Editor's Note: Instant retail meets users' immediate needs, placing high demands on supply chains, making channel value crucial, and driving growth through omnichannel digitalization. As major players enter, instant retail is poised to become a mainstream consumption model. Click to read the original article for details Over the past two years, instant retail has attracted unprecedented attention from giants. Whether Alibaba, JD.com, Meituan, or Pinduoduo, all are strengthening their布局 in this track. This is not a new concept; its development history spans nearly a decade. However, in recent years, the pandemic has disrupted consumption paths like in-store and express delivery, accelerating users' shift to home-delivery services that reach the 'last mile,' driving rapid growth in instant retail and making it a key incremental focus for giants. With internet growth slowing, platforms, retailers, and brands are all targeting this track and actively positioning themselves. In this race that has lasted nearly a decade and will continue for the next ten years, whoever can seize the leading position first is most likely to capture the dividends of future high growth. 01 Instant Retail: The Second Growth Curve for E-commerce Giants Giants are intensifying their bets on instant retail. Last year, at the Flash Purchase Digital Retail Conference, Meituan announced the launch of the "Billion Brand Growth Plan" for brand partners and the "Hundred Cities, Ten Thousand Stores Action" for chain supermarkets, aiming to help 100 brands achieve transaction volumes exceeding 1 billion yuan on Meituan Flash Purchase within five years. In March this year, JD.com established a new Same-City Business Department and appointed He Huijian, Vice President of Dada Group, as its head, reporting to Xin Lijun, CEO of JD Retail. On Alibaba's side, after establishing the Same-City Retail Business Group in 2020, Taobao App launched the "Hourly Delivery" service in 16 cities nationwide. In September of the following year, Tmall Supermarket expanded hourly delivery of daily necessities to 132 fourth- and fifth-tier cities. In March this year, Hema Neighborhood also launched home delivery services. Additionally, according to reports from LatePost, Douyin has recently begun piloting its self-operated "Douyin Supermarket Delivery" service in cities like Hangzhou and Guangzhou. These actions indicate that whether in internal strategic positioning or resource support, all giants have significantly increased their investment. Behind this is the vast space of the instant retail market. This track, developed for nearly a decade, has entered a period of rapid growth after early accumulation. According to the industry's first "Instant Retail Open Platform Model Research White Paper" jointly released by the China Chain Store & Franchise Association (CCFA), Dada Group, and JD.com's Consumer and Industry Development Research Institute, from 2016 to 2021, the overall O2O market scale grew at an average annual rate of 35%. Among this, the O2O home delivery business achieved a compound annual growth rate of 64%, with the platform model growing at 81%, higher than the overall O2O home delivery growth, becoming one of the driving forces. In 2021, the overall home delivery market reached 2 trillion yuan. It is estimated that by 2025, the open platform model of instant retail will exceed the trillion-yuan threshold, reaching approximately 1.2 trillion yuan. The white paper surveyed consumer purchasing needs, showing that in recent years, users increasingly value category richness and delivery time, while price sensitivity has declined. This trend has become more pronounced, especially after the pandemic. On one hand, in terms of purchased categories, not only are essential categories like fresh produce, grain and oil, and dairy products increasing their share, but non-essential categories such as furniture, kitchenware, 3C electronics, and pet supplies are also becoming more common in instant retail consumption. This indicates that users' needs for home delivery are becoming more diversified, with more opportunity categories to expand. On the other hand, in terms of consumer profiles, the customer base of instant retail has expanded from primarily post-80s women to include all family members. Their demands have also extended from 'daily purchases' and 'emergency purchases' to 'promotional purchases,' 'trial purchases,' and 'gift purchases.' The rapid market growth and expansion of categories and users have made instant retail a new growth curve for these giants after the e-commerce industry's growth slowed significantly. During this year's 618 shopping festival, the number of users placing orders on JD Hourly Purchase increased by over 400% year-on-year, and sales on JD Hourly Purchase and JD Daojia grew by 77% year-on-year. According to media reports, Ele.me's local life