In recent years, the overall O2O market has continued to expand, exceeding 3.3 trillion yuan in 2021, with the home-delivery business growing at 64% over the past five years, serving as the internal driver of O2O market growth. As a key component of O2O home delivery, instant retail has grown significantly. It is expected that by 2025, the open platform model of instant retail will surpass the trillion-yuan threshold, reaching approximately 1.2 trillion yuan, making it a major part of O2O home delivery and potentially driving overall O2O market growth in the future. Mr. Wang Yijun, head of O2O business at Tsingtao Brewery's Innovation Marketing Headquarters, shared insights on instant retail from a brand perspective at the 8th FMCG Innovation Conference, under the theme "From Far-field to Near-field: Exploring the New Boundaries of Instant Retail Development."
Background and Significance of Focusing on Instant Retail 2023 marks the 120th anniversary of Tsingtao Brewery, making it one of the few century-old enterprises in China. As a century-old company, Tsingtao Brewery continues to maintain its innovative vitality, with its brand value ranking first in China's beer industry for 19 consecutive years. Tsingtao Brewery adheres to the strategic positioning of combining basic quality, distinctive quality, and charming quality, using unique brewing techniques to meet consumers' pursuit of beer quality.
Over the past two years, Tsingtao Brewery has continued to advance its high-end development strategy, integrating product strength, channel strength, and marketing strength. High-end products such as Amber Lager and Century Journey have been launched, and the star product "Legend of a Lifetime" has pushed beer premiumization to new heights.
Currently, the e-commerce landscape is undergoing major changes. The dividends of traditional e-commerce platforms like Alibaba and JD.com are diminishing, while interest-based e-commerce platforms like Douyin and Kuaishou are emerging rapidly. Instant retail is developing at high speed, and Chinese consumers' online purchasing habits are quietly changing.
With the pandemic lasting three years, internet consumption scenarios are also changing. Instant retail home-delivery platforms have quietly entered people's daily lives, and both platform-based and self-operated home-delivery brands have become part of daily life. Vertical channels in the alcohol category, such as Waima Songjiu and Jiu Xiaoer, have become new tracks we focus on and develop.
1) From an online perspective: China's internet dividend is nearing its peak. In 2021, the scale was 12 trillion yuan with a growth rate of 14%, but by 2022, it had dropped to only 4%, with online physical retail sales below 12 trillion yuan, growing by about 6 percentage points. Enterprises doing online brands and online business need to think about which channels to use to drive incremental growth in the future.
In the past two years, instant retail platforms have shown explosive growth, but since last year, after two to three years of high-speed growth, the natural growth momentum of major instant retail platforms is gradually disappearing. How to achieve new brand growth during a period of stable growth is a challenge every brand will face.
While instant retail is booming, consumer shopping habits have undergone irreversible changes, forming a dependence on home-delivery services, which we call the "lazy economy." Analysis of the times when consumers purchase Tsingtao Beer online shows that nighttime consumption accounts for a very high proportion, clearly indicating a high alignment between instant retail scenarios and consumers' drinking needs, and demonstrating the unique charm of instant retail growth.
2) From an offline perspective: Against the backdrop of sluggish growth in physical customer business, shifting to online channels has become an indispensable strategic choice. In 2021, there were approximately 250,000 convenience stores in China, and in 2022, this number will be even higher. Convenience stores are one of the few retail formats in China that are growing. During the pandemic, convenience stores quickly transformed their product categories, with a significant increase in the proportion of epidemic prevention supplies, protective equipment, and fresh products. Additionally, as a 24-hour retail format, convenience stores place greater emphasis on online growth and operations, driving the accelerated development of instant retail.
Therefore, the growth of instant retail is actually the result of a two-way push between consumer demand and supply-side innovation.
The beer industry is heavily dependent on offline channels, and heavy cargo logistics result in high distribution costs. Tsingtao Brewery's online business accounts for a relatively small proportion of the company's overall sales, but its value to Tsingtao Brewery is crucial.
