According to the 'Instant Retail Industry Development Report' released by the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, instant retail has maintained an average annual growth rate of over 50%, with the market size reaching 504.286 billion yuan in 2022. It is expected that by 2025, the market size will triple that of 2022, far exceeding market expectations. Whether viewed from growth rate or scale, instant retail is a track that retailers cannot afford to abandon. In embracing instant retail, retailers also face many new problems: inconsistent online and offline data, poor data flow across multiple systems and channels, difficult organizational upgrades, and difficult business analysis. Essentially, these are all 'digitalization' problems. How to use digital systems to achieve efficient operation of channels, ecosystems, and models is the key 'fulcrum' for retailers to excel in instant retail. As a leader in the instant retail field, Meituan keenly captured this need and launched Meituan Morning Glory (牵牛花) to help retailers continuously evolve in the instant retail space. How does Meituan Morning Glory help retailers solve the 'digitalization' problems of instant retail?

Multi-channel management: Simplify complex problems to reduce costs and increase efficiency

Channels are the source of all business; one more channel means one more path for business growth. Therefore, whether online or offline, omnichannel operation has always been the consensus in the industry. The same applies to the instant retail format. Instant retail is not composed of a single channel but is formed by multiple channel platforms and various ecosystems. For retailers, doing instant business is not simply about doing well in one link or on one platform, but about building a multi-channel marketing and sales position. The complexity and difficulty of multi-channel management in instant retail far exceed that of single-channel management.

First, there is the challenge of managing differences across channels. Each instant retail platform has a different underlying development path; some evolved from food delivery, some from e-commerce, and some from short-video platforms. Platforms starting from different points will develop unique characteristics and core competitive advantages over time. From a sales perspective, this is a good thing; based on the differentiation of each platform, retailers can achieve broader audience coverage and thus higher sales growth. However, different underlying genes determine that different instant retail platforms will have differences in business models, user groups, and operational strategies. This also leads to a variety of trivial and complex problems for retailers when they focus on instant retail, such as different product management systems, platform rules, activity mechanisms, and financial reconciliation rules, greatly increasing the difficulty for business personnel to understand and operate.

For retailers, to do well in multi-channel, they must be familiar with the rules, characteristics, and operational methods of each platform, but this undoubtedly poses a great challenge to the operational capabilities of staff, organizational structure adjustment, and the establishment and implementation of instant retail business processes and systems. To solve this pain point for partner merchants, the Meituan Morning Glory system not only connects to the Meituan platform but also covers multiple instant retail platforms and many public and private domain platforms, allowing partner merchants to quickly adapt to multi-channel management. As Mr. He Lei, product leader of Meituan Morning Glory, said, the Meituan Morning Glory system is both a 'translator' and an 'integrator'. On one hand, it helps retailers understand the systems of each channel more quickly and clearly; on the other hand, it integrates resources around 'products, services, and promotions' to help retail merchants reduce management costs.

Second, there is the efficiency issue of multi-channel operations. For single-channel operations, one person may be enough. But once multiple channels are involved, it is not as simple as adding more people; the difficulty increases exponentially. This is especially reflected in two dimensions: low personnel efficiency and high inventory management difficulty. At the 2023 Meituan Morning Glory Partner Conference, Ms. Liu Xiaoxu, online operations leader of Shanghai Nonggongshang Yunsheng Technology, mentioned that without a middle-platform system, the Nonggongshang supermarket they served had each team member responsible for one platform, guarding their phones. When an order came in, they would take a screenshot and send it to the delivery group, then forward it to the relevant store, and only after seeing the screenshot would store staff start picking goods. This was not only inefficient but also highly error-prone.

Moreover, when there was a surge in orders, inventory accuracy was very low, and there was no time to update inventory on each platform. Even if orders were accepted, there was no stock. As a result, during peak surges, they had to close the store; not accepting orders meant no errors, but sales definitely suffered significant losses.

The Meituan Morning Glory system connects different instant retail platforms, unifying all data into one middle platform, allowing all platform orders to be received on a single system. In the past, four or five people were needed to receive orders, update inventory, and list/unlist products; now one person can do it. Data shows that store fulfillment efficiency increased by 50%, personnel efficiency improved by 75%, and inventory accuracy reached 99%.

Multi-ecosystem integration: Let merchants use one system to solve all ecosystem problems

In the fast-paced business world, the retail industry is both a highly competitive field and a field full of details and changes. To maintain a competitive advantage, retail enterprises must rely on accurate and comprehensive data analysis to respond quickly to market changes. In the instant retail field, retailers also need effective data analysis to gain insights into market trends, grasp consumer needs, and make targeted product and service optimizations to improve sales and consumer satisfaction. But the difficulty lies in the fact that data from a single channel is already vast and complex, and multi-channel operations in instant retail mean not only a doubling of data volume but also an exponential increase in complexity.

  • From a financial perspective, multi-channel data integration is messy and chaotic. Product flow, information flow, logistics, cash flow, online and offline, platform to platform—there are huge differences in all aspects, making sorting complex and reconciliation difficult.

