Instant retail heating up, many parties are competing for layout
Reporter Ban Juanjuan reports from Beijing
“Instant retail” is heating up. The Ministry of Commerce’s “Report on the Development of China’s Online Retail Market in the First Half of 2022” clearly mentions “instant retail” as one of the new consumption scenarios. The reporter learned that Meituan, JD.com, and Dada Group are stepping up efforts to deploy the instant retail market, and traditional offline retailers such as chain supermarkets and convenience stores are also actively entering the instant retail market.
According to the “Research White Paper on the Open Platform Model of Instant Retail” released by the China Chain Store & Franchise Association, as an important part of the O2O (Online To Offline) home business, the instant retail outlet has arrived and may usher in rapid growth. It is estimated that by 2025, the scale of the open platform model in instant retail will reach about 1.2 trillion yuan, leading and driving the growth of the overall O2O market.
Instant retail market is growing rapidly
Xiao Liu runs an 80-square-meter cheap department store supermarket in Tongzhou, Beijing. With the constant notification of new orders coming from the computer at the counter, hundreds of takeaway orders are sent from here every day, with a monthly sales of nearly 1 million yuan. Relying on the riders of the retail platform, the supermarket operated by Xiao Liu can meet the daily necessities of the surrounding residents within 30 minutes.
From “next-day delivery” and “same-day delivery” to “30-minute delivery”, online orders are delivered to your door at a very high speed offline. This kind of consumption experience has expanded from “delivery food” to more fields.
“The new retail format continues to develop, the advantages of online convenience and personalized recommendation are gradually enlarged, the level of intelligence of offline channels continues to improve, and online and offline channels tend to be deeply integrated. In this context, instant retail, contactless consumption and live streaming New consumption scenarios such as goods are accelerating the layout and maintaining the momentum of development.” The Ministry of Commerce’s “Report on the Development of China’s Online Retail Market in the First Half of 2022” stated.
Instant retail means that consumers place orders on online trading platforms, and offline physical retailers perform door-to-door delivery services through third-party (or retailer-owned) logistics. The products provided include food and beverages, fresh vegetables, medicine and health, digital 3C Waiting for goods, the delivery time is usually 30 to 60 minutes.
The “instant retail” business has developed rapidly in many places. Data from retail platform Meituan shows that from January to July this year, instant retail consumption by various market players in Hubei grew steadily. Among them, instant retail orders at convenience stores increased by 40% year-on-year, instant retail orders at beverage and liquor stores increased by 111% year-on-year, instant retail orders at pet supply stores increased by 150% year-on-year, and instant retail orders at mom-and-pop grocery stores increased by 309% year-on-year. From January to July this year, instant retail orders in Yunnan vegetable markets increased by 51% year-on-year, and instant retail orders in grocery stores increased by 162% year-on-year.
“The demand for instant consumption has always existed, and it used to exist only in some emergency scenarios and a small group of people. Recently, due to the rise of contactless consumption, the improvement of consumer spending power, the improvement of the instant consumption market environment, and the cultivation of instant consumption habits. The instant consumption market has entered a high-speed growth.” Hong Yong, an associate researcher of the Institute of Electronic Commerce of the Research Institute of the Ministry of Commerce, told the “Economic Information Daily” reporter.
Various capitals are competing for layout
According to Meituan’s 2022 second quarter and semi-annual performance report, Meituan achieved revenue of 50.9 billion yuan in the second quarter, a year-on-year increase of 16.4%. Instant delivery orders increased to 4.1 billion, and quarterly revenue from the core local business segment including food delivery and Meituan flash sales increased to 36.8 billion. The annual active merchants on the platform increased to 9.2 million, a new high.
According to the second quarter 2022 performance report of Dada Group, a local instant retail and distribution platform, the total revenue of Dada Group in the second quarter was 2.3 billion yuan, a year-on-year increase of 55%.
In the second quarter of this year, JD.com Hourly Shopping continued its rapid growth, with GMV (gross turnover) more than doubled year-on-year. JD Daojia’s online marketing revenue increased by more than 80% year-on-year. JD.com has made it clear that it will convert the existing 580 million active users of the main site into instant retail users, and will give periodic specific goals for the business level.
Internet platforms such as Douyin e-commerce and Ali are also targeting the instant retail market.
It is worth noting that instant retail is not only the field of traditional e-commerce competition, more offline retailers have begun to actively enter this market.
The local convenience store brand Meiyijia, which has more than 28,000 stores nationwide, has positioned instant retailing as a corporate strategy. Instant retailing businesses such as takeaways are under the overall overall management of the company. Currently, there are more than 100 teams dedicated to the takeaway business.
Pei Liang, president of the China Chain Store & Franchise Association, said that instant retailing is an important part of omni-channel retailing. It does not rely solely on online traffic, but through the integration of offline resources, enabling platforms and offline retailers to cooperate to form a kind of 1 +1>2 ability.
According to the “Research White Paper on the Open Platform Model of Instant Retail”, with the rapid improvement of the infrastructure of the new business model and the urban distribution service network, instant retail characterized by hourly delivery and minute delivery has become a new outlet for retail model innovation.
Just-in-time delivery is key
The industry believes that instant retail is a typical format for the integrated development of the digital economy and the real economy, and my country’s instant retail is still in the initial stage of development. As more and more consumers adopt the purchase method of instant retailing, the distribution cost will be greatly reduced, the distribution efficiency will be improved, and the instant retailing will maintain an accelerated development trend.
Hong Yong said that instant retail is closely related to instant delivery efficiency, and consumers pay more attention to instant delivery efficiency, so they need to increase investment in front-end warehouses and other aspects. “For enterprises, it is necessary to prepare resources such as capital, manpower, technology, etc., and increase technological investment in unmanned vehicles, drones and other unmanned distribution, do a good job in real-time retail product quality control and brand management, and improve the Warehouse layout, optimized distribution big data system, and shortened distribution time.”
Peng Jianzhen, secretary-general of the China Chain Store & Franchise Association, believes that instant delivery is the need for business development and the result of the development of cloud computing, big data, the Internet of Things, and intelligent technology. For offline merchants, instant delivery is a new business model that brings online traffic dividends. Only by making more efforts in operation and service features can offline merchants be expected to convert more online traffic into actual sales.
The “Research White Paper on the Open Platform Model of Instant Retail” pointed out that online traffic introduction, integrated transformation of store and warehouse, full-link digital management, omni-channel user operation, omni-channel integrated marketing and online and offline sales services have become retailers and brands. It is the key for retailers to do a good job in instant retail.