Douyin Hourly Delivery: A New Direction for Instant Retail?

Instant Retail Background Science 1. What are Douyin Hourly Delivery, Alibaba Hourly Delivery, JD Daojia (Hourly Delivery), Meituan Flash Shopping, Fresh Food Front Warehouses, and Instant Retail? Douyin, Alibaba, and JD's hourly delivery, Meituan Flash Shopping, flash warehouses, and fresh food front warehouses all belong to the instant retail industry, which is a shopping method or industry where users order online and receive delivery within one hour. It is one of three major shopping models, alongside community group buying (next-day delivery) and e-commerce (3-5 day delivery). The difference in delivery time reflects differences in fulfillment methods, supply, merchants, products, consumer groups, and gross margin structures, so they are parallel and isolated industries. The essence of instant retail is the delivery-ization of local retail. In simple terms, it is the business where all physical stores such as supermarkets, convenience stores, and mom-and-pop shops deliver to homes via couriers. Why must it be delivery-ized? Because the only fulfillment method that can deliver to users within one hour is delivery riders, and the only supply that can reach users within one hour is local merchants. Therefore, "hourly delivery" is a user-friendly term for consumers, "instant retail" is a professional term for industry practitioners, and "retail delivery" is the essence of the business. They all mean the same thing. 2. Current Status of Meituan, JD, Alibaba, and Douyin in Instant Retail The current status of Meituan, JD, Alibaba, and Douyin in instant retail is shown in the table below. In one sentence: Meituan holds about half of the market, while JD + Alibaba + front warehouse projects + supermarket self-operated online businesses share the remaining half. Douyin's presence is negligible. 3. Four Elements of Instant Retail Business and Regional Bilateral Nature – Project Attributes Let's first look at the ride-hailing market. The ride-hailing market is a bilateral market based on regional supply-demand balance, and platforms need to leverage supply and demand to start. The supply side of ride-hailing is drivers, and the product and service provided are standardized and simple: driving and carrying passengers. In this market, when Didi was restricted by the state from registering new users, platforms like Gaode Taxi, Meituan Taxi, and Cao Cao Zhuanche used money and traffic to attack the market. The result was that Didi still maintained about 70%+ market share. In the past year, other competitors have been unable to invest to change this market. For food delivery and retail delivery (instant retail), the market involves merchants, riders, users, and platforms, which is one more element than the ride-hailing market – merchants. We can think of riders as drivers, and the service and product they provide are also highly standardized and simple, and labor-intensive. But the new element, merchants, represents products, which are extremely diverse and differentiated. This means there is significant resistance to turning this market, requiring strong driving force, or in other words, much more traffic and money than the ride-hailing market. Can Douyin break into this highly resistant regional bilateral market and oligopoly with traffic and money? Look at what happened in the ride-hailing market and Douyin's food delivery, and we'll know the answer. So, imitating giants and attacking head-on will have predictable results. The only way is to find the opponent's weaknesses or wait for the right timing. Fortunately, Meituan, Ele.me, and JD have such weaknesses, providing opportunities for new entrants. 4. Needs Solved by Instant Retail and Problems It Brings – Project Opportunities Instant retail best solves urgent and convenience needs, but it also creates new problems – higher costs leading to higher prices. New problems are new opportunities, which will be discussed in the "Shortcomings of Food Delivery Platforms" section below. 