---
title: "Alibaba Retail Link and Ele.me Announce Joint Operation of Tmall Xiaodian, Community Stores Officially Integrated with Local Life Services"
description: "Ele.me and Alibaba's Retail Link have launched a new online operation model for Tmall Xiaodian, combining supply chain advantages with local life services and minute-level delivery to transform traditional convenience stores. This move addresses key issues such as supply chain costs, online traffic, and delivery efficiency, marking a significant shift in the FMCG industry."
author: "New Distribution"
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published: "2018-07-05"
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# Alibaba Retail Link and Ele.me Announce Joint Operation of Tmall Xiaodian, Community Stores Officially Integrated with Local Life Services

> Ele.me and Alibaba's Retail Link have launched a new online operation model for Tmall Xiaodian, combining supply chain advantages with local life services and minute-level delivery to transform traditional convenience stores. This move addresses key issues such as supply chain costs, online traffic, and delivery efficiency, marking a significant shift in the FMCG industry.

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The "windfall" for traditional convenience store transformation has arrived! This time it's Ele.me + Tmall Xiaodian.
Three months after fully integrating into Alibaba, Alibaba Group Vice President and Ele.me CEO Wang Lei stated today: "With the strength of the entire Alibaba New Retail ecosystem, Ele.me will build itself into the core platform for local life services in the New Retail era."
"Ele.me now stands at two major windfalls: the New Retail windfall and the local life services windfall."
Ele.me recently partnered with Retail Link to pioneer a new online operation model for Tmall Xiaodian. Retail Link's supply chain advantages, combined with Ele.me's local life traffic entry point and minute-level delivery, will create a fully intelligent merchant service.
1
Alibaba Acquires Ele.me
On April 2, Alibaba announced the full acquisition of Ele.me for $9.5 billion, jointly with Ant Financial. The $9.5 billion amount set a new record for cash acquisitions in China's internet history. After the acquisition, Ele.me's brand and operations will remain independent. In terms of personnel, Ele.me founder and CEO Zhang Xuhao will serve as Chairman of Ele.me and also as Special Assistant for New Retail Strategy to Alibaba Group CEO Zhang Yong. Alibaba Group Vice President Wang Lei will become CEO of Ele.me.
With this acquisition, the domestic food delivery market will evolve from the previous duopoly of Meituan Waimai and Ele.me into a "three kingdoms" battle among Meituan Waimai, Alibaba's Ele.me (including Baidu Waimai acquired by Ele.me), Alibaba's Koubei, and Didi Waimai. Currently, Meituan is entering the ride-hailing market. Although Alibaba's acquisition of Ele.me was not intended as a "siege of Wei to rescue Zhao," Meituan's pressure has increased nonetheless. The future landscape of the food delivery market is more uncertain, but in future market competition, ecosystem aggregation, technology empowering industries, and deep cultivation of the industry chain are the fundamental paths to victory. To some extent, this is Alibaba's New Retail approach.
Ele.me has a massive instant delivery logistics platform for food delivery—Fengniao—with over 3 million registered riders, plus the delivery personnel from Baidu Waimai acquired by Ele.me. When this system connects with Cainiao Network's logistics system and smart warehousing, it can further accelerate the logistics speed of Taobao and Tmall. Imagine a scenario: a consumer buys a product from Taobao, and after it arrives locally via Cainiao's logistics, if the consumer urgently needs it, they can pay an extra fee to have a delivery rider bring it from the logistics point to their home through the local delivery network. This achieves seamless, fast, and 24/7 connectivity for the last mile from merchant to consumer.
Moreover, more importantly, the vast local instant delivery network formed by Ele.me's food delivery services will become a key support point for Alibaba's New Retail last mile. Services like Hema's "30-minute delivery" and 24-hour home emergency services, "Tmall Supermarket one-hour delivery," and many first-tier brands' "order online, deliver from store within two hours" now have a solid foundation with Ele.me's local instant delivery system. Alibaba New Retail's concept of a "three-kilometer ideal living circle" will be greatly enhanced in terms of management, quality, and efficiency.
Strategically, Ele.me's addition helps Alibaba's New Retail transition to New Consumption. Retail is more about selling goods, while consumption includes comprehensive requirements for product quality, service, quality, personalization, and other added values. Among these, fast and convenient last-mile delivery is a natural part. In this regard, Zhang Xuhao's evaluation of Ele.me's food delivery business is representative: "Food delivery is not just about restaurant meals; it's the delivery for the entire consumer goods and New Retail system. 'Everything 30' (all items delivered within 30 minutes) will be the most important thing in the next decade."
For this reason, after the acquisition, Alibaba CEO Zhang Yong stated: "This is the most important investment in Alibaba's history." In his employee letter to all Alibaba staff, Zhang Yong wrote: "As one of the highest-frequency applications of local life services, food delivery is an important entry point for local life. Ele.me's leading food delivery services, together with Koubei's in-store services, will expand new local life service areas for the Alibaba ecosystem, completing an important step from New Retail to New Consumption. At the same time, we can clearly see that the vast and multi-dimensional local instant delivery network formed by food delivery services will become the necessary commercial infrastructure for various New Retail scenarios."
