Source | Innovation Retail Society ID | dnwlkjyxgs Author | Ding Zhenghong
Instant retail is in a period of rapid growth. In 2024, China's instant retail market reached 780 billion yuan, and it is expected to exceed 850 billion yuan in 2025, approaching the trillion-yuan mark, with a compound annual growth rate of 46% over the past five years (Ministry of Commerce data).
Amid this growth surge, Meituan Squirrel Convenience and Taobao Convenience Store have emerged. Platforms personally entering the lightning warehouse space should be a boon for the industry, but in practice, it has dealt a heavy blow to third-party lightning warehouse investors.
Meituan, Alibaba, and JD.com, which should have been referees on the sidelines, have become players on the field. As a result, the three core resources—traffic, rules, and data—have shifted from a "public pool" to the platforms' "private domain."
This has sparked industry discussion: Is this an engine that accelerates industry standardization, or the last straw that crushes socialized lightning warehouses?
The author, a "veteran of Meituan," was deeply involved in exploring and growing the new supply lightning warehouse direction.
Recently, I have had many conversations with frontline practitioners. Some are busy selecting products in Shandong, some are scrutinizing delivery costs in Guangzhou, some are building teams in Beijing, and others are pondering next steps in Hunan. Their sentiments are strikingly consistent: Is the platform's entry about taking our livelihoods, or is there a deeper intention?
Behind this lies a more profound issue. Currently, every industry is "rolling," but the essence of this competition is low-level.
Those involved in lightning warehouses are among the most proactive in embracing change. They understand structural shifts in user demand, dare to bet on new channels and tools, and find opportunities in supply-demand mismatches. But when platforms enter, this path suddenly becomes harder and steeper.
So today, I want to offer a third-party perspective, without taking sides, to dissect this "platform entry" game and provide several different viewpoints for lightning warehouse operators, distributors, brand owners, and platform operators.
The "Lightning Era" of Instant Retail Why Can't Platforms Resist Entering?
The growth rate of instant retail is dazzling. The supply chain system centered on "lightning warehouses" (a local warehousing and delivery model with half-hour delivery) has become the engine of new consumption growth.
The emergence of Meituan Squirrel Convenience (Meituan) and Taobao Convenience Store (Alibaba) is essentially platforms pursuing two things: traffic monetization and supply control.
By deeply co-building warehousing and distribution systems with partners, they control everything from product selection to fulfillment, connecting the brand (B)-supply chain (B)-user (C) chain and reshaping supply-demand matching.
But this has also raised external questions: Platforms are "both referees and players," "privatizing" the three public resources of traffic, rules, and data. In the short term, this compresses the living space of socialized lightning warehouses, stifling innovation and capital observation and injection. In the medium to long term, it may also bring leaps in industry standardization and user experience.
Recall that in 2020, Meituan first proposed the "lightning warehouse" concept, when instant retail was still an extension of food delivery.
As an innovative front-warehouse model for its Flash Purchase business to address the "supply-demand mismatch" in instant retail, the concept quickly expanded, driving standardization in the instant retail industry.
Subsequently, Alibaba and JD.com followed suit. But no one expected that within just five years, this model would become the engine of new consumption. Lightning warehouses are not simple storage facilities; they are complex, long-chain operations integrating product selection, pricing, promotions, inventory forecasting, order procurement, receiving and warehousing, picking and packing, and rider dispatch.
When a user places an order, the warehouse system assigns the order to a picker and simultaneously dispatches a nearby rider to pick up the goods, achieving seamless half-hour delivery.
By 2024, the number of comprehensive lightning warehouses nationwide has reached tens of thousands, and including specialized vertical-category lightning warehouses, the total across several platforms approaches 100,000. Imagine: after a user places an order, a case of ice-cold beer or a bottle of makeup remover arrives at the door within 30 minutes. That's the magic of lightning warehouses—an instant retail model centered on hour-level warehousing and refined fulfillment.
It's not a simple upgrade of e-commerce logistics; it reshapes the supply-demand logic of local consumption. With capital support, scale rapidly expands, and at the current trend, within about five years, warehouses will be everywhere.
