Preface The hottest topic in the retail market today is instant retail. This article will interpret the key points of the current market. We will break down the models, analyze the market and landscape, and discuss some far-reaching impacts that many have not yet touched upon. First, let's review what has happened in the market since the beginning of this year. After the Spring Festival, JD.com entered the local life services sector. It launched the JD Food Delivery channel and initiated a 10-billion-yuan subsidy campaign against Meituan in March-April. On April 10, within less than 40 days of launch, daily orders exceeded 5 million, prompting Meituan to respond. On April 15, Meituan officially announced the unification of its scattered near-field retail businesses under the brand "Meituan Flash Purchase," strengthening its full-category positioning and committing to merchants with "3-day settlement and anytime withdrawal" to boost merchant enthusiasm. JD.com then announced the launch of its self-operated instant delivery e-commerce business and planned to add at least 50,000 full-time riders in the quarter; shortly after, it was revealed that Liu Qiangdong's internal speech required JD Food Delivery's profit margin to be no higher than 5%, signaling a long-term subsidy strategy to gain market share. Meituan and JD.com are now in direct competition in both food delivery and flash purchase. On June 23, Alibaba CEO Wu Yongming issued a letter to all employees, officially announcing the merger of Ele.me and Fliggy into the Taotian Group, marking Ele.me's shift from the local life services sector into Alibaba's core e-commerce system. Alibaba simultaneously upgraded the hourly delivery channel on its Taobao app homepage to a first-level entry for Taobao Flash Purchase, and launched a super 10-billion-yuan subsidy plan with Ele.me, fully entering the instant retail battlefield. On the first day, Taobao Flash Purchase and Ele.me achieved over 60 million daily orders, with non-tea beverage orders accounting for 75% and a punctual delivery rate of 97%, showing strong potential. By mid-July, as the subsidy war among Meituan, Alibaba, and JD.com intensified, the industry's total daily orders rose from about 100 million to over 200 million. Finally, Pinduoduo could no longer hold back. According to reports, Pinduoduo's community group buying business, Duoduo Maicai, is piloting self-built front warehouses in Shanghai, planning to launch instant delivery services in August 2025. Pinduoduo's initial strategy is to learn from Meituan's combination of front warehouse self-operation and platform flash purchase: on one hand, it will select fresh produce, branded, and white-label products from Duoduo Maicai and Pinduoduo's main site to ensure low prices; on the other hand, it will prioritize building self-operated front warehouses in core cities, while partnering with third-party delivery services like Shansong and SF City Same-Day for delivery. This will mark Pinduoduo's official entry into instant retail, adding another variable to an already heated market. How to Understand Instant Retail With the rapid growth of the instant retail market and the high attention brought by the food delivery war, many viewpoints have emerged. But we still need to understand the logic behind the noise. Instant retail is not a new thing. Although in the current stock market, instant retail is one of the few increments. We still need to systematically evaluate the market increment, neither overestimating nor being overly pessimistic. To understand the logic of instant retail, I think we must first deeply understand three things:
First, understand what kind of business instant retail is.
Second, understand what kind of company Meituan is.
