From October 9 to 11, the 5th China FMCG Conference and the 1st China FMCG Distributor Conference were successfully held at the Shenzhen Denghui International Hotel. Over three days, more than 1,500 FMCG manufacturers and distributors from across the country participated in this grand event, with over 80 speakers delivering精彩 content. On October 10, Mr. An Zhongjie, General Manager of Channel Business at Meituan Waima Songjiu, delivered a keynote speech titled "Instant Retail Adds New Momentum to an Old Category," deeply sharing how instant retail empowers alcoholic beverage brands. New Distribution has compiled the essence of Mr. An's speech for readers.
Instant Retail: Retail + Technology, Driving Business Growth Meituan's mission is to help people eat better and live better. Driven by this mission, Meituan also has a strategy of retail + technology. Why add technology to retail? Technology plays two main roles in retail: First, technology helps improve efficiency for the B-side, enhance user experience for the C-side, and rapidly increase scale. Second, it creates, turning the impossible into possible. For example, traditional retail in the 1950s experienced a wave of digital transformation, with retail giants like Walmart adopting barcode technology and POS systems, gradually developing into digitalization. This is a typical example of technology empowering retail. But this was only empowerment for the B-side; the C-side user experience was not yet obvious. It wasn't until the 1990s that information technologies gradually evolved, making products, transactions, payments, fulfillment, and delivery online, and the C-side user experience gradually shifted from offline to online. This change caused a huge growth in B2C retail scale. Although B2C scale is already large, users' instant needs—getting what they want anytime, anywhere—are still not fully satisfied. Until around 2010, mobile internet technology and mobile hardware brought two levels of change, gradually increasing the importance of instant retail. The first level is the great enrichment of product supply. In the past, within 1-2 kilometers, there might be only a few thousand or ten thousand products. But the advent of mobile internet rapidly expanded product supply, surging to tens of thousands or even hundreds of thousands. Taking Beijing's Wangjing area as an example, three years ago, Meituan's product supply in Wangjing was about 20,000, with over 50% provided by Carrefour and Wumart. Today, in Wangjing's business district, product supply exceeds 400,000, not only from hypermarkets but also from various small shops. The second level is the improvement of instant delivery networks. Mobile internet technology has greatly improved the construction of instant delivery networks. The combination of product supply and instant delivery has greatly satisfied users' needs for getting what they want anytime, anywhere. These two levels of change have stimulated users' potential needs and made instant retail a mainstream channel for consumer purchases.
Instant Retail: Starts with Emergency, Grows with Convenience, Thrives with Lifestyle We believe that instant retail starts with emergency, grows with convenience, and thrives with lifestyle. First, it starts with emergency. Most people's first order on an instant retail platform is likely food delivery. The second order might be for emergency needs, such as buying medicine or forgetting a data cable on a business trip. This is the stimulation of emergency needs in instant retail. When emergency needs are repeatedly satisfied, consumers discover that instant retail platforms can reliably meet product needs. Then they migrate to other categories, such as flowers, fruits, ingredients, even rice, flour, oil, and 3C digital products. At this point, it shifts from emergency needs to convenience needs, which is growing with convenience. For example, when you don't want to go downstairs to carry 20 kilograms of rice, or when you don't want to travel 5 kilometers to buy a broom, consumers immediately think of instant retail platforms to meet these needs. Finally, it thrives with lifestyle, as consumers gradually treat instant retail as a definitive lifestyle.
Let me explain with two cases. First, through user research, we found that a female user in Shandong made 134 purchases on the Meituan platform in one month, essentially integrating instant retail into her life. Second, on March 14 this year, a female user from Wuhan went to Sanya for vacation. There was a temperature difference between the two places, but she only brought a handbag. After arriving, she used instant retail platforms to purchase all travel daily necessities, including high-end cosmetics and summer clothing. When a user truly becomes accustomed to a consumption platform, and that platform becomes a definitive lifestyle for them, they can't do without it; this habit becomes part of their life.