5. Instant Retail, Community Group Buying, and Local Retail Digitalization – Industry Opportunities From 2005 to 2020, consumer shopping habits transitioned from offline consumption to a combination of offline and e-commerce shopping. During this process, Alibaba, JD, and Pinduoduo rose, and millions became wealthy as merchants, brands, intermediaries, etc. Although the e-commerce wave is a once-in-decades historical opportunity, e-commerce still only accounts for about 20% of physical retail. Most local services and local retail still operate offline and cannot be digitalized. The digitalization of local services began around 2012, accelerated with food delivery in 2015, and matured by 2020. During this process, Meituan and Ele.me rose, and millions became wealthy. As of 2020, the internet still couldn't solve the digitalization of local retail; for example, we still need to go to supermarkets and convenience stores for daily necessities. In 2020, due to the pandemic, community group buying seemed like an opportunity to digitalize local retail, and major internet platforms rushed in. Unfortunately, community group buying still didn't fully solve this problem. The rapid and healthy development of instant retail brings new hope for local retail digitalization. The earliest attempt at instant retail was fresh food front warehouses, with companies like Miss Fresh and Dingdong Maicai trying to solve the digitalization of kitchen consumption or wet market shopping. This approach of rebuilding supply, fulfillment, and platforms, and choosing fresh food as the category, led to slow industry development, with leading projects shaky and prospects unclear. Starting in 2021, Meituan Flash Shopping grew rapidly. By putting local retail merchants on Meituan, leveraging Meituan users' food delivery habits, and fulfilling via riders, this instant retail model or retail delivery model greatly promoted the digitalization of local retail. So far, retail delivery is the only proven method for large-scale local retail digitalization, and it's something Meituan and other delivery platforms are good at – since it's basically the same as food delivery. The industry generally believes that the instant retail market will reach 1 trillion yuan by 2026. Shortcomings and Timing of Food Delivery Platforms 1. Shortcomings of Food Delivery Platforms In practice, Meituan, Ele.me, and JD have treated the "local merchants + riders" instant retail model as the main solution for local retail digitalization. This is their strength, but also their weakness. Financially, local retail businesses have thin profit margins, much lower than food delivery. If rider costs are added, instant retail is inevitably high-cost, leading to higher gross margins than local retail. For Meituan Flash Warehouse, gross margin needs to be above 45% to break even. In terms of product mix, to maintain such high gross margins, a certain scale of general merchandise is necessary. That is, without enough demand for general merchandise, there won't be enough supply for instant retail. Average order value, platform commissions, and rider costs are also important factors for this model to sustain. For example, platform commissions are only 5% and still require platform subsidies. Compared to food delivery, retail delivery commissions are significantly lower. Meituan's food delivery is not a very profitable business, and retail delivery is even harder to make profitable. It only makes sense to leverage the reuse value of Meituan's riders, users, and platform operations. A new platform starting this way and trying to take the leader's share is suicidal. In other words, the gross margin of local retail digitalization must be lowered for newcomers to have a chance. But how to lower the gross margin? From the perspective of products and user consumption scenarios, does local retail digitalization have to be hourly delivery and rider-to-home? From the perspective of Meituan, Ele.me, and their users, it seems so, but from the perspective of all internet users and consumption scenarios, not necessarily. For example, if a user buys a data cable or hotel supplies on Meituan Flash Shopping, it's definitely an hourly need. But what if they buy toilet paper, instant noodles, or milk? From the perspective of food delivery users, buying these things seems likely to be associated with hourly delivery, given their mindset. But from the perspective of a housewife at home, or from Douyin or other non-delivery platforms, some things should be hourly, while others can accept half-day delivery, especially when they are cheaper. What's wrong with half-day delivery? The essence of local retail digitalization is to put a local assortment of goods on a localized online platform and deliver them to users in some way. The largest segment of local retail is supermarkets, convenience stores, and mom-and-pop shops, accounting for about 40-50%. This assortment mainly includes fresh food, FMCG, and general merchandise. Front warehouses solve the fresh-food-centric product mix, such as Dingdong Maicai, Pupu Supermarket, and