services revenue grew 29% year-on-year in the first quarter, significantly higher than the company's overall 9% revenue growth, making it Alibaba's fastest-growing segment. However, despite all players betting on this track, their strategies differ. After nearly a decade of development, instant retail has spawned diverse business models, including the front-warehouse model represented by Miss Fresh, Dingdong Maicai, and Meituan Maicai; the warehouse-store integration model represented by Hema and 7Fresh; and the open platform model represented by JD Daojia and Meituan Flash Purchase. In essence, the first two require self-built stores and warehouses, managing inventory and deeply controlling goods, which are asset-heavy self-operated models with greater SKU limitations and restricted scale expansion. The open platform model, on the other hand, primarily collaborates with offline stores, is lighter, and can integrate merchants and brands across all categories to meet consumers' relatively long-tail instant consumption needs. Both models have their pros and cons, but compared to self-operation, the open platform model is more conducive to win-win cooperation with merchants and better meets the needs of physical retailers and brands looking to enter the market. 02 All-Category Merchants and Brands Enter; Digital Capabilities Become Key While platform players place instant retail in a strategic position, the ongoing pandemic and economic downturn have transformed instant retail from a supplementary offline channel to an indispensable incremental channel for retailers and brands. For example, Xiaomi, which previously focused on direct-operated stores, began connecting to JD Daojia and Meituan in October last year. Since 2022, its monthly order growth has exceeded 300% at its peak. China Resources Vanguard, a well-known supermarket chain, saw sales on JD Daojia grow 2.2 times in 2020 compared to 2019, with premium formats growing 5 times. According to the "2022 Instant Retail Open Platform Model White Paper," brand players entering the instant retail track have expanded from food and beverage and fresh produce categories to all categories, and their geographic reach has extended from high-tier cities to lower-tier cities. However, entering instant retail does not guarantee reaping all the dividends. For brands, it means shifting from managing offline warehouses to coordinating hundreds or thousands of stores for LBS-based supply and sales, which tests their ability to digitally manage supply chains online. Therefore, as the channel value of instant retail becomes increasingly important, omnichannel digitalization has become the most critical driver of physical retail growth. In this regard, brands' digitalization relies on the support of the platforms they join. In the industry, JD Hourly Purchase and JD Daojia, as one of the earliest platforms to focus on instant retail, have developed a complete digital solution covering supply, operations, and users through years of practice. On the supply side, retail brands can use data from JD Daojia and collaborate with physical merchants to improve product availability and inventory matching, boosting online sales. In terms of promotion and operations, there have been cases where brands' online and offline promotions were not integrated, wasting marketing investment. Now, brands can use the platform's marketing tools to improve the efficiency and accuracy of online promotions. During this year's 38 Festival, personal care brand Kotex, through cooperation with JD Daojia, increased the availability rate of new products by 27% within two weeks, with sales growing 114% month-on-month during the campaign. Unilever, a well-known daily chemical group, used JD Daojia's promotional data tool "Tonghuashun" to increase sales by 119% during the "Tonghuashun Super Brand Week" event. It is evident that digital empowerment can maximize the positive effects of instant retail and quickly fill the capability gaps of latecomers. The digital capabilities of open platforms have also become key for retailers and brands in choosing partner platforms and leveraging online retail channel growth. 