceries Supply Code of Practice. That means it generates sales of at least £1bn, which is no small feat. But would anybody argue that it is on a par with Tesco and Sainsbury’s?

Rapid delivery won’t be enough on its own to drive custom to Joybuy, never mind disadvantages in areas such as brand trust, product innovation and range. On price, schemes such as ClubCard and Nectar have proved their value as Tesco and Sainsbury’s have fought off the discounters and no doubt would enable them to hold off Joybuy.

The impact of Joybuy remains to be seen. Perhaps, considering JD’s previous interest in Currys and its supply chain prowess, it ultimately has a less obvious, bigger goal in mind than running another grocery business.

For the time being, the established grocers will keep a watching brief over Joybuy as they focus on trading their biggest punches primarily with each other.