Meituan Maicai (renamed Xiaoxiang Supermarket). Flash warehouses solve the FMCG and general merchandise product mix. Why do we see local retail digitalization as delivery-ization? Because fresh food must be delivered promptly. If it's half-day or next-day, there must be a price or product advantage. Meituan and Ele.me are naturally delivery platforms, so it's seamless. Thus, what we currently see as instant retail or local retail digitalization is retail delivery. But from the perspectives of users, consumption scenarios, products, and platforms, local retail digitalization doesn't have to be all instant retail or retail delivery. Theoretically, half-day or even next-day delivery is allowed. The key is to differentiate on delivery time, price, SKU, and service. 2. Timing Given by Meituan, Ele.me, and JD Meituan has invested heavily in innovative businesses and will continue for the next two years. Relatively, core businesses like Flash Shopping haven't received sufficient resources. This is a strategic window. Ele.me is struggling under Alibaba's current environment. Ele.me and Alibaba have lost the courage and ability to explore new businesses, as seen in their indecisiveness and slow progress in community group buying. They will repeat this in local retail digitalization. In fact, from my contact with Ele.me, they are already at the end of their strength in this business expansion. JD is similar to Alibaba; community group buying proved it has lost the courage and ability to explore new businesses. JD has invested heavily in instant retail, such as taking stakes in Walmart and Yonghui, and acquiring Dada, but these are capital-driven. In terms of business itself, JD hasn't made much progress. In the past two months, JD has been testing a front warehouse model focused on fresh food. After playing in instant retail for so long, exploring this direction shows that their instant retail efforts have been in vain. Of course, another reason JD Daojia hasn't done well is that it treats local retail digitalization as instant retail and retail delivery, but JD lacks the organizational capabilities and basic resources for such a business. And the business has little profit margin. Meituan only started retail delivery after building food delivery infrastructure and reusing it. So JD Daojia's failure is understandable. If instant retail were replaced with my new plan, it would better fit JD's basic capabilities. In summary, now is the best time to enter local retail digitalization.

New Plan for Local Retail Digitalization
And How Douyin Can Do Local Retail Digitalization Well This plan will optimize in the following three aspects:
Improve efficiency, reduce costs, and offer users lower prices.
Leverage one's own advantages and create new ones.
Avoid competitors' strengths and attack their weaknesses. 1. Competitive Strategy: Improve Efficiency, Reduce Costs, and Gain Market with Low Prices 1.1 How to Reduce Fulfillment Costs – Combine Riders and Intra-city Express Delivery
Focus on non-urgent needs, mainly daily necessities (excluding fresh food), using intra-city express delivery from front warehouses to stations or doorsteps, with half-day delivery, passing rider costs into prices.
If instant delivery is needed, charge rider fees separately; high average order value or high-margin products can waive rider fees.
Promote group delivery by community or route. For example, when a community's consumption reaches 500 yuan, any resident's minimum delivery fee drops to 10 yuan (half-day delivery to station). When it reaches 2000 yuan or the community's profit target is met, all orders in the community are delivered to the station within 1 hour with zero minimum order. (Community-based delivery logic doesn't affect individual order logic.) 1.2 How to Reduce Storage and Sorting Costs – Refer to front warehouses: convert supermarkets into front warehouses, and change in-store operations to front warehouse operations. 1.3 How to Reduce Product Costs – Refer to warehouse membership stores and discount snack stores
Promote subscription consumption: launch monthly/weekly subscription plans, calculate household consumption cycles, and offer ultra-low gross margins (15%, or via full-reduction subsidies) for early monthly orders.
Use monthly prepayments to organize production and supply, reducing costs.
Cooperate with brands and factories, bypassing distributors, and directly enter regional or city warehouses (equivalent to distributor warehouses).
Promote brand and factory direct-invested big single-product plans to attract traffic.