Under Instant Retail, New Growth Drivers for the Alcohol Category The development of categories on Meituan Flash Shopping was not deliberately designed but naturally emerged from user needs, leading to rapid growth. Each category's emergence is rooted in huge shifts and changes in user needs. The entire instant retail market is estimated to exceed 500 billion yuan this year. Meituan Flash Shopping has reached 175 billion yuan in the past four quarters. By 2026, the instant retail market is expected to reach one trillion yuan, with Meituan Flash Shopping reaching about 400 billion yuan, including various platform and self-operated models. As instant retail scale expands, categories also burst with new opportunities. The explosion of categories on instant retail platforms differs from B2C categories. First, it's about immediacy and convenience. Second, the user needs of a certain category offline do not fully match those online; the current supply and service methods may not meet online users' needs. Therefore, in this context, Meituan Flash Shopping, in addition to its current platform model, is gradually exploring other service methods to meet consumer needs. So, what consumer needs has Meituan identified in the alcohol category? Consumers' needs for instant retail in alcohol are: fast, diverse, authentic, and economical. Of course, every internet platform might base on these four points, just with different priorities. Based on this priority, how does Meituan meet user needs? In 2021, Meituan launched the Waima Songjiu business, using a model of "unified self-operated supply chain + micro-fulfillment centers + self-owned delivery," providing users with affordable, authentic, and high-quality alcohol delivery services with an average delivery time of 15 minutes.
Among these, the first capability is strong instant delivery. Especially in the alcohol category, when users are at a social gathering, they can't wait even a minute for delivery; "fast" is an extremely important experience. Based on this, Waima Songjiu aims to achieve an average delivery time of 15 minutes. The second capability is product authenticity and diversity, which requires building a self-operated supply chain. Of course, many platform models can achieve "diversity," but besides diversity, there is authenticity. Authenticity not only refers to product authenticity but also brand trust. So, for diversity and authenticity, we need to build our own supply chain. Waima Songjiu has already achieved sourcing most brands directly from the source and brand owners, ensuring supply stability and cost advantages. In mall operations, we ensure consistency in price, product information, and marketing activities for user experience. The third capability is efficient operations, lower warehouse costs, and simplified organization. We need to improve efficiency at every step, so Meituan Waima Songjiu's systems are self-built to ensure the highest digital operation efficiency. In terms of micro-fulfillment center operations, Meituan has two methods: one is self-operated, where the assets of the micro-fulfillment centers are owned by Meituan Waima Songjiu; the other is cooperation, where Meituan partners with others, providing brand, systems, supply chain, and operations, while the partner is responsible for operating the micro-fulfillment center, mainly including three aspects: inventory management, fulfillment and delivery, and overall market user promotion. Based on the above operating model, Waima Songjiu has achieved some breakthrough results in two and a half years. In June 2021, the first store opened, and by September this year, 400 stores were online. Although there are still issues to explore, we have gained relatively certain insights in several aspects.
First, sales results reflect that Waima Songjiu's business value has been widely accepted by users, with two-year-old stores achieving 80% year-on-year growth.
Second, Waima Songjiu's profit model has been validated. After two years of operation, Waima Songjiu's micro-fulfillment centers in Guangdong Province have achieved profitability.
Third, Waima Songjiu's user value, business model, and profitability have been validated from first-tier cities like Guangzhou and Shenzhen to fifth-tier cities like Zijin County. The number of stores in Guangdong Province has reached nearly 300, and in 2023, scale grew over 300% compared to 2022, which encourages us to expand to more provinces in 2024.
Finally, I want to say that the development of the instant retail industry will provide more opportunities for the entire retail category. Meituan is also exploring new supply methods and possibilities in new categories. Meituan Waima Songjiu looks forward to deep cooperation with more brands or partners who want to start businesses, to win new growth in the instant retail alcohol category together.
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