Instant retail, as an innovative business model, has gradually become a trend in the retail industry. Especially under the impact of the pandemic in recent years, consumer shopping habits have undergone significant shifts, leading to a substantial increase in demand for instant retail. With the ability to order online anytime and have goods delivered within an hour, instant retail—characterized by 'local stores + instant delivery'—has gradually become a primary shopping method for consumers. As a pioneer and leader in instant retail, JD Daojia is celebrating its eighth anniversary. Since JD opened the curtain on instant retail in 2015, JD Daojia has been at the forefront. Now, after eight years of rapid development, JD Daojia has become a representative of the industry's growth from scratch and continuous leadership. New Distribution has learned that during JD Daojia's 8th anniversary celebration from April 7 to April 16, over 300,000 physical stores nationwide participated, offering consumers instant retail services with 'online ordering and all-category delivery within an hour.' On the peak day of April 15, many categories saw doubled sales growth: alcoholic beverages grew 370% year-on-year, perfume and cosmetics grew 130%, shampoo and hair care grew 230%, sports and outdoor grew 320%, and apparel grew 380%; home improvement and building materials grew over 6 times year-on-year. From the data, it's clear that instant retail, represented by JD Daojia, has become a significant force driving the retail industry and is gradually becoming the main battlefield for future retail.
Instant Retail: Deterministic Growth Over the past two decades, China's retail industry has undergone tremendous changes, with new business models and retail formats constantly emerging. Traditional retail, e-commerce, and social retail are three retail scenarios, with traditional small stores, KA, B2B, O2O, B2C, and other channel combinations, making consumer shopping scenarios increasingly diverse. With the enrichment of shopping scenarios and channel differentiation, the market is becoming more segmented, making it harder for brands to find a channel for deterministic growth. However, instant retail is definitely an incremental channel business for brands. In recent years, the instant retail market has been growing rapidly overall, and this trillion-yuan market has become a mainstream channel that FMCG companies cannot afford to ignore. The China Chain Store & Franchise Association's '2022 China Instant Retail Development Report' points out that the market size of instant retail has grown at an average annual rate of 81% over the past five years. It is expected that by 2025, the open platform model of instant retail will exceed the trillion-yuan threshold, reaching approximately 1.2 trillion yuan. From a platform perspective, the growth trend of instant retail is also evident. Taking JD Daojia as an example, in the fourth quarter of 2022, JD Daojia's hourly delivery business continued its high growth momentum, with GMV growing over 80% year-on-year. As a trend of deterministic growth, there is no doubt that brands must engage in instant retail. Moreover, they should continue to increase investment and innovation in instant retail to quickly adapt to market changes and maintain competitive advantages. It is foreseeable that in the future market, instant retail will continue to maintain high growth momentum. Both brands and platforms have begun to elevate instant retail to a strategic position.
JD Daojia: Digitalization + Supply Chain Provide Differentiated Value for Brands The essence of instant retail is an upgrade of e-commerce. Its purpose is not to subvert the retail industry but to use internet technology to reconstruct the three dimensions of people, goods, and scenes, meeting consumers' evolving consumption needs and injecting new momentum into physical retail. From the perspective of brands, the value of instant retail is not only as a channel for rapid business growth but also for achieving omni-channel digitalization and supply chain optimization. This is deeply reflected in JD's instant retail business. Since 2021, JD has integrated the instant retail capabilities accumulated over eight years by JD Daojia into its main site, opening a same-city channel on the homepage and launching 'JD Hourly Delivery' as a unified C-end brand, providing a more convenient and faster shopping experience to meet consumers' demands for timeliness, quality, and service. This deep integration has also made JD Daojia's 'digitalization + supply chain' capabilities more complete. According to New Distribution, JD Retail has identified same-city business as one of its four must-win battles for 2023. Subsequently, JD Daojia clarified its dual-end operation strategy of 'JD App + JD Daojia App.' The JD Daojia App and JD App have different positioning and usage scenarios. The JD Daojia App focuses on same-city orders and user retention, serving as JD's main battlefield in this field, with continuous deep cultivation. The JD App is a full-category penetration battlefield. Based on LBS capability upgrades, JD will more actively penetrate instant retail across advantageous categories such as 3C, liquor, maternal and infant, and personal care and beauty. By integrating various resources, JD Daojia has formed a differentiated capability based on 'digitalization + supply chain' to help brands deeply layout instant retail.