Encourage brands and factories to convert advertising budgets, shelf fees, and rebates into prices or store full-reduction coupons, creating a low-price label. 2. Traffic Strategy: Content and Path for Local Retail Digitalization – How to Leverage Your Own Advantages When talking about Douyin, people say Douyin has a lot of traffic, as if traffic alone can conquer the world. WeChat also has a lot of traffic, but can WeChat do e-commerce or local retail digitalization? The type and form of traffic are most directly related to monetization, not empty talk about traffic volume. Baidu and Tencent both thought they had a lot of traffic, but weren't they powerless in e-commerce? Whether it's e-commerce, food delivery, or local retail digitalization, the core is operations, products, and merchants, not so-called traffic. Pinduoduo's rise is a good example – Pinduoduo solved users' demand for low-priced goods, aggregated demand through group buying, provided conditions for merchants to improve supply efficiency and reduce costs, and on the backend, achieved low-cost supply through low-price merchants, even counterfeit merchants. It spread through personal relationships within WeChat's traffic pool. Pinduoduo first found its target users and core needs, then found ways to meet those needs on both demand and supply sides, and finally found a path and method for dissemination in a traffic pool. All three are indispensable. So-called traffic volume is the least meaningful, which explains why Pinduoduo succeeded while WeChat didn't. Douyin is just a traffic pool. To build a "Pinduoduo" or local retail digitalization business on top of it, you need to find your users and core needs, then find ways to meet those needs on both demand and supply sides, and finally determine the path and method for dissemination within Douyin. As mentioned earlier, users and scenarios for local retail digitalization include both urgent and non-urgent, somewhat planned needs. For urgent needs, supply and fulfillment costs increase, and users bear higher prices. For non-urgent, planned needs, efforts should focus on fulfillment and merchant sides to improve efficiency, reduce costs, and offer users lower prices, shifting demand from supermarkets, convenience stores, mom-and-pop shops, and other platforms. On the fulfillment side, we separate urgent and non-urgent orders and products. Non-urgent orders are delivered via intra-city express, while urgent orders use riders. On the storage side, convert supermarkets and convenience stores into warehouses, set up as large front warehouses, and keep operations consistent with front warehouses. On the product supply side, cooperate with brands and manufacturers as much as possible, abandoning traditional distributor channels. On the user side, attract users to subscribe through prices and products. On the business model side, change supermarkets' behavior of charging brands and renting space, and convert brand and partner budgets into prices or activities, attracting traffic through lower prices and improving turnover efficiency. What about the traffic side? Since we're doing this within Douyin, we must design communication methods and content based on Douyin's traffic forms, and that content must resonate with our users and core needs. Our core scenario and demographic are household consumption and its people. Household consumption inevitably involves saving money or cost-effectiveness. Saving money or spending wisely is a positive, attractive, and endless topic. Subscription consumption and planned consumption are also full of content and topics. They all have the foundation for content creation, video, and KOL. As products deepen, KOLs can create various content covering all aspects of life. For example, challenging to live on 200 yuan a month using Douyin's XX subscription project, challenging to have milk and snacks for a year for only 1000 yuan, how to survive a month without going out, how to arrange parents'/girlfriend's/boyfriend's daily necessities clearly, etc. If it weren't for planned consumption saving money, there would be no possibility of long-term topics and content. Only at certain key points could content be created, and it would lack dissemination power, such as promotional videos during campaigns. Currently, Douyin's hourly delivery merchants and products are very difficult to content-ify. They just put local merchants online and give them a good entrance, with disastrous results. This is exactly the same as when Tencent and Baidu gave traffic entrances and called a few merchants to list a bunch of products. Imagine, do the products sold at your local supermarket, convenience store, or mom-and-pop shop have any promotional points? Even offline physical merchants don't promote or advertise, so why would they come to Douyin to do content and promotion? What's there to promote about Mengniu milk in supermarkets? Is there an activity or something consumers haven't tasted or seen? A physical merchant has hundreds to tens of thousands of SKUs; how can they promote them all? Traffic is meaningless; it's only meaningful when combined with monetizable content based on traffic type. The products sold by local merchants have no content-able points, so no matter how much traffic Douyin gives, it's useless. If you directly list local merchants for Douyin hourly delivery, there's only one way suitable for Douyin's traffic type: same-city hot product flash sales, such as durian specials. This is the same logic as Douyin food delivery. Because it's a flash sale, there's shouting, and thus content potential. But flash sales must meet characteristics like high average order value, high gross margin, scale effects, and tolerance for order spikes, and can't be for everyday common products and businesses. This leads to an extremely low scale ceiling. So, the current Douyin hourly delivery business is wrong even from a traffic perspective alone. If relying solely on Douyin users' natural consumption habits, from content consumption to content-driven shopping, to national shelf e-commerce, to regional local retail digitalization, traffic conversion efficiency is extremely low and cannot support local merchants. The traffic strategy in this plan has two parts: online and offline dissemination point design, and dissemination point commission. Extended Topic: Traffic and Local Business Layout Currently, Douyin traffic is national, with almost no regional focus, which is very disadvantageous for localized businesses, especially in the early stages. As long as Douyin wants to deeply cultivate local business, it must have traffic owners, content, and dissemination forms that align with it, but Douyin has no obvious layout in this regard. My rough thoughts are as follows:

Each city needs to develop several KOLs focused on the local city, using Douyin's local business to shape their local influence, and using their influence to promote Douyin's local business.