Third, understand what kind of company Alibaba is. Without understanding these three things, it is difficult to make judgments. What kind of business is instant retail? The essence of instant retail is an online e-commerce model. With the iteration of fulfillment models, online e-commerce has diverged into two major categories: one is the instant retail model with delivery within an hour, and the other is the traditional next-day delivery model. The earliest instant retail was not called instant retail; the market generally called it front warehouses, including early players like U Zhanggui, Miss Fresh, Dingdong Maicai, and Pupu Maicai. The emergence of this model was largely an attempt to achieve e-commerce for fresh produce. But in reality, viewing front warehouses as online business is a misinterpretation. From various attributes, the essence of front warehouses is almost the same as supermarket business. Whether it's self-operated inventory or gross margin structure, or the assessment of some important operating indicators (waste, turnover). That is to say, front warehouses are online e-commerce for consumers, but their business form is almost identical to offline supermarkets. So why has a new term "instant retail" been invented today? Today, whether it's Meituan Flash Purchase, Xiaoxiang Supermarket, Dingdong Maicai, or Pupu Maicai, they are all classified as instant retail by the market. But Meituan Flash Purchase and Dingdong Maicai are completely different businesses in terms of business attributes. Meituan Flash Purchase has almost zero inventory and zero waste because the ownership of goods lies with merchants, but Dingdong Maicai has to bear the purchase-sale price difference and waste itself. This determines that the two business models require completely different core capabilities. The core competitive factor of Flash Purchase lies in C-end traffic and delivery network. Once C-end traffic is large enough, the density of nationwide delivery capacity is high enough, and B-end merchants are numerous enough, a strong bilateral network effect can be achieved, continuously reducing the delivery cost per order through algorithm optimization, thus forming a barrier. The core competitive factor of front warehouses lies in supply chain depth and regional density. Through higher order density → amortizing warehouse rent/fulfillment → lower prices → higher repurchase, a retail business flywheel is achieved. Here we can clearly see why Flash Purchase has developed much faster than front warehouses in recent years. Because once a nationwide C-end traffic platform and delivery network are built at once, the business can grow geometrically, and the marginal cost of entering new cities is almost zero. In contrast, each new front warehouse requires significant capital investment and has a long ramp-up period. We can compare the two figures below, which are estimated market landscape distributions for the supermarket category (fresh + FMCG) in 2020 and 2024, respectively. 2020 Supermarket Category (Fresh + FMCG) Total Market Distribution 2024 Supermarket Category (Fresh + FMCG) Total Market Distribution From the above two figures, we can at least derive several viewpoints:
In the past few years, in the fresh + FMCG category, the degree of online penetration has been continuously increasing, putting pressure on offline. Both instant e-commerce and planned e-commerce have grown, although traditional shelf e-commerce growth has slowed, interest e-commerce has effectively supplemented and increased penetration in some categories.
The instant retail market is growing faster. From a growth rate perspective, Flash Purchase > Front Warehouse > Planned E-commerce > Offline. Flash Purchase is growing much faster than front warehouses.
The chain rate of offline formats is increasing, and non-chain formats are more impacted by online. For a stock market, the high growth of instant retail in the past was mainly due to competing with planned retail for offline market share. Of course, instant retail grew faster than planned retail and grabbed more aggressively. At the current point, when the growth of planned e-commerce is almost peaking, instant retail will grab share from both offline and planned retail. In the past, the retail industry framework was often analyzed along the four dimensions of "more, faster, better, cheaper," but this is a relatively rigid way of thinking. We previously defined instant retail within the single category of "fast" because, from the supply side, higher fulfillment costs suppressed average order value, preventing further downward exploration. So instant retail was fixed in some special scenarios, such as emergency and travel scenarios. But from the consumer demand side, we also need to consider whether consumer preferences are expanding (shifting towards instant consumption). Consumers naturally have planned consumption and instant consumption preferences. In offline scenarios, consumers also have natural planned and instant consumption behaviors. In online scenarios, the same applies. In the past, due to supply-side fulfillment constraints, online was mainly planned consumption, but with supply-side optimization, its share will continue to expand. So the naming of instant retail is actually a new way of defining retail formats (defined by consumer shopping preferences, not by store type). If you equate instant retail with past front warehouses or Hema's warehouse-store integration, you may deviate from the true connotation of this thing. Consumer shopping preferences will change with the evolution of social ecology. In modern post-industrial society, there is a basic concept called Time Poverty. That is, after human productivity improves, free time does not decrease because work methods, information response speed, family division of labor, and structure have all undergone fundamental changes. From a psychological perspective, the subjective value of future rewards in the human brain naturally decays nonlinearly with waiting time. When the delay in obtaining a reward is greater than an hour, the brain begins to heavily discount its value, which we call delay discounting. Conversely, according to reward circuit theory, once consumers get instant gratification, the actual reward is greater than expected, dopamine pulses rise, forming a positive loop. So theoretically, once consumers get used to instant retail scenarios, it is possible to change some consumption habits. Even if supply-side