---
title: "A Million Small Stores Embrace Instant Retail: Who Will Strike Gold First?"
description: "On a Friday night, Wu Di invites colleagues over for dinner and discovers he can buy board game cards via food delivery apps, reflecting the rise of instant retail. This trend is offering new opportunities for small stores, supermarkets, and convenience stores to expand their reach and increase revenue, though success requires adapting to digital operations and local service."
author: "开菠萝财经团队"
publisher: "New Distribution"
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published: "2023-03-20"
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# A Million Small Stores Embrace Instant Retail: Who Will Strike Gold First?

> On a Friday night, Wu Di invites colleagues over for dinner and discovers he can buy board game cards via food delivery apps, reflecting the rise of instant retail. This trend is offering new opportunities for small stores, supermarkets, and convenience stores to expand their reach and increase revenue, though success requires adapting to digital operations and local service.

On a Friday night in March, Wu Di invited colleagues to his home for dinner. After eating and drinking, someone suggested playing Werewolf, but he only had playing cards at home. At 10 p.m., the nearby supermarket was closed, and ordering from e-commerce platforms was too late. There was a 24-hour convenience store in the neighboring community, a bit farther away. Unsure if they had what he needed, Wu Di decided to ask a courier rider. When he opened Meituan, he suddenly realized he could buy cards just like ordering takeout. He indeed found many stores selling cards—not just Werewolf, but also boxed script murder games, and even poker chips. This trivial incident reflects a change in retail over the past two years: while traditional e-commerce satisfies planned needs, delivery platforms are beginning to fill instant needs, and people can buy almost anything through instant retail. Following this trend, more and more physical stores are joining delivery platforms. Instant retail is becoming a common opportunity for supermarkets, convenience stores, community stores, and other small and large physical merchants. How many such small stores are there nationwide? According to a report from Dongwu Securities, Meituan Flash Shopping has about 1 million merchants, with the most being supermarkets, fruit stores, and flower shops. This number is far from peaking, growing at a 30% year-on-year rate. The last large-scale "going online" for small physical stores was the "Groupon War" a decade ago. After all, e-commerce mainly changed the fate of online stores, while offline stores were mostly spectators. Is an online supermarket a good business? How is online business after the pandemic restrictions were lifted? Only the first supermarkets to try delivery can answer these questions.

**City Edge, Bright Lights**
After ending his 10-year career as an employee, Deng Feilong decided to start his own business and open an offline supermarket. Ande Supermarket is located in a somewhat remote but not remote area—it's in the suburban area of Shanghai, in the center of Jinshan District. After multiple site visits, Deng Feilong rented a storefront near Red Star Macalline. The 200-square-meter supermarket is "small but complete," as Deng puts it, "able to solve immediate needs like thirst, hunger, and cigarette shortages for nearby residents." Deng has years of e-commerce operations experience and launched delivery services on Meituan in 2018, when few in the industry mentioned "instant retail." With professional riders providing support, the supermarket's reach expanded to 5 kilometers around, offering round-the-clock service. "It increases revenue by about 30%," he says, which is valuable income. Ande Supermarket, located in the suburbs, meets nearby residents' instant needs through delivery.

Expanding business scope to increase revenue is the primary reason many physical merchants embrace instant retail. "Order is about to be due, please prepare the goods!" At Telin Life Supermarket in Xixiang Street, Bao'an District, Shenzhen, the sound of Meituan orders keeps coming from the machine; when orders are dense, it rings every few seconds. The owner, Chen Yu, is busy picking and packing goods, while riders on electric bikes come and go, taking packed items and leaving. Half an hour later, lights will turn on in nearby residential buildings, and the snacks in the packages will fill the stomachs of young people returning from work. Most transactions at Telin Life Supermarket are completed online, with fulfillment late at night: "From 6 p.m. to the next morning, orders account for 70% of the day." The store has a rich variety of goods, including trendy snacks, toilet plungers, bubble wrap, and cat food. Chen Yu believes the advantage of an online supermarket lies in time and product differentiation: most supermarkets operate only during the day, and instant retail solves the pain point of "not knowing where to buy offline, and e-commerce ordering is too late." Moreover, previously, 30-minute delivery was mostly for fresh food platforms; her supermarket focuses on "urgent and hard-to-buy small items," bringing great convenience to community residents.