First, from the marketing dimension, help brands achieve digital efficiency. Traditional marketing spending lacks precise targeting and results are difficult to quantify. For example, investments in offline display, end-cap displays, and promotions—what is the conversion rate and effect? It's hard to get quick data feedback. The ultimate destination of goods is consumers, so marketing activities must be based on the consumer dimension for the best results. JD Daojia, based on JD's LBS transformation of traffic, Jingzhuntong LBS upgrade, and JD Shufang data product integration, provides complete data management and analysis from the start to the end of the transaction, making marketing more precise and data-driven to enhance brand marketing effectiveness. Taking Mengniu as an example, in the JD Daojia New Year's Festival project, leveraging JD's mature marketing product 'Jingzhuntong' and its LBS capability upgrade, they achieved precise matching of people, goods, and scenes, optimizing Mengniu's marketing effect. This brought over 100,000 ordering users to Mengniu, with new customers accounting for over 45%, achieving dual growth in users and sales. In this process, the value of data is not limited to result feedback; it can also be continuously accumulated, helping platforms, merchants, and brands innovate integrated marketing models and maximize brand marketing benefits.
Second, from the user dimension, improve brands' digital operation capabilities. The value of data is not limited to result feedback. JD Daojia's integration of online and offline full-chain data can help brands obtain touchpoints that traditional channels cannot see, as well as areas for optimization. Online, based on the WeChat ecosystem, they have developed a new retail model that achieves a win-win situation for instant retail platforms, brands, and consumers—the 'Cloud Store' project—optimizing brand private domain operations. Offline, stores share smart promoters to continuously digitize users, and scenario-based marketing is built alongside platform traffic distribution mechanism rule upgrades. Combining online and offline, they deeply explore and meet users' multi-scenario instant consumption needs. In user digital operations, Mengniu and JD Daojia cooperated on the 'Cloud Store' project, using the innovative marketing approach of 'O2O + shopping guide + private domain user operations' to convert offline customers into digital users, achieving private domain operations. Data shows that Mengniu users through JD Daojia's Cloud Store project had a seven-day repurchase rate 3 percentage points higher than other channels, and offline supermarket stores also received online traffic feedback.
Third, from the supply chain dimension, help brands achieve digital supply management. The digital management of a brand's offline sales system is itself a complex project. The online-offline integration model of instant retail, combined with JD Daojia's digital capabilities, can help brands strengthen digital management of their offline distribution systems. For example, in the 'Perfect Store' project between Kimberly-Clark and JD Daojia, they first communicated with the brand to develop a core product list by category, identified regional grids and stores that needed optimization of online supply, and the platform took the lead in coordinating with physical retailers to set and track optimization indicators such as the number of online products and product online rate. Through the 'Perfect Store' project, the O2O channel availability rate of Kimberly-Clark's Kotex high-end new products increased by 27%, and sales on JD Daojia during the campaign increased by 114% month-on-month. JD Daojia uses the 'Perfect Store' project to explore brand supply chain integration. Through JD Daojia's data analysis capabilities and advantages in linking offline channels, it helps brands optimize the overall online and offline business structure and achieve omni-channel supply optimization.
Entering the 2.0 Rational Growth Stage: Instant Retail Focuses on 'Cost, Efficiency, Experience' From 2015 to today, it has been eight years for JD Daojia and also eight years for the development of the instant retail industry. In the past development process, the entire instant retail industry was in the 1.0 stage of barbaric growth. From a brand perspective, this was a new channel; as long as you did it, you could achieve natural growth. During rapid development, many new demands and challenges emerged, such as channel management, user demand insight, and efficient use of marketing expenses. Therefore, instant retail's complex offline multi-format stores and fulfillment processes are fundamentally different from food delivery. On one hand, the SKUs covered by instant retail stores reach tens of thousands, which is not the same magnitude as the dozens of SKUs in food delivery. On the other hand, instant retail involves various offline merchants with numerous SKUs and scattered orders. From order to delivery, instant retail requires more efficient and precise warehousing and picking systems, as well as a fast and reliable logistics network, to ensure goods are delivered to consumers in the shortest possible time. At its root, instant retail is retail, an evolution of e-commerce, not driven by the traffic + delivery logic of food delivery. The core logic of e-commerce is refined operations, and instant retail must also move to a refined operation stage. In terms of trends, the instant retail industry is gradually transitioning from the 'barbaric growth' 1.0 extensive stage to the 2.0 rational growth stage. The key for brands to achieve sustained deterministic growth is to improve operational efficiency and user demand insight. As JD Group CEO Xu Lei mentioned in a recent earnings call, 'JD is doing same-city business not because of rapid growth, but because users have needs, brands have needs, and the supply chain has needs. When these three points are satisfied, we ultimately return to 'cost, efficiency, and experience.' In the 2.0 rational growth stage of instant retail, the focus must ultimately be on 'cost, efficiency, and experience.' This applies to JD Daojia, the instant retail industry, and the sustainable development of brands.