fulfillment conditions remain unchanged, part of planned e-commerce share will gradually shift to instant retail. Understanding this, you understand why JD.com and Alibaba are entering this industry. Next, we need to understand what kind of company Meituan is. All of Meituan's data and business are publicly available, so I won't repeat them. But what is Meituan's core barrier? We need to understand that. One of Meituan's core drivers is the bilateral network effect we discussed earlier. Meituan has about 700 million users today, not the largest among internet platforms, but high-frequency enough. Simply put, it attracts massive users through its highest-frequency food delivery scenario, forming order density to amortize fulfillment costs, improve delivery speed, enhance user stickiness through memberships, attract more merchants, and further reduce costs and improve efficiency, creating a flywheel effect. This flywheel looks simple, but there are many details interlocked. That is, the food delivery business (or home delivery business) is a very refined industry. Its refinement is actually very similar to the retail industry, requiring optimization across all chains and links. So the barrier of this business lies in combining scale effects and refined operations/link optimization. This barrier, in terms of results, is that Meituan continuously reduces unit delivery costs while ensuring relatively high-quality consumer experience, thus keeping competitors outside its moat. So once Meituan has woven this nationwide delivery network for food delivery, and C-end consumers have formed instant retail consumption habits in non-food sectors, the rapid growth of Flash Purchase is very natural, and this speed will be much faster than the model of slowly opening front warehouses. At the same time, as the main attacker in this food delivery war, we also need to understand why Alibaba is attacking. A previously circulated meeting minutes clearly expressed Alibaba's strategic intent. We previously mentioned that the traditional planned retail market has basically peaked. In the coming years, except for Pinduoduo which may still grow, all planned retail e-commerce companies face the status quo of hitting a stage ceiling. So under the premise that overall user volume has peaked, planned retail e-commerce companies must increase frequency. And planned retail e-commerce companies generally believe that the cost of acquiring users through the food delivery market is much lower than other channels. Even if instant retail is not profitable, it can still form positive feedback for the platform business. So how to attack? The core is to deconstruct the existing delivery network (i.e., attack the opponent's core barrier). Strategically, it uses short-term large subsidies to cause partial defection on the delivery side. Of course, subsidy intensity, regulatory attitudes, and cross-BU collaboration efficiency will determine whether, after Q4 2025, an order density of at least 60 million daily orders can be maintained with lower subsidies. But overall, Taotian will inevitably get a share of the instant retail market. So I say the food delivery war is an asymmetric battle because the strategic demands of both sides are inconsistent. At the same time, if Alibaba succeeds, Pinduoduo may also accelerate its entry into the market. How to Predict the Instant Retail Market I have several views on how the instant retail market will evolve in the future.
The instant retail market will continue to grow, not only grabbing share from offline but also from planned e-commerce.
Despite regulatory factors, Alibaba will still occupy a significant share. I think it could be a 50-50 split, and we also need to watch Pinduoduo.
Alibaba has a planned e-commerce gene, which differs from Meituan. Once Alibaba starts order routing actions, it will have a huge impact on existing brands and retailers. Offline orders will be further moved online, and offline stores will face new capability requirements.
Due to changes in the competitive landscape, Meituan will shift from pursuing incremental growth to accelerating supply chain optimization. (Order routing refers to when the user's delivery address is near a store with the same product in stock, the platform will directly reassign the order originally going through Tmall/express delivery to the local store for instant fulfillment.) So how big a market can instant retail actually grab? The market generally estimates the instant retail market size at 2 trillion yuan, while Alibaba is more optimistic at 4 trillion. Of course, I believe Alibaba's optimistic estimate is based on moving part of planned e-commerce share to instant retail through order routing (a large number of 3C, beauty, and general merchandise categories). With Meituan alone, the instant retail market would not be given such an optimistic estimate. At the same time, Alibaba's share in the flash purchase market will be more optimistic than in the food delivery market. Food delivery is a business that requires extremely high peak-time delivery scheduling capabilities, while flash purchase is relatively weaker. Moreover, high-margin categories like 3C, flowers, alcohol, and mother and baby can be transferred to near-field through content and subsidies, providing a better consumer experience than Meituan's pure tool attribute. So I think Meituan and Alibaba may split the near-field non-food sector 50-50 in the future. At the same time, due to changes in the competitive landscape, Meituan will accelerate supply chain optimization. Meituan's 30,000 lightning warehouses have significantly weaker supply chain depth than Alibaba's, so Meituan's next step will inevitably be brand co-operation and direct supply, deepening its moat in products and supply chain. Changes in the Current Instant Retail Landscape What impact will it have on brands? As I said, due to its planned e-commerce gene, Alibaba's future approach in the instant retail market will be vastly different from Meituan's. This also forms the biggest potential variable in the market. Simply put, the planned e-commerce gene is to predict demand first, then stock up. That is, use SKU depth to meet consumer demand, then use Tmall's commerce flow and Cainiao's logistics to reach consumers. The local e-commerce gene is to have demand first, then gather goods. So when planned e-commerce directly enters local e-commerce, it will have a revolutionary impact on the existing supply chain landscape.
