Instant Retail's Disruption of Traditional E-commerce Recently, I spoke with the founder of a retail chain brand, who shared his view: instant retail will continue to see sustained high growth over the next five to ten years, and this is foreseeable. "Open your phone and check—are you shopping on traditional e-commerce less and less?" he told me. I looked at my Taobao and JD.com purchase history: Taobao had only a few orders, JD.com had more, mainly digital products, but compared to two years ago, orders had indeed decreased significantly. "Now open your food delivery app and filter for 'non-restaurant delivery and grocery' orders," he instructed. I was surprised by the number of orders—over the past year, I had placed over a hundred retail orders on two major instant retail platforms, with small amounts but high frequency. These orders included not only high-frequency FMCG items like beverages, snacks, and daily necessities, but also long-tail items like phones, keyboards, and routers. "This is a happening fact: instant retail is rapidly cutting into traditional e-commerce's business. Instant retail's category penetration is very fast, expanding from traditional FMCG, fresh produce, and general merchandise to all categories, with supermarket categories almost fully penetrated. In the past, long-tail categories were mostly bought on traditional e-commerce; as instant retail supply becomes abundant, market share will inevitably be redistributed."
Traditional E-commerce's Midlife Crisis Over the past decade, traditional e-commerce platforms like Taobao, JD.com, and Pinduoduo have dominated the retail market with their advantages of "rich SKUs, low prices, and large-scale logistics," profoundly changing consumer habits and shifting shopping from offline to online. Traditional e-commerce's core advantages: 1. Rich SKUs, covering the breadth of the 'long-tail market.' Leveraging internet technology and platform-based operations, they expand product variety to areas beyond offline retail's reach. In simple terms, it's an "infinite shelf." Consumers can find almost any product on e-commerce platforms, from mass-market items to niche needs, including long-tail products hard to find offline. This meets consumers' desire for "variety and freedom of choice," making them prefer one-stop shopping on e-commerce platforms. 2. Nationwide supply chain and logistics network, driving down costs through economies of scale. E-commerce platforms optimize distribution efficiency and reduce per-unit delivery costs through nationwide logistics networks and centralized warehousing. JD.com, as a representative self-operated e-commerce, controls the entire process from warehouse to consumer with its self-built logistics, offering relatively high delivery efficiency. Platform-based e-commerce like Taobao and Pinduoduo rely on third-party logistics networks to achieve nationwide delivery capabilities. By aggregating large order volumes and centralized delivery, traditional e-commerce can spread costs over long-distance logistics, building a price advantage. 3. Price-driven, low-price strategy capturing consumer mindshare. E-commerce platforms connect directly with brands and suppliers, reducing intermediate links and further lowering prices. Intense competition among platforms has fueled price wars, and price-sensitive consumers have gradually formed the impression that "e-commerce is cheaper." These advantages drove exponential growth for traditional e-commerce over the past decade. Although traditional e-commerce's business logic was once one of the industry's best solutions, its limitations are becoming apparent amid evolving consumer demands and market changes.
Traditional e-commerce's current pain points: 1. Weakness in high-frequency, low-ticket items. Traditional e-commerce's logistics and warehousing are better suited for high-ticket, low-frequency items like appliances and clothing. For low-ticket, high-frequency items (e.g., snacks, beverages), traditional e-commerce faces high delivery costs and low margins. A distributor friend doing traditional e-commerce told me he sells beverages on traditional e-commerce at zero profit, just as a "drain" to meet manufacturer sales targets. 2. Insufficient service capability for regional products. Traditional e-commerce's SKU richness relies on nationwide uniform supply, but consumer needs often have distinct regional characteristics. With a nationwide supply chain at its core, it struggles to adapt quickly to regional and localized demand changes. For example, southern consumers may have higher demand for herbal tea and fresh fruit, while northern consumers prefer hot drinks or convenience foods. 3. Long fulfillment times, failing to meet immediate needs. Traditional e-commerce delivery typically takes 1-3 days, relying on cross-regional logistics networks. While it covers the national market, it falls short in "last-mile" delivery efficiency. For planned purchases like large items or non-daily goods, consumers tolerate longer delivery times. But for high-frequency, immediate needs like beverages and fresh produce, consumers prefer "buy now, get now" models. Traditional e-commerce still holds an advantage in "planned consumption," but as demand for immediacy and convenience surges, its weaknesses in fulfillment speed, high-frequency delivery, and regional service are exposed. These pain points represent potential growth areas that traditional e-commerce could have captured, but with the emergence and evolution of instant retail, they have become entry points for instant retail to seize market share, fueling its rapid rise.