For example, some physical merchants have price differences between online and offline. The workload of entering online sales into the POS is heavy, and inaccurate product amounts and discounts can lead to difficult financial reconciliation.

Furthermore, the rules of financial statements vary across platforms; some platforms have a settlement cycle of T+1, others T+3, and they are inconsistent with offline financial rules, leading to accounting differences and uncertainty about how to handle discrepancies during reconciliation.

  • From an operational perspective, the data indicators and positioning of each channel differ, making data analysis difficult. And single-dimensional data analysis often cannot quickly identify problems.

For example, the meaning of data fields in orders from different channels is inconsistent. To analyze data uniformly, one must first unify the data fields across channels, then merge and integrate them, a process that is cumbersome and error-prone.

  • Finally, from a service perspective, retailers need a large number of service providers, and when problems arise, they often do not know who to turn to, seriously affecting efficiency. For example, if there is an inventory problem, should they contact the ERP system, the middle-platform SaaS system, or the agency operator? Poor coordination among multiple systems makes it difficult to quickly identify the root cause.

To solve these 'digital' problems and enable partner merchants to operate more efficiently in instant retail channels, at the Partner Ecosystem Conference, Meituan Morning Glory officially announced the launch of the 'Hand-in-Hand Plan' (牵手计划). By joining hands with ERP vendors, ISVs, supply chain partners, delivery platforms, and even agency operators, and by building standardized product integration capabilities and services, it provides merchants with a 'one-stop' solution, truly allowing merchants to use one system to solve all ecosystem problems in instant retail. 'Building an ecosystem is very important; only by deepening cooperation with ecosystem partners can we provide retailers with more complete, personalized, and timely services,' said Lu Guangyuan, business leader of Meituan Morning Glory.

Multi-model operation: Be good at both 'old business' and 'new business'

In the past two years, the 'warehouse' format has become a new trend in retail evolution, with many traditional retailers trying it out. Traditional retailers' offline business already has mature systems and processes for business operations, product selection, and personnel management, but the 'warehouse' business involves site selection, product selection, and fulfillment, which are entirely new models different from offline. To more intuitively understand the differences, we can compare traditional convenience stores and lightning warehouses from four aspects: model, products, site selection, and fulfillment.

  • First, business model. The core of a traditional convenience store is attracting consumers to visit the store offline, with online instant retail business accounting for only a small portion, while a lightning warehouse is purely instant retail business, where consumers select products and place orders online without needing to enter the store.

  • Second, product structure. Traditional convenience stores typically have 1,000 to 1,500 SKUs, with the core being FMCG categories; lightning warehouses have an area of 150 to 300 square meters, with 4,000 to 5,000 SKUs, and the core categories are FMCG plus general merchandise, with more long-tail products.

  • Third, site selection requirements. Traditional convenience stores have strict requirements for foot traffic, surrounding facilities, and decoration level, with high rents; if the location is not good, it is difficult to make a profit. Lightning warehouses have no storefront requirements; residential houses, basements, etc., are all acceptable.

Moreover, traditional convenience stores cover a radius of about 3 kilometers, while lightning warehouses cover 3 to 5 kilometers, meaning the coverage of people differs, and the gap in order volume can be significant.

  • Fourth, fulfillment. Convenience stores are for in-store consumption; consumers take products themselves, and staff need to serve in-store customers while supporting instant retail fulfillment. Lightning warehouses are pure online orders, with dedicated in-store staff supporting fulfillment, greatly improving efficiency, and operating 24 hours, unaffected by space and time.

The differences between the two models mean that when retailers try the 'warehouse' format, using the original store management logic cannot meet the needs of the 'warehouse' business. For example, Jimu (吉慕) previously mainly operated offline convenience store business. In 2021, they began trying Jimu Lightning Warehouse. Within two months of opening, online order volume surpassed that of the old supply stores operating both online and offline. At that point, they realized that the original ordering logic, product management, and inventory management experience could not meet the needs of the lightning warehouse format stores. Meituan Lightning Warehouse itself is a new supply model proposed by Meituan Flash Shopping. Based on its understanding of the 'warehouse' model and instant retail, Meituan Morning Glory has both a dedicated 'warehouse' model solution and can also well support the 'warehouse-store hybrid model' operation. With the support of the Meituan Morning Glory digital middle platform, Jimu achieved digital management within the warehouse and seamless online-offline integration, while optimizing in-store processes through digital management tools. All links improved significantly: inventory accuracy reached 98%, out-of-stock refund rate dropped to 0.1%, the availability rate of TOP 500 products was controlled at around 95% (up 18 percentage points), and inventory turnover days were around 24 days, further improving consumer satisfaction and loyalty.

Final Thoughts

Undoubtedly, the trillion-yuan instant retail market is a good business. But to compete in the trillion-yuan instant retail market, you must first board the 'digitalization' ship to sail further!

'The era of the great voyage in the retail industry has arrived. Instant retail is a vast ocean of stars. Those who can enter this 'sea' first are merchants with courage and vision,' said Lu Guangyuan, business leader of Meituan Morning Glory. 'Morning Glory hopes to be a ship, carrying all partners to sail together and grow the business bigger and stronger.'