“Lightning warehouses are not a high-profit industry; one cannot enter blindly.” This is the honest feedback from several lightning warehouse operators recently. Over the past year, the food delivery war and various subsidies have rapidly inflated instant retail order volumes. Many opened warehouses with a gold-rush mentality, believing that entry alone would guarantee profits. Indeed, with subsidies, order volumes surged. But the problem is that high order volumes during subsidy peaks do not equal long-term operational capability; it is common to see total orders and loss-making orders increase simultaneously. When subsidies stop and orders decline, fundamental issues in product selection and daily operations are exposed. Previously, some merchants who entered impulsively began to incur losses and close warehouses, and the recent increase in warehouse recycling businesses confirms this. As the industry returns to rationality, we find that lightning warehouses have never been an easy, high-profit business; they have always been a “tough business” that requires professional expertise and meticulous management. The Illusion Created by Subsidies: Many Believe Lightning Warehouses Have No Barriers The most dangerous aspect of the food delivery war is not that it makes the track crowded, but that it distorts correct business signals in a short time. High subsidies created a market illusion, leading some practitioners to misjudge lightning warehouses as a low-barrier, high-profit business. This illusion spread rapidly in the market, directly leading to irrational expansion on the supply side, causing many novices lacking retail experience to enter blindly before understanding the essence of the business. A lightning warehouse merchant in eastern Guangdong told us, “During the food delivery war, many newcomers entered the lightning warehouse business. Around our store, I don’t have statistics, but from my feeling, new stores increased by 50% in a short time.” The sharp increase in the number of lightning warehouses did not make the industry more prosperous; instead, competition in the same business district quickly intensified. The overall payback period was extended, product homogenization became increasingly severe, and merchants were forced to compete on low prices. These pressures ultimately fell on operations. A more serious misjudgment is treating the order volume brought by subsidies as an asset. The essence of business is value exchange, not low-price dumping. Many people used the false growth from short-term subsidies to validate long-term business logic, which became the root cause of industry pitfalls. “Actually, during the food delivery war, orders surged in at certain times, just like milk tea shops. Even milk tea shops couldn’t adapt, and we lightning warehouses found it even harder. Even if we prepared in advance, it was difficult. Moreover, many of these orders were low-price orders relying on subsidies, and the proportion of loss-making orders was high,” shared a lightning warehouse merchant in Wuhan. This kind of low-price-driven order severely occupies normal operational resources. Once subsidies stop, traffic dries up instantly and cannot be沉淀 as long-term assets for merchants. Mr. Deng, a lightning warehouse franchisee in Jinan, believes, “Lightning warehouse customers are not typical price-sensitive customers; most are residents with urgent needs. They care more about service quality and cost-effectiveness rather than just price. Once users form consumption habits, they won’t churn simply due to price differences.” Therefore, the biggest problem brought by the food delivery war is not intensified competition, but that it made many practitioners mistake subsidy-driven high order volumes for operational capability. When subsidies recede and orders return to normal, stores without basic skills will expose their shortcomings as order volumes increase; businesses without repeat purchases are just temporary illusions, no matter how lively. Lightning Warehouses: A “Tough Business” After subsidies end and the industry returns to normal, every merchant must answer a more fundamental question: What kind of business is a lightning warehouse? It is a “tough” business that requires meticulous management. The “toughness” here does not mean the business has no future, but that the underlying logic of making money has fundamentally changed. Any retail format goes through a period of野蛮 growth and dividend in its early stages. In the initial stage of lightning warehouses, the market was typically characterized by demand exceeding supply, and early entrants could easily enjoy excess dividends from supply-demand mismatch. But as the industry develops, warehouse density increases, supply gradually improves, and excess profits inevitably return to the average level of the retail industry. Mr. Deng from Jinan put it directly, “The industry is now in a screening period, expected to last until 2026-2027. Some lightning warehouse merchants with insufficient operational capabilities will be eliminated, and the future industry will rely more on refined operations and service quality.” In this cycle, merchants with insufficient operational capabilities and those hoping for short-term profits will be cleared out; only those with true造血能力 can survive and thrive in competition. Moreover, a key issue is that many practitioners mistakenly view instant retail as a purely online traffic business. But in fact, instant retail transactions occur online, but its underlying capabilities are all offline. The underlying supply, organizational system, inventory turnover, and fulfillment and delivery are all offline “hard work.” When offline fundamentals are weak, such as low inventory accuracy, chaotic picking routes, and mismatched product structures, the more online traffic comes, the faster problems are exposed, and the faster the store dies. “I have always used the word ‘operation’ to describe the lightning warehouse business, not ‘speculation’ or ‘investment.’ As a store owner, you have to do everything yourself, from recruitment, site selection, product selection, daily operations, to handling various emergencies. You must manage every detail with care to gain a deeper understanding of the lightning warehouse business and do it well,” shared Mr. Fang, a lightning warehouse franchisee in southern Zhejiang. So, lightning warehouses are a tough business, meaning that after the dividend period, the industry enters a screening phase, requiring hard work in offline supply and operations, and only through meticulous management can certainty be achieved. The Second Half of Lightning Warehouses: Competing on Capabilities From industry data, instant retail has not slowed down after subsidies receded; instead, it continues to grow. According to the “Instant Retail Industry Development Report (2025)” released by the Ministry of Commerce Research Institute, China’s instant retail scale will exceed 1 trillion yuan in 2026 and is expected to reach 2 trillion yuan by 2030. Today’s lightning warehouses, as an important part of instant retail, remain a continuously growing business. But “market growth” and “individual profitability” are two different things. In the second half of lightning warehouses, the watershed of supply differentiation will become increasingly clear. Only those who systematize their capabilities can turn the business into a long-term one. First, compete on supply chain and product strength. Information in the industry is transparent; now lightning warehouses generally have over 6,000 SKUs. The logic behind this is not that more SKUs are better, but that products need to match consumer needs. In the same business district, users’ reasons for ordering are often simple: either urgent, convenient, or a better choice. Whoever can meet these needs faster, more completely, and more accurately will continue to get orders. When communicating with a lightning warehouse owner in the Chaoshan area, he told me that lightning warehouses require broad supply and a strong supply chain system to meet needs in different scenarios. For example, urgent needs like “diapers and ear thermometers at midnight,” and high-margin scenario-based needs like “craft beer + ice cups + cocktail recipes.” Another path for product strength is to use structure to avoid homogenized price wars. A lightning warehouse merchant in Ningxia expanded their product mix from simple beverages and snacks to daily necessities that better meet instant needs and have healthier profit structures, making daily necessities account for about two-thirds. The second capability is service and experience. When supply is no longer scarce, service and experience become the key to retaining customers. Mr. Deng believes that the lightning warehouse industry is transitioning from supply-oriented to service-oriented. In the current era of product homogenization, the granularity of service determines customer loyalty. Competing on service is not just slogans; it is a set of daily actions that reduce errors and ensure stable fulfillment. For example, proactively giving红糖姜茶 and warm patches to users purchasing menstrual products; in delivery, strict standards for food bags, ice packs, and bubble wrap. The essence of service is reducing uncertainty. Most instant retail users care less about who sends red envelopes and more about who provides more stable service quality and better cost-effectiveness. The third capability is the use of digitalization and platform empowerment. Today’s professional lightning warehouse operators no longer rely on intuition for purchasing but fully utilize platform data to drive growth. Mr. Liu, a lightning warehouse franchisee in Wuhan, has a directly replicable approach: during the food delivery war, he did not blindly pursue order volume but delved into the backend digital system, analyzed order details, accurately identified which products were profitable and which faced excessive competition in the business district, and made rapid product selection and replacement accordingly. Mr. Deng from Jinan goes further, skillfully leveraging the brand’s operational support to optimize product structure and gross profit models, leaving complex backend accounting to the system while focusing on front-end fulfillment and customer complaints. In the end, the logic of the second half of lightning warehouses can be summarized in one sentence: Products and supply chain determine whether you can continuously get orders; service and experience determine whether you can accumulate repeat purchases; digital operations determine whether you can maintain profit structure in high competition. Final Thoughts Lightning warehouses are a business worth doing long-term, but they should not be judged by short-term logic such as traffic and subsidies. Subsidies can amplify transactions but cannot沉淀 repeat purchases; heat can attract entry but cannot replace basic skills. After subsidies recede, some players lacking core competitiveness being eliminated is a necessary stage of industry maturity. Good money drives out bad money, and competing on operational capability is the most authentic industry answer after lightning warehouses return to rationality.