First, through the online window, we can directly connect with consumers, understand their needs more promptly, and reach consumer groups more accurately. Online channels have become a new frontier for brand communication. Second, online consumers, especially instant retail consumers, exhibit characteristics of being younger, having stronger purchasing power, and being more exploratory with brands. This is precisely the development goal for our product structure upgrade to capture new potential consumer groups and channels.
Therefore, our strategic positioning for online business is: the main battlefield for new product promotion, the new high ground for structure upgrade, and the strong position for brand leadership.
How Does Tsingtao Brewery Do Instant Retail?
1) Building Strong Connections with Consumers Only by digging into consumer scenarios and needs can we achieve more immediate results in business growth and sales promotion.
Through the product structure distribution on instant retail platforms, we found that our strategic products are growing significantly on instant retail platforms, with a strong increase in share, playing a leading role for offline channels.
Compared to traditional e-commerce, instant retail platform users are about 5 years younger, which is precisely the group we need to penetrate for brand communication. A representative example is our Tsingtao White Beer. Our white beer product line is growing strongly offline and is about to become the next big single product.
But on online instant retail platforms, white beer has already become a bestseller, second only to classic products. This growth reflects consumers' preference for the taste and image of white beer, as well as the fact that online consumers are ahead in recognizing new products, which is a trait of instant retail platform consumers.
2) Building Infrastructure Infrastructure is the core of business growth for instant retail home-delivery. Infrastructure work sounds simple—just listing a product—but it is very difficult in the instant retail field because we do not have control over the products, and we cannot easily influence the available product list on channels.
Since deciding to engage in instant retail home-delivery, Tsingtao Brewery has started with infrastructure construction.
First, we established a standard product library, unifying specifications from image design to product names. Through standardized infrastructure, our products' image on platforms has been enhanced, with stronger impact on consumers and deeper brand penetration.
Second, we strengthened internal organizational coordination, fully mobilizing frontline sales personnel from various business units to promote infrastructure construction on a regular basis.
Additionally, we strengthened co-creation with channels, creating perfect stores with channels in key cities, and using marketing activities as a lever to jointly promote infrastructure construction with channels.
3) Scenario-based Marketing Tsingtao Brewery pays close attention to interaction with consumers on online channels. Every month, we think about what the current drinking scenarios are and how to align with consumers' drinking scenarios through instant retail platforms.
For example, during the New Year shopping season, we promoted gift box sales online in our strong base markets, seizing the gift-giving and New Year shopping scenarios, matching appropriate promotional strategies, and linking with head retail channels for offline interaction reinforcement. Now that spring is here and everything is reviving, after three years of pandemic restrictions, people have long awaited the comfort of spring. So our April theme is "This Spring, Waiting for You with Good Wine." Scenario-based marketing is about understanding what consumers care about, exploring their feelings, and resonating with them.
4) Online-Offline Joint Marketing Currently, the traffic and growth of instant retail platforms have slowed down, and growth strategies have long moved away from the crude tactics of subsidies and coupons. Recently, we have focused more on organically integrating resources from retail channels and home-delivery platforms, using refined operational strategies to drive business growth with clear goals and focus.
By coordinating marketing resources among the three parties and opening up communication links with consumers, we can create a phased online marketing atmosphere and achieve win-win outcomes for brands, platforms, and retail channels. This cannot be achieved without the full cooperation of the offline team, with everyone aligned in pace, goals, and actions. Through nearly a year of coordinated efforts, we have strengthened our synergy with the ground team. The ground team can also leverage the activity resources of home-delivery platforms to drive channel expansion and truly achieve online-offline integrated marketing.
5) Catering Industry Linkage Tsingtao Brewery has been deeply involved in the catering channel for many years, but the instant retail we are familiar with now focuses more on retail channels. How to link the catering industry with the beer category is something we have been researching and exploring. Last year, we experimented with the consumption scenario of "food with beer" and found that the immediate consumption scenario for beer has great potential, but the channel format is more focused. This is very different from traditional catering promotion methods.
The biggest problem in the catering channel is that standard products account for too small a proportion in the catering category, and the pricing system is completely different from retail channels. Consumers do not prioritize ordering beer when dining. Last year, we piloted the "food with beer" model in the catering channel with Meituan through channel penetration, consumer mindset cultivation, and brand communication.