Add a traffic mechanism that pushes content based on geographic location, i.e., content creators can choose the exposure area to meet local business traffic needs.
Create a task card mechanism where completing a task grants one traffic boost for a video, and the task's content gets additional traffic support. Tasks include those Douyin wants to promote and commercial tasks Douyin receives. This task card can gather "ants" to complete tasks that big video creators can't, such as creating content to promote this project. Douyin doesn't pay cash costs; it just uses some traffic permissions, leveraging others' efforts for its own benefit. Extended Topic: Can Subscription Habits Be Cultivated? Membership shopping habits also started from scratch. Supermarket one-stop shopping and checkout lines have always existed. There's no habit that can't be cultivated or replaced; it depends on benefits and costs. Douyin is a great platform to change public perception, and it's possible to persuade the public under the banner of planned consumption and saving money. If a platform delivers desired goods to your home every week, and if you can return them if you don't want them, why would you refuse? The key is to accurately gauge consumers' consumption cycles and emphasize saving money and family values. 3. Supply-Side Strategy – First Organize Concentrated, High-Quality Supply, Then Organize Dispersed, Low-Quality Supply, and Implement Quota System for Dispersed Low-Quality Supply Douyin's local retail digitalization business shouldn't imitate Meituan Flash Shopping by organizing a large amount of dispersed, low-quality supply from the start, including scattered social stores, chain convenience stores, and regional or national supermarkets. Why are national supermarkets also low-quality supply? Because their main business is offline; products, storage, sorting, marketing, and pricing are all offline-oriented. Even if a few stores do well online, they focus on Meituan, JD, and Alibaba, with other platforms as an afterthought. It's unrealistic for Douyin to rely on this level of supply for large-scale business. Social stores and chain convenience stores have the problem of being too dispersed, leading to very low revenue per store and high expansion costs. Meituan doesn't spend much effort here, or rather, Meituan has already completed this work through early investment and reputation. Comparing Flash Warehouse and Flash Shopping, from 2020 to the end of 2023, Flash Warehouse's GMV grew from 0 to about 20 billion yuan, with about 5,000-6,000 warehouses and about 1,000+ project owners. The supermarket/convenience store segment of Meituan Flash Shopping grew from 0 to about 80 billion yuan from 2018 to the end of 2023, with about 2,000 large chain retailers and 200,000 small merchants. Moreover, Flash Warehouse's penetration relative to Flash Shopping is still increasing. Clearly, the advantages of concentrated, high-quality supply are evident. Concentrated, high-quality supply can also well meet the plan of "starting with next-day delivery and competing with hourly delivery." Because the number of merchants is small, concentrated, and capable, they can cooperate well with the platform in planning and executing products, fulfillment, storage, and marketing for next-day and hourly delivery. If relying on dispersed small and medium merchants or large supermarkets focused on offline, the platform cannot complete planning or implementation. Once high-quality supply is established, nationwide rollout, consumer enthusiasm, and profit effects emerge, then a wave of "ground promotion" or "KOL promotion + agent service" can organize existing social supply, increasing scale by enriching merchants, products, and service forms. Expansion of local small and medium merchants should be managed with regional quotas, i.e., only a limited number of merchants of a certain type can be listed in a region, and these merchants should be supported so their income on Douyin is not lower than on Meituan. It's not recommended to imitate Meituan Flash Shopping's unlimited supply strategy; it's not Douyin's strength. This reduces expansion workload and costs while ensuring supply effectiveness. Also, because of regional quotas, merchants with initiative and online operation capabilities will proactively contact the platform to list. To keep the quota, merchants will accept platform assessments and self-optimize. Local small and medium merchants should focus on complementarity with high-quality supply merchants. For example, if high-quality merchants mainly do supermarkets, then local small and medium merchants should supplement with fresh food stores, flower shops, beauty stores, pet stores, pharmacies, etc., with a small number of convenience stores. 4. Competitive Strategy: Start with Half-Day Delivery, Compete with Hourly Delivery – Avoid Competitors' Strengths, Choose Their Weaknesses Starting with half-day delivery has three main reasons:
Half-day delivery products are more planned. Subscription consumption can reduce merchant costs, and changing rider fulfillment to intra-city express reduces fulfillment costs, lowering costs for consumers while meeting their shopping needs. In the market dominated by Meituan Flash Shopping and JD Hourly Delivery, this scenario isn't differentiated; they all use instant fulfillment, with high merchant and fulfillment costs, higher than offline costs, which doesn't align with the current economic situation and business optimization direction.