These two supermarkets in Shanghai and Shenzhen are just the tip of the iceberg in the transformation of mom-and-pop stores. In fact, using instant retail platforms to expand business scope is a path that large supermarkets have already taken. Traditional e-commerce is a centralized traffic distribution model, while instant retail matches local stores and consumers based on location, converting online traffic into store orders. Xu Lingna is the digitalization head of Tianhong Mall. Many people have asked her: "How do you prove that the sales brought are incremental? Is it possible that you're just shifting offline sales to online?" She shared a "cross-time and space" concept: In terms of time, 20% of Tianhong's online sales occur after closing—between 10 p.m. and 9 a.m. the next day; in terms of space, previously a store covered 3 kilometers around, but now 45% of online sales are sold to areas where Tianhong has no physical stores. Unlike the zero-sum relationship between traditional e-commerce and offline entities, instant retail has not squeezed out existing offline business but has broken through time and space constraints, bringing orders from farther, closer, earlier, and later. So some say the rapid growth of instant retail is essentially the growth of the local physical economy.

**One Storefront, Two Businesses**
It can be seen that many of the first stores to join delivery platforms have already formed stable customer flows. Every industry has survival of the fittest, and those who act early have more opportunities. As a business between online and offline, instant retail demands more from store owners: they need both the acumen of e-commerce operations and the meticulousness of store service, ultimately building a sustainable business.

Only those who have actually run a store know how complex human needs are. Even for the same resident in the same community, needs vary greatly at different times and scenarios. Ideally, stores on instant retail platforms should compete differently from offline-only entities and online-only e-commerce. In other words, if a supermarket wants to do delivery, it must find a completely different path from the past. This online supermarket must leverage instant retail's data and fulfillment capabilities to predict consumer needs faster and more accurately, while also leveraging its roots in the local community to provide services that e-commerce platforms don't offer.

From product selection, picking, to delivery, Zheng Mingyue relies on digital systems. In February this year, a People's Daily reporter interviewed a small store in Chaoyang, Beijing. The 3-person store has over 5,000 orders per month. With 170 square meters, it holds twice the product variety of a typical convenience store. Benefiting from digital operation tools, owner Zheng Mingyue always sees business opportunities faster than peers. For example, early on, he stocked over 40 types of potato chips, covering multiple brands, flavors, and packaging styles. After one month of operation, the system indicated that 10 types had zero sales. "At that point, you need to discount and clear inventory quickly, and replenish bestsellers in time," Zheng said. In just four months, he had eliminated over a hundred products and added over 90 new ones. "With four to five thousand products and 12 shelves, how to arrange them and where to put each item—all depends on the system's design and planning," Zheng explained. After products are listed, the system keeps track of each item's position and quantity. During the picking process, the system can automatically plan the picking route, and staff can pick 30 items in an average of just over 2 minutes.

The other side of digitalization is often a sense of distance. But for mom-and-pop stores rooted in the community, instant retail is not a purely online business; during the process of picking and delivery, the store owner's understanding of neighbors is embedded. In 2019, Nanjing community supermarket "7 Things" joined an instant retail platform, and now one-third of orders come from online. On January 10th, Chinese People's Police Day, owner Ma Jun received a "strange" order: a young woman wanted to buy a can of Want Want milk with a special police-themed packaging, asking the owner to pick out the "police officer" version as a surprise for her police boyfriend. Although the order was small, when Ma Jun found that can from a whole box and personally packed it, he felt "like participating in someone else's happiness."

One storefront, two businesses. Small stores that are relatively successful in instant retail share a common trait: their overall mindset is online, willing to sacrifice profit on individual items to ensure overall profit growth; they also don't neglect offline actions, paying attention to every note, so residents enjoy the same service as visiting the store in person.