03 Giants' Breakout in Progress: Who Is Leading the Track? In the instant retail model, physical stores become the supply protagonists, which to some extent can be seen as existing resources for platforms. To date, JD Daojia has connected over 150,000 physical retail stores, holding a 27% market share in supermarket instant retail, ranking first among local retail supermarket O2O platforms in China, with deep cooperation with over 80 of the top 100 supermarkets. JD Daojia also collaborates deeply with over 200 brands, leading the industry in both scale and depth. This also proves that first movers have advantages. In fact, among the many giants that have entered, JD.com was one of the earliest to launch home delivery services. As early as 2015, JD.com launched the JD Daojia app, starting with supermarket categories and expanding to all categories including mother and baby, beauty, alcohol, and home appliances. In the past three years of rapid development in instant retail, JD.com has significantly increased its attention to this business. In March this year, it established the Same-City Business Department, formally elevating the strategic position of instant retail. In 2021, JD.com integrated all its instant retail capabilities and, together with Dada, launched the instant retail brand Hourly Purchase. When shopping on JD.com, consumers can enter through the "Nearby" entrance on the homepage or select products with the Hourly Purchase label based on their location. Products are shipped from stores within 3-5 kilometers of the user's POI, with Dada handling delivery, providing service within one hour of ordering. After nearly eight years of accumulation, JD.com's instant retail business has gradually established and iterated a complete system to help physical retailers excel in instant retail. In terms of traffic investment, JD.com significantly increased resource support for instant retail last year—in October, the JD.com app homepage officially launched the "Nearby" channel as a dedicated space for instant retail. This means that in addition to JD Daojia's nearly 70 million active users, JD.com opens up a pool of over 580 million annual active users to retailers. In JD.com's highest-traffic search area, merchants can also use Jingzuntong to precisely reach consumers and gain user increments. In marketing with physical merchants and brands, JD Daojia and Hourly Purchase have continuously created marketing activities such as "Super Merchant Day," "Super Brand Day," and "Super Brand Week," and recently launched "Super Weekend" on JD.com's "Nearby" channel to help merchants and brands with integrated marketing for online sales and user accumulation. They also provide live streaming entry points on JD.com and JD Daojia to facilitate localized self-broadcasting and boost store sales. For example, AEON's "Super Weekend" cooperation with JD Daojia has been highly effective, with sales during the promotion accounting for over 30% of the month. Another well-known supermarket, China Resources Vanguard, during the peak of its "Olé/blt Super Merchant Day" cooperation with JD Daojia, saw sales increase by over 200% compared to daily levels in the previous month, and new user growth achieved a historic breakthrough, up over 100% from the previous month. In the final step of fulfillment, JD Daojia was the first platform in the industry to launch the Picking Assistant app, which has evolved into the Haibo Middle-Platform SaaS system, providing complete omnichannel fulfillment operation solutions. Dada Now, which handles fulfillment in JD.com's instant retail business, also launched digital products last year such as Dada Youjian crowdsourced picking solutions and Dada Smart Distribution SaaS system to help physical merchants improve fulfillment efficiency. After applying Dada Youjian picking solutions across all stores, Walmart, a well-known supermarket brand, reduced picking time by 15%, pickup time by 23%, and increased hourly picking speed by 18%. During the 2021 "618" period, its crowdsourced picking volume reached 9.3 million items, up 34% quarter-on-quarter, with order fulfillment efficiency improving by double digits. Zhu Xiaojing, President and CEO of Walmart China, believes: "Instant retail is an important form for physical retailers to achieve omnichannel transformation and optimize shopping experience, and it is also a mainstream consumption method that meets consumer expectations and is foreseeable in the future." Chen Yi, Managing Director of Kimberly-Clark China, said: "Instant retail has become a channel that Kimberly-Clark values highly. With deepened cooperation with JD Daojia and JD Hourly Purchase, including omnichannel supply optimization, marketing and promotion enhancement, regional coordination, and tripartite resonance among 'brand + platform + retailer,' we hope to achieve further optimization and improvement through collaborative innovation, driving the rapid development of hygiene care and other categories in the instant retail market." From focused traffic investment to upgraded marketing tactics, digital transformation solutions for merchants and brands, and optimized fulfillment services, the complete service system built by JD.com and Dada has brought core competitiveness for high growth and deeper cooperation stickiness with merchants and brands. In the crowded instant retail track, JD.com has seized the leading position. Whether it can maintain its lead amid continuous investment from all giants will be its most important proposition in the next five years. Source: 36Kr Future Consumption (ID: lslb168) -END-