2
Ele.me's "Minute-Level Delivery"
Fengniao Delivery, as the representative of the local life instant delivery system, will no longer only serve food delivery but will also provide delivery capacity to various Alibaba New Retail units. This means Fengniao is about to "soar to the sky," fully integrating into Alibaba's New Retail "minute-level delivery."
The Fengniao delivery platform was established in 2015 and has over 3 million riders. Fengniao has 3,000 delivery stations nationwide. Combined with Ele.me's internal incubation project "Future Restaurant" and its thousands of offline physical stores and affiliated convenience stores, Fengniao has gradually built a network of pre-positioned warehouses for food delivery that reaches down to the community level.
Let's look at some data. Fengniao's instant delivery intelligent dispatch system "Ark" has expanded to 2,000 cities and counties nationwide. With the help of the intelligent dispatch system, the average delivery time per order has been reduced to 28 minutes and 36 seconds. Rider income has increased by up to 40%, and during the World Cup, the fastest food delivery order was delivered in 8 minutes. Wang Lei believes that in 2017, the national instant delivery market delivered nearly 10 billion orders, equivalent to 25% of traditional logistics' business volume. In the future, it is expected that the volume of local instant delivery will reach more than half of traditional express delivery.
And Fengniao will also become the "main delivery rider" for Tmall Xiaodian.
3
From Traditional Convenience Stores to Tmall Xiaodian
Currently, there are over 6 million small stores in China, mostly mom-and-pop shops, with over 70% in third- to sixth-tier cities. The number of stores has been basically stable over the past 10 years. About 80% of store owners are over 45 years old and are usually not familiar with smartphones and the internet. Store owners open their shops for more than 12 hours a day on average, and in South China, they even open for 15 hours a day, but their income is meager.
Because they are at the end of the supply chain, after layers of price increases, the purchase price of goods for small stores is relatively high, resulting in selling prices that are usually more than 10 percentage points higher than those in hypermarkets.
"If there is any business that is hardest to do, it is the small store."
But what is the core problem that makes small stores truly difficult? It is still the traffic problem. Traditional convenience stores rely on surrounding natural traffic, and this amount is basically limited. That is, a small store cannot have a big explosion. This time, the combination of Ele.me and Tmall Xiaodian will bring about a major change.
Today, let's talk about the qualitative changes that Ele.me + Tmall Xiaodian will bring.
In August last year, Alibaba's Retail Link announced that the first Tmall Xiaodian dedicated to serving communities officially began operations in Hangzhou. Since then, Tmall Xiaodian has expanded nationwide, with a surprisingly fast pace of store conversions.
Tmall counter inside the store
According to reports, all Tmall Xiaodian stores not only have Tmall brand authorization, such as the Tmall storefront and exclusive Tmall shelves, but the entire store will also undergo personalized renovation.
Tmall counter products in the supermarket
Supermarket backend system
Shelf heat map analysis
Store owners using Retail Link can calculate what products are most suitable for their store based on the consumer composition around the community supermarket and the store owner's personal profile.
They can view real-time data on daily sales, inventory, and even product sales rankings. Based on backend data, they can see which similar products sell better and restock accordingly.
4
Online High-Traffic Entry Point
Leveraging Ele.me's high-traffic online entry point, traditional convenience stores may usher in a comprehensive transformation opportunity. Based on current test data, the results are very good.
In the first pilot phase, the average daily sales and average daily order volume of Tmall Xiaodian stores both tripled.
According to reports, this operation plan not only includes product category arrangement and discount settings suitable for food delivery scenarios, but also introduces quality brands through Retail Link, offering discounts to attract customers.
Ele.me + Tmall Xiaodian actually solves three core problems of traditional convenience stores: 1. Supply chain price and efficiency issues. 2. Online traffic issues. 3. Delivery efficiency issues. Therefore, with the combined force of the Ele.me + Tmall Xiaodian model, traditional convenience stores are now fully embracing a new opportunity. In the early stage, there will definitely be a dividend period, but later, competition may shift to product differentiation among individual stores. This is because the biggest advantage of convenience stores currently is product standardization (completely different from catering, where every restaurant has a different taste), but the biggest disadvantage is also product standardization. Therefore, convenience store operators should change their thinking early and embrace change.
Compiled from: Retail Business Review, Niu Danqing
From August 22-24, the "2018 FMCG China Digital Innovation Conference (2018FDIC)" with the theme "Finding New Engines for Growth" will be held in Shanghai, hosted by the China FMCG Industry Association and organized by New Distribution.
The conference will last 3 days, focusing on two main themes: marketing and supply chain, with six parallel forums on brand, distribution, communication, B2B, intra-city logistics, and innovative retail. We will invite industry experts, CEOs, and senior brand executives to deeply interpret the trends and drivers of digital transformation in the FMCG industry.
We will invite over 500 executives from FMCG companies, 200+ CEOs from B2B industries, and 1000+ major FMCG distributors to gather and discuss how the FMCG industry can use digital tools to achieve rapid growth again in the digital era. This conference will build a bridge for brand owners, distributors, retail enterprises, and marketing agencies, helping FMCG manufacturers obtain the latest information, understand best practices, and master more transformation skills.
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Conference Time
August 22-24, 2018
Conference Venue
Shanghai Baohua Marriott Hotel
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August 22: Full-day registration
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August 24: Theme: FMCG Supply Chain Digital Upgrade
All day: FMCG Supply Chain Conference
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