For brands, brand inventory will be largely front-loaded. Potentially, brands must also hand over store inventory data; if they don't report store inventory, they basically lose traffic directly.
For distributors, orders bypass provincial agents and ship directly from stores. At the same time, online and offline prices are fully aligned, and there may basically be no price difference. If Alibaba uses mandatory routing to convert brand central inventory into store instant inventory, the impact on the supply chain system is basically revolutionary, far exceeding the surface subsidy war. Of course, from a positive perspective, for brands, this also establishes the first opportunity for digital interconnection with channel partners. In the past, the digitalization capability of China's offline retail industry was very backward, and both brands and retailers were extremely closed. The cross-border entry of internet e-commerce companies will once again change the circulation structure of offline FMCG. The digital characteristics of instant retail give brands unprecedented opportunities for consumer data insights. China's production-supply-marketing collaborative integration may not appear in offline retail enterprises like in Japan, but rather in internet e-commerce companies. Changes in the Current Instant Retail Landscape What impact will it have on distributors? From the current perspective, the supply structure of instant retail is still diversified. Distribution layers are fewer, and electronic consumer goods with high order values will basically be directly supplied. Large FMCG brands will gradually adopt direct supply, but with regional distributors providing services. Small brands will still be supplied by regional distributors. At the same time, due to the low penetration of instant retail in lower-tier markets, the deep distribution pattern below third-tier cities will be difficult to completely shake in the short term. But in mid-to-high-tier cities, the market for secondary wholesalers will be further compressed. We need to clarify a concept: Meituan started with local life services, so the Flash Purchase business within Meituan's system still relies on China's traditional distribution system. But Alibaba's gene is a platform B2C e-commerce model that eliminates middlemen, so Alibaba's entry into the instant retail market may be the real catfish. It is foreseeable that the concentration of China's circulation links will accelerate due to the development of instant retail formats. Of course, during market adjustment, new increments are inevitably bred. For regions where brands have not built their own front warehouses, distributors' warehouses can transform into the brand's front warehouses for that region, taking on nearby warehousing and sorting functions, and undertaking the brand's regional landing and services. In the process of brands and instant retail platforms building vertical supply platforms, new service providers will emerge. Secondly, for the relatively fragmented multi-category lightning warehouse format, there are also opportunities for intensive supply chain companies. Due to space limitations, it is difficult to fully convey all thoughts in text. In August, in Shanghai, at the 2025 7th China FMCG Conference with the theme "New Demand · New Supply," a special forum on "Instant Retail Reconstructing the Offline FMCG Market" will be held, with systematic discussions on the topic "Instant Retail Market Prediction and Response Strategies." We have invited: Liu Shaomin, General Manager of New Retail at Hengan Group; Ma Yong, O2O Sales Director of Online Expansion Department at China Resources Snow Breweries Sales Business Development Center; Huang Jianchao, Founder & CEO of Kuaikeda; Zhang Yu, former CEO of Wanshengtang Okamoto Business Unit; and Wang Xukun, Head of Supply Chain at Jiangxiaotun, among many other speakers. Focusing on instant retail market trends, platform cooperation strategies, supply chain efficiency optimization, and new channel growth paths, we will explore ways for FMCG to embrace instant retail for breakthrough and win-win. How can brands and distributors leverage local commerce flow and digital infrastructure to achieve counter-trend growth in a stock market? How to efficiently integrate online and offline to seize new community consumption entry points? From August 19-21, come to Shanghai, and let's find the answers together. 🔺