**Physical Retail, Bustling as Ever**
Conversely, merchants who failed in trying delivery often only saw one side. Either they used offline profit models to calculate online business performance, or they treated instant retail as e-commerce, losing the local characteristics of physical stores. Now it's common for supermarkets and convenience stores to join online platforms. Old Lu is one of them. Last year, he tried instant retail for a while, with the same products as in the store, and even the same prices online and offline, with little change. For about six months, store traffic was flat, and he didn't make much money. So he consulted a supermarket owner who specializes in online business and realized their mindsets were completely different. For him, opening a store first requires calculating rent, utilities, and labor costs, leaving a little profit, and pricing each product accordingly. The online-focused owner does the opposite: first set a profit line, then set up promotions like free shipping thresholds, ensuring that most orders are profitable, so overall it's profitable. The most obvious difference is that Old Lu always calculates sales volume and never sells anything at a loss. His friend's unit of calculation is the order, aiming to increase average order value rather than worrying about per-item profit. Many restaurants doing delivery increase profit by increasing turnover. Old Lu found that for a supermarket like his, which mainly operates offline, the key to making money from instant retail is also ensuring enough orders.

Now it's common for supermarkets and convenience stores to join online platforms. To stay competitive, "0.1 yuan traffic-driving items" and "9.9 yuan minimum order" are standard. It sounds like "selling at a loss for publicity." Some think it's like online stores making physical stores "roll up," and the pressure from delivery is transmitted offline, making small stores' business harder—this view is wrong and one-sided. It's not that online will eventually "roll" offline, but when physical stores go online, competition becomes more transparent. Some instant retail merchants feel pressure because mature offline formats have transformed online early and are competing with them in a new round. Take Old Lu as an example: when he first started delivery, the biggest difficulty was too few products—too few categories, so average order value couldn't increase, making it easy to lose money. If he added more products, inventory and labor became issues, so it was contradictory. "I originally thought online was about grabbing traffic, and it must be those online-only stores taking business. Later, after careful calculation, I found that many top-order stores are chain convenience stores and large supermarkets that sell everything." Old Lu discovered that when he put products online, competitors were no longer the small shop next door, but small stores in three nearby blocks, even supermarkets ten kilometers away. According to a report from the China Chain Store & Franchise Association, over 80% of convenience stores have launched online business. From the financial reports of major supermarkets, the proportion of online revenue is increasing. Since delivery covers a wider area, different formats with different locations and characteristics appear in consumers' sight simultaneously, and large supermarkets that can "buy everything in one stop" have a clear competitive advantage.

On delivery platforms, large supermarkets and mom-and-pop stores serve consumers within 10 kilometers together. But this isn't entirely bad. If Old Lu hadn't done online, he wouldn't have faced competition from other formats. It's like opening a new map in a game; precisely by doing instant retail, mom-and-pop stores get the chance to compete with supermarkets and convenience stores. Unlike e-commerce stores, the weapon of mom-and-pop stores is definitely not traffic. The key to profitability for instant retail merchants is precisely to transform traffic thinking into local thinking, serving residents well within a limited radius, and using a different approach to deal with former competitors. The so-called "channel dividend" is not about grabbing territory, but using the platform to leverage strengths and avoid weaknesses, achieving maximum effect with minimal effort. For example, although a rich product variety is a big plus, for community stores, precise product selection and ultimate service are more important. This Mid-Autumn Festival, a small store in Hangzhou sold not mooncakes but mooncake syrup and trays—the owner noticed residents had the urge to make mooncakes by hand, and large supermarkets couldn't react in time. A pet store in Wuhan, seeing a product go viral on short videos today, can stock it tomorrow, so nearby residents can buy it without waiting, and they can also bring dogs for bathing, which ordinary convenience stores can't do.

The online ecosystem is a true reflection of offline. As supermarkets, convenience stores, discount stores, and other formats go online, mom-and-pop stores will face more competition in the future. In the past, the key to survival for mom-and-pop stores was being closer to residents and competing differently from large supermarkets. Similarly, stores on instant retail platforms must differentiate from offline-only entities and online-only e-commerce.

Physical retail is becoming bustling again, and the trend of online-offline integration is unstoppable. Offline retail, which had formed a balance, may now have to compete for online incremental growth together. But no matter how the situation changes, the long-term essence of physical stores remains the eight characters: "operate with heart, serve solidly."

*Cover image sourced from Visual China*


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