Meituan users have a clear user mindset for Meituan as a food delivery platform, requiring instant delivery within one hour. Meituan, Ele.me, and JD Daojia's vast and dispersed local supply also makes it impossible for Meituan to distinguish half-day from hourly delivery. Douyin users don't have a clear mindset for Douyin's local retail business. Therefore, if Douyin starts with hourly delivery, it's hitting the gun barrel of Meituan, Ele.me, and JD Hourly Delivery. But starting with half-day delivery, competitors will find it hard to follow with their existing systems; they'd have to reorganize supply and carve out a half-day position in their complex supply systems.
Separating half-day and hourly products and orders allows better control of product gross margins, enabling low-price competition while accommodating hourly needs. Competing with hourly delivery is because it's the competitors' core territory. Of course, if we don't defeat them in hourly delivery, half-day can still take a share of their cake. Douyin is in a comfortable position with no burden. Our plan includes an automatic evolution mechanism from half-day to hourly delivery, achieving half-day costs with hourly delivery effects. When evolving to 2-4 hour delivery, the consumer group, scenarios, and products will closely approach retail delivery. Combined with our hourly delivery method based on products and orders, we can deliver a dimensionality reduction strike against pure retail delivery businesses. Of course, this plan will be inferior to Meituan Flash Shopping on the merchant and product supply side, so we must greatly strengthen high-quality supply merchants' capabilities to enrich products and reduce this disadvantage. On the other hand, after user awareness forms, replicate the Flash Shopping business and expand local merchants. Of course, there's a question – can half-day delivery experience compete with hourly delivery? Of course it can. Experience isn't just about delivery time; it's a comprehensive comparison of product categories, SKU count, quality, price, merchant service, fulfillment service, and fulfillment time. So, the key is which demographics, scenarios, and products are better served by half-day delivery, since some products don't need hourly delivery, and consumers care more about price. Some say Tmall Supermarket and Taoxianda have been doing half-day delivery for a long time. Why hasn't Alibaba succeeded? Does that mean half-day delivery doesn't work? Tmall Supermarket's half-day delivery is the same as JD's 211, both warehouse-style express, i.e., building large regional warehouses, and only areas near local large warehouses can achieve half-day or 211 delivery. Its warehousing and distribution cost is about 9-11 yuan per order, similar to delivery-style retail (including front warehouses, Flash Shopping, and Flash Warehouse), and much higher than our plan. The essence of this plan is a large front warehouse plan, changing rider instant fulfillment to express fulfillment + rider fulfillment, more like a front warehouse plan, completely different from e-commerce or Tmall Supermarket. Some might think Taoxianda has done delivery-style retail, but Taoxianda did nothing; it's just a traffic reseller, unable to delve into warehousing, distribution, products, or pricing. Not worth mentioning. To analyze different warehousing and distribution models clearly would require a report of tens of thousands of words, so I won't elaborate here. 5. Co-opetition Strategy – Jointly Split the Market Share of Leading Players With Ele.me and JD, cooperation isn't about providing supply, fulfillment, or traffic resources to each other. This kind of cooperation has never succeeded, such as Douyin and Ele.me, Meituan and Kuaishou. What can truly work is choosing key markets. For example, treat markets where Meituan has over 70% market share as markets everyone can carve up. Each company focuses on different cities, attacking Meituan's market. Once market shares are roughly divided, cooperation can't be maintained, and chaos ensues. Everyone must learn from community group buying: uncontrolled melee among giants is terrible, hurting themselves, with no winners. Moreover, local retail digitalization is a low-profit business, just a strategic position. So, each company suffering huge losses to take this market is a pyrrhic victory. Douyin Local Retail Digitalization High-Quality Supply Plan Overview Summary: Douyin's local retail digitalization high-quality supply plan targets household daily consumption and price-sensitive people, while also serving urgent and price-insensitive people. It focuses on planned consumer goods, supplemented by urgent consumer goods. It improves efficiency and reduces costs in storage, fulfillment, and products, adopting a low-price competitive strategy to achieve lower prices than Meituan Flash Shopping and supermarkets.