The current industry status can be summarized as "three highs and one low": high growth, high subsidies, high barriers, and low margins.
High growth: Instant retail transaction penetration is expected to rise from 4.2% in 2023 to 5.5%-6.5% in 2025, with app monthly active users reaching 550 million and penetration exceeding 50%.
High subsidies: Platform giants continue to "burn money" to seize market share. In 2024, Alibaba, Meituan, and JD.com spent over 80 billion yuan in subsidies in the local life sector—Alibaba invested 50 billion, Meituan 30 billion, and JD.com 10 billion. Where does this money go? Rider bonuses, merchant commission reductions, and user discount coupons. As a result, user stickiness increases and market education accelerates, but platform profits decline.
High barriers: Lightning warehouses require integrating warehousing, fulfillment, and data systems. In first-tier cities, a single warehouse investment often starts at millions, and operations management relies on algorithms and middle platforms.
Low margins: Third-party lightning warehouses have net profit margins of only 3%-5%, with fulfillment costs exceeding 20%. Only through scale can they barely profit, and a single warehouse needs to exceed 10,000 orders to be stable.
These barriers and pressures leave many small warehouses struggling.
The trigger for platform entry is dual anxiety over "traffic monetization" and "supply loss of control."
Taking Meituan and Alibaba as examples, in the past, platforms relied on third-party supply, with uneven fulfillment quality: stockouts, customer complaints, and delays were frequent, affecting user experience. Platforms hope to control higher-quality supply through self-operated warehouses, optimizing supply-demand matching from the source.
Starting in 2022, Meituan Squirrel Convenience began exploring solutions to these issues, aiming to significantly reduce search no-result rates, maximize user demand fulfillment, and improve product quality.
At the end of October this year, Alibaba launched Taobao Convenience Store with the same logic, covering FMCG, daily chemicals, paper and hygiene, home daily necessities, home appliances and general merchandise, apparel and home textiles, etc., with a focus on "30-minute instant delivery."
These quasi-self-operated warehouses are not simple storage points but the platforms' "tentacles": embedded in the Taobao/Meituan apps, enjoying certain traffic preference, rule priority, and data privileges. The platform's hands-on approach is the global optimal solution at this stage.
From the perspective of platform partners, this situation resembles a "gentle hunt." I understand both sides. My judgment is that platforms are not maliciously invading but following the trend—using quasi-self-operated models to validate and optimize supply-side reform.
This path and bilateral coordination with partners are difficult to achieve due to inconsistent goals. The platform's goal is to comprehensively improve user experience, thereby enhancing traffic monetization; partners' goal is to enhance traffic monetization, with user experience secondary or even ignored. But this approach also quietly changes the game rules: traffic shifts from "public infrastructure" to "private tools," diluting the interests of third-party warehouses.
Platform self-operated warehouses are like a mirror—reflecting the industry's shortcomings on one side and the plight of third-party warehouses on the other.
The Double-Edged Sword of "Referee + Player"
Theoretically, platform entry is a catalyst for industry win-win; but in practice, it becomes an "involution accelerator" for third-party warehouses.
First Barrier: Traffic Preference.
In the past, third-party warehouses could compete fairly through platform rules, traffic, and data resources. But after the launch of quasi-self-operated warehouses, Taobao/Meituan algorithms prioritize pushing products from these stores: when searching for products, platform quasi-self-operated warehouse products rank at the top, and third parties need to pay extra to "buy positions." According to anonymous feedback from lightning warehouse practitioners, in Q3 2025, orders for third parties in the same business district as Squirrel Convenience dropped by 15%-20%.
Second Bias: Double Standards in Rules.
Subsidy policies, traffic distribution, and review mechanisms often favor self-operated warehouses. Platforms both set the rules and participate in the game, so third-party warehouses inevitably suffer.
Third Hidden Danger: Data Closure.
Data is the core competitiveness of lightning warehouses. If platforms use data as self-operated resources, they effectively "strangle third parties in the hands of algorithms." In the long run, this is more fatal than traffic preference.