Instant Retail's Certain Growth: Perfect Match of Supply and Demand In July 2022, the Ministry of Commerce's official website released the "China Online Retail Market Development Report for the First Half of 2022," which first explicitly introduced the concept of "instant retail." However, instant retail's development actually began with the emergence of food delivery in 2014. Phase 1 (2014-2018): The industry was mostly called O2O, with retail stores going online, such as KA and convenience stores joining platforms like Meituan and Ele.me. Phase 2 (2018-2020): Fresh e-commerce players like Miss Fresh, Taocaicai, and Dingdong Maicai rose, focusing on fresh produce warehousing models. Phase 3 (2020-2023): Various front-warehouse models, represented by flash warehouses, began to emerge, starting with supermarket flash warehouses and expanding to vertical categories like beauty and pet supplies. Phase 4 (2023-present): Category penetration; supermarket categories are now fully penetrated, and expansion is underway to all categories, including 3C digital, apparel, and general merchandise. For example, Xiaomi, Nike, Miniso, and Heilan Home have started opening stores on instant retail platforms. By Phase 4, instant retail's growth remains certain. Let's examine this from the demand and supply dimensions.
First, demand. The "Instant Retail Industry Development Report (2024)" by the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce shows: In 2023, China's instant retail market reached 650 billion yuan, up 28.89% year-on-year, accounting for 4.2% of online retail sales, 17.89 percentage points higher than the overall online retail growth rate, making it a new growth point for consumer spending. In 2023, the number of active instant retail users was approximately 580 million, up 34.88% year-on-year, accounting for 53.11% of internet users. Total demand should be viewed from two dimensions: user numbers and user needs. Instant retail's user base is already massive, but it continues to grow rapidly. A friend running a front-warehouse told me that each year, new 18-year-olds are likely to become instant retail users. Simply put, younger generations, starting with the post-90s, are heavy users of food delivery. For this generation, instant retail is equivalent to e-commerce. For the next generation, this mindset will be passed on, making instant retail the first choice for shopping. Meanwhile, user demand on instant retail is multiplying, evolving from early emergency needs to a definitive lifestyle. For example, I spoke with a flash warehouse operator whose store had a female consumer place over 300 orders in 2024. This order volume means she resolved the vast majority of her daily shopping needs through instant retail. This may be an outlier, but we see a definitive trend: consumers are increasingly accustomed to using instant retail as their primary channel for daily product needs. Beyond basic daily needs, there's another variable: new demand stimulated by scenarios. When discussing with the head of instant retail at an FMCG brand, he mentioned that instant retail's significant role is quickly capturing demand generated by scenario marketing. For instance, ice cups became popular in summer; brands ran "ice cup+" seeding campaigns on Xiaohongshu, and consumers, seeing them, wanted to try immediately. At that moment, going to a store or ordering from traditional e-commerce would take too long; instant retail is the best option. So, both in user numbers and user demand, instant retail is continuously growing.
Second, supply. In the O2O era, product supply was relatively scarce, centered on bringing offline store inventory online. Platforms served merely as online traffic gateways, relying on offline store inventory with limited SKUs and little differentiated supply. Supply was constrained; users couldn't find what they wanted, and what was available had high premiums due to infrastructure costs. Brands treated it as a supplement to offline retail, often without dedicated teams, just small groups. This phase can be understood as: "I sell what I have." But today, instant retail supply has greatly enriched, and "everything to home" is gradually becoming a reality. On one hand, instant retail's sustained high growth has made all brands take this channel seriously, proactively co-creating with platforms to improve supply. During this process, mainstream supermarket categories have achieved full penetration, and even differentiated product offerings have emerged. On the other hand, user demand drives product supply, leading to the emergence of various vertical front-warehouses, gradually filling the gaps in long-tail products. "Everything can be delivered" is becoming a reality as supply matures. This phase can be understood as: "I provide whatever consumers want." Crucially, instant retail remains rooted in local supply, which adds incremental value to local physical businesses. Therefore, supply stability is also assured.
On one side, continuously growing demand; on the other, gradually enriching supply. The efficient match between the two brings certain growth for instant retail.
Final Thoughts Competition between new and old channels is natural; no one is guaranteed to win because China's market is large enough for various channels to survive, just in varying degrees. The competition between instant retail and traditional e-commerce is not a simple substitution but a deep game around "time value" and "supply-demand scenarios." Instant retail is not a replacement for traditional e-commerce but an important complement to the retail model. The relationship between the two will eventually evolve from "competition" to "symbiosis." From O2O to instant retail, we see that models keep iterating and new formats keep emerging, but what remains unchanged is that growth continues. In 2025, what new changes will instant retail bring? What innovative moves will retailers make? What incremental opportunities will brands have? How should distributors participate? From March 17-19, the 10th China FMCG Innovation Conference will be held in Chengdu, concurrently hosting the [Seizing Increment—Instant Retail Forum]. We will invite outstanding platforms, brands, retailers, and distributors in the instant retail field to share how they are tapping into increments in instant retail!
【New Order · Symbiosis】 The 10th China FMCG Innovation Conference Date: March 17-19, 2025 Location: Chengdu, China