On the storage side, use the front warehouse model.
On the fulfillment side, mix intra-city express and rider fulfillment.
On the product side, focus on FMCG and general merchandise.
On the user and scenario side, target price-sensitive housewives, deeply penetrate household planned consumption scenarios, and develop subscription consumption habits.
On the procurement and supply side, bypass the distribution system and reform supermarkets' fee-based entry model.
On the traffic side, combine Douyin's traffic characteristics with the target group's actual situation.
On the platform supply side, develop highly controllable, high-quality supply. 1. Storage Overview – Upgrade Supermarket and Convenience Store Formats to Warehouse Formats Organize 1-10 merchants per city, set up 1 to 50 front warehouses (11 to 77 grids, one warehouse per grid), each warehouse with a 5 km radius, about 10,000+ SKUs, and 1,000+ square meters. Grid count and service radius need testing, with main considerations being scale density, delivery time, and delivery cost. Within a delivery cost of 2 yuan, the faster the better. At a certain scale density and cost, 2-4 hour delivery is achievable. 2. Fulfillment Overview – Combine Express and Rider Mixed Fulfillment Focus on non-urgent needs, mainly daily necessities (excluding fresh food), using intra-city express delivery from front warehouses to stations or doorsteps, with half-day delivery, passing rider costs into prices. If instant delivery is needed, charge rider fees separately; high average order value or high-margin products can waive rider fees. 3. Procurement and Supply Chain Overview – Improve Supply System, Imitate Discount Stores and Warehouse Stores Cooperate with brands and factories, bypassing distributors, and directly enter regional or city warehouses (equivalent to distributor warehouses). Promote brand and factory direct-invested big single-product plans to attract traffic; encourage brands and factories to convert advertising budgets, shelf fees, and rebates into prices or store full-reduction coupons, creating a low-price label. (Seize brand and factory budgets and fees from supermarkets and convenience stores.) 4. User Side Overview – Control Gross Margin as Much as Possible, Flexibly Meet Delivery Time Needs Promote subscription consumption: launch monthly/weekly subscription plans, calculate household consumption cycles, and offer ultra-low gross margins for early monthly orders. Use monthly prepayments to organize production and supply, reducing costs; upgrade to instant delivery based on products, orders, and consumers' willingness to pay. 5. Traffic and Promotion Overview – Same-City Traffic Density and Multi-Point Testing Fully Utilize Douyin Content and Traffic – Promotion Strategy Centered on Douyin Regional KOLs Choose cities with authoritative KOLs in county towns or prefecture-level cities for city-wide testing. Certify KOLs' identities, let them deepen their local influence through this project, and have them serve the project regularly, with or without compensation. Offline stations and group leaders advance simultaneously as support. Utilize Offline Traffic + Intra-city Broad Traffic – Promotion Strategy Centered on Stations and Group Leaders Develop stations and group leaders in provincial capitals and certain areas of prefecture-level cities, and develop stations and group leaders across county-level cities as KOLs, organizing users by community. Online KOLs in the area serve as support, providing content. 6. Platform Control over High-Quality Supply Merchants Several merchants monopolize a city, controlling ineffective competition, helping merchants scale and improve efficiency; the platform provides traffic subsidies and preferences to these merchants; set category gross margins and overall gross margins for merchant products to control prices; take equity stakes in merchants, control net profit margins, and require exclusive supply. In general, merchants are not complete business entities but the platform's supply and fulfillment end in the local market. Merchants cooperate with the platform to adopt low-price strategies to open markets. 