Of course, platforms have their own logic: self-operated warehouses are to validate standardized models and prepare for future openness and empowerment. In other words, platforms are not maliciously competing but "running it themselves first" to see if the industry model works. The question is—whether they can truly "open-source and give back" determines the outcome of this game.
Engine and Trap Coexist
Platform entry brings industry standardization and experience upgrades but also exacerbates resource monopolization and innovation compression.
If I were to judge its pros and cons, my view is: 60% promotion, 40% risk.
From a promotional perspective, the quasi-self-operated warehouse model is an "industry engine"—it validates models, raises standards, and drives spillover; from a competitive perspective, it is a "speed trap"—privatizing resources compresses space, and we must be wary of medium- to long-term "monopoly resurgence."
From the perspective of third-party lightning warehouse practitioners, platforms' quasi-self-operated warehouses (such as Meituan Squirrel Convenience) should drive the entire industry upward through standardized acceleration and ecosystem spillover. But in reality, it remains at the stage of traffic plundering, not yet truly transformed into a win-win engine.
Promotional aspects:
The threshold for standardization acceleration and ecosystem spillover—currently still at the traffic plundering stage. To achieve "standardized acceleration and ecosystem spillover," clear thresholds must be met:
- Standardized models open-sourced to cover at least 30% of third-party warehouses in the industry (e.g., public SKU selection standards);
- Ecosystem spillover mechanisms implemented (e.g., open data sharing interfaces);
- Subsidies tilted toward third parties to transform around platform goals (e.g., support for building warehouses for local merchants, not just their own warehouses).
These are not excessive demands but the bottom line for industry win-win—similar to Meituan's early lightning warehouse recruitment model, which attracted local retail merchants to build warehouses, covering daily convenience store front warehouses, helping merchants exceed 10,000 monthly orders and sustain profit growth.
However, the current situation in 2025 shows that although Meituan Squirrel Convenience has achieved a closed loop of warehousing and distribution through its ecosystem, its empowerment of third-party warehouses is limited, and data sharing and open-source mechanisms have not been implemented on a large scale. This leads more partners to interpret platform entry as traffic plundering: algorithms prioritize self-operated push, and in this hunting feast, third-party orders decline by 15%-20% or more, while spillover effects are limited to internal system and mechanism optimization, not effectively benefiting third parties.
Malicious aspects:
Resource privatization compresses innovation space. Short-term subsidy wars seem to accelerate market education, but in the medium to long term, data barriers become the killer.
After the privatization of traffic, rules, and data, third-party warehouses' overall ability to acquire traffic plummets, and inventory backlog risks skyrocket. Capitalization paths become blurred, and investors worry about being "harvested by platforms."
The result? Industry innovation shifts from "a hundred flowers blooming" to "platform vassalage"—who would dare invest in building warehouses and become "leeks"?
This is not "the wolf is coming," but "a mirror"—forcing you to confront your shortcomings. Platforms need to accelerate open-sourcing, otherwise the spillover logic will be hard to realize, and regulatory hammer may strike again.
Platform entry will reshape the lightning warehouse path: from "fighting alone" to "alliance symbiosis." It is predicted that by 2027, third-party warehouses will stabilize at 60%-70% (based on current order growth trends, but slightly declining under platform self-operated pressure), and supply and service quality will bring significant increases in average order value and profits—avoiding the current "red ocean battle" and shifting to user value orientation (e.g., precise product selection + high-quality supply chain). This requires third parties to follow platform rule reforms and achieve low-cost capability migration.
Final Thoughts
Platform entry into lightning warehouses is not a cage but a mirror.
It exposes industry shortcomings and catalyzes structural upgrades. In the short term, it accelerates industry sustainability; in the medium to long term, it tests the resilience and creativity of socialized resources.
For third-party practitioners, this wave is an opportunity to transition from "followers" to "definers";
For distributors and brand owners, this is a window of "misplaced dividends."
For platforms, only through ecosystem co-prosperity can traffic be long-lasting.
On November 25-26, in Hangzhou, I will attend the "2025 Instant Retail Supply Summit and First Instant Retail Store-Warehouse Product Selection Fair" and deliver a keynote speech titled "Supply Revolution: The Next Golden Decade of Instant Retail."
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