Through the pilot, we found that the catering channel format needs to be focused, and the marketing mechanism is very different from the retail format. However, the project also brought many additional gains. Through the release and registration of investment promotion activities, we discovered blind spots in terminal layout and implemented strategies such as canned products entering catering.
6) Creating a New Frontier for Brand Marketing Instant retail platforms are an excellent frontier for brand communication, with marketing investment conversion being very direct and efficient. We have been co-creating brand communication marketing cases with Meituan and Ele.me, and have also tried joint launches of new products with Tmall and JD.com online platforms. Online audience reach is more convenient, and cross-category audience linkage is easier.
During last year's World Cup, we collaborated with Qiaqia and Lay's, focusing on late-night game-watching supply scenarios, achieving interaction between category resources and audience resources, while also providing a better scenario interaction experience and creating very good business-driving effects.
What Other Opportunities Are There in the Future? From far-field to near-field, what other opportunities can we find?
1) Lightning Warehouse Layout The rise of lightning warehouses has brought new growth in marketing channels. Lightning warehouses have several advantages:
First, they have longer business hours than supermarkets; Second, they have a more complete product range than convenience stores; Third, single-store operating costs are more economical.
Let me share some data: last year, our business in the lightning warehouse channel doubled, and the proportion of lightning warehouses in our overall business has increased significantly. This is also a key focus for us this year. Currently, lightning warehouses have begun to scale, and chain operations are gradually emerging. The opportunity for brands is, on one hand, to seize the supply of offline supply chains, and on the other hand, to conduct in-depth cooperation with lightning warehouses on online platforms to seize the channel growth dividend.
2) High-end Fresh Food Development Data shows that low-temperature milk's instant retail home-delivery market share can reach 20%, but beer fresh food, especially high-end fresh food, is still at a very early stage. We are also focusing on the development of high-end fresh food on instant retail platforms. We jointly launched a customized draft beer with Meituan Maicai, achieving rapid fulfillment and delivery of short-shelf-life fresh products through instant retail channels, providing consumers with a delightful experience in taste and service.
Tsingtao Original Pulp is our star product in high-end fresh food, and it has been favored and praised by consumers since its launch. Tsingtao Original Pulp adheres to our product insistence of no filtration, no dilution, no sterilization, full cold chain, and 7-day freshness, preserving the fresh taste of beer to the greatest extent, with fine foam and rich aroma.
However, because the 7-day short shelf life places extremely high demands on supply chain and channel sales capabilities, we now offer Original Pulp products on instant retail channels in first-tier cities. This year, we hope to leverage the fulfillment capabilities of instant retail and co-create with platforms to deliver beer that only brewers could drink before to thousands of households.
In Conclusion: Instant retail has already passed the stage of crude growth, and its growth will continue in the future. As a brand, we should still adopt refined operational concepts to grow together with platforms. This refinement should include refined audience operations, refined channel linkage, refined promotional mechanisms, and refined product strategies.
Second is intelligent precision. Through the digital capabilities empowered by instant retail platforms, we can promote data visualization and operational transparency.
Looking ahead, what kind of relationship will there be between far-field and near-field?
Imagine that one day in the future, you buy a case of Tsingtao Beer on a flagship store on Tmall, JD.com, or Douyin, and the convenience store or distributor at your doorstep delivers it within 30 minutes. This is the application scenario of near-field and far-field integration. Although this idea is easy to say, it involves many management and operational issues that need to be addressed, including how to handle ownership of goods and settlement of capital flows. I believe this day will come soon, and by then, the boundary between far-field and near-field will become even more blurred.
Achieving the integration of far-field and near-field requires the support of brand resources, building a bridge between public and private domain traffic, and solving internal enterprise issues. Only in this way will the integration of far-field and near-field be more valuable.
Finally, this year marks the 120th anniversary of Tsingtao Brewery. Tsingtao Brewery hopes to pay tribute to the next century together with China's retail industry through more innovative products and more charming quality.