7. Work Allocation Douyin's Work Top-level project design, including positioning, user groups, scenarios, shopping methods, fulfillment methods, supply configuration, traffic introduction and conversion, merchant management and market allocation, and system development. High-Quality Merchants' Work Product selection, pricing, activities, procurement, storage, sorting, customer service, offline KOL expansion and training, etc. They must deeply understand supermarkets, warehouse membership stores, and front warehouses. Except for gross margin space and fulfillment methods controlled by the platform, all other work is the merchant's responsibility. Considering this is an innovative industry project, if high-quality merchants are too strong, they won't obey Douyin's arrangements; if they're too weak, they can't get comprehensive top-tier team support. Therefore, Douyin needs to configure industry experts in procurement, sales, storage, and online product operations to help merchants design and implement project work. Merchant profiles must meet one of the following requirements:

Entrepreneurial teams composed of industry experts in procurement, sales, storage, and online product operations.
Ability to organize the local FMCG and general merchandise supply chain, with financial strength. 8. Plan Summary The core differences between this plan and existing front warehouse plans are as follows:

Change fresh food to non-fresh daily consumer goods and planned consumer goods, and change urgent kitchen needs to non-urgent household needs.
Transform unplanned consumption into planned consumption as much as possible, while accepting unplanned consumption.
Change pure rider fulfillment to intra-city express + rider mixed fulfillment, and change delivery time from within 1 hour to within 6 hours + within 1 hour.
Shopping behavior and results can be content-ified and disseminated on Douyin.
Change self-operation to a highly controlled cooperation model. The goals of the core parts of this plan are as follows: The core of this plan is daily consumption + half-day delivery. Planned consumption is just a part, not the whole. Planned consumption can improve efficiency and reduce costs. 9. Retail Delivery vs. New Plan Retail delivery's logic is that if you need to shop at supermarkets, convenience stores, or mom-and-pop shops, you can stay home and have it delivered within an hour by riders. Demand and supply are highly flexible and fast, but at the cost of extra money. Compared to subscription consumption, retail delivery platforms don't strongly grasp user needs. Because retail delivery only gets orders when users have needs and habitually use the platform. With subscription, users don't even think about their needs; days before the need arises, the subscription platform can deliver goods home. When users receive goods, they suddenly realize they were almost out, and it's just in time. Products from supermarkets, convenience stores, and mom-and-pop shops are naturally planned, such as rice, toilet paper, and milk. So, if subscription accuracy can be improved to a certain level, with regular home delivery, it will be quite attractive to the target group. Compared to half-day delivery, instant delivery costs more and lacks appeal for household consumers. In one sentence, the new plan is: provide users with lower prices and deliver goods to their homes promptly and proactively according to their needs, without requiring users to think about what they lack or which channel is better. 10. Other Whether Douyin does content e-commerce, shelf e-commerce, or overseas e-commerce, its scale, growth, and profits are better than local food and retail digitalization. Local retail digitalization is better than food delivery because there's still opportunity, while food delivery currently has no visible opportunity. The significance of Douyin doing local retail digitalization may lie in non-financial strategic indicators like ecosystem and user habits. For example, users can meet urgent needs, planned needs, e-commerce needs, and local retail needs on Douyin. At that point, Douyin would be a more comprehensive e-commerce platform than Alibaba, better occupying user mindshare. These different needs and markets contribute scale, profit, or user mindshare/ecosystem positioning, and can't be measured solely by financial and business metrics.