Source | Lingshou
Instant Retail Besieges Supermarkets Wang Peng, a veteran retailer operating three chain supermarkets in a third-tier city in Shandong, is feeling increasingly anxious lately. "Foot traffic is clearly declining, especially among young people. The scene of picking up groceries on the way home from work is almost disappearing," he told the author. In contrast to the quiet supermarket stores, Meituan and Ele.me riders in the community are becoming more active. "In the past month, instant retail has been fierce, especially with various subsidies on delivery platforms. Once people order delivery, many become too lazy to cook, and supermarket business naturally suffers." What troubles him more is that now almost all daily goods, including rice, flour, oil, fruits, and snacks, can be delivered to your door within 30 minutes. The offline consumption demand that originally belonged to supermarkets is being gradually shifted online and taken away by delivery platforms. For Wang Peng, who has run a retail store for over a decade, this scene feels like a familiar fate. Looking back to around 2015, when the O2O wave surged, instant retail platforms such as Duodian APP and JD Daojia were established. Their core task was to move offline supermarkets online, solving the channel problem of whether products were available. This was the first digitalization of traditional retail. However, a decade later, as the wave of instant retail surges again, the tactics and logic of the entire battlefield have fundamentally changed. This change stems from the evolution of the instant retail format itself over the past decade, from "light" to "heavy" and then to a combination of both. Initially, it was O2O platforms focused on traffic matching. Then came the store-warehouse integration promoted by Hema, followed by the emergence of more flexible and cost-effective front-warehouse models like Dingdong Maicai and Pupu. Now, it has evolved into the lightning warehouse model that combines platform traffic with front-warehouse experience. This clear evolutionary path has gradually formed a consensus in the industry: the lifeline of instant retail lies in the pursuit of fulfillment experience and operational efficiency. It is on this new consensus that the current second wave of impact is so different. Now, the focus of competition is no longer simple channel expansion. From Meituan's plan to deploy 100,000 "lightning warehouses" by 2027, to Taobao's "Flash Sale" achieving tens of millions of orders in a short time, to JD.com upgrading fulfillment speed from "hourly delivery" to "minute-level," the actions of internet giants indicate that this round of war is a deep revolution that goes into the industry, centered on fulfillment capability and backend efficiency. So much so that for regional chain operators like Wang Peng, joining instant retail is more of a defensive measure. Data from the National Bureau of Statistics shows that the growth rate of physical store retail sales has continued to slow in recent years. "The data confirms my intuitive feeling—before I decided to fully launch on delivery platforms earlier this year, the foot traffic and average transaction value at my three stores had been declining for several consecutive quarters," Wang Peng said. After entering the game, instant retail has indeed brought new growth space for traditional stores. "The most significant change is the expansion of service radius," he explained. "In the past, the store's service scope was limited to the surrounding one kilometer. Now, through the platform, coverage can be extended to three to five kilometers. At the same time, nighttime orders have become a new business increment, supplementing the sales period after the store closes." However, behind the A-side of revenue growth, a profit problem has quietly emerged. The B-side of Growth: Where Did the Profit Go? "The revenue figures look good, but at the end of the month when I check the accounts, I find that profits haven't grown correspondingly; they've even become thinner," Wang Peng admitted. Wang Peng's dilemma is not unique. It is a common problem faced by most traditional supermarkets involved in instant retail—"increased revenue without increased profit." The reason is that many supermarkets simply "copy and paste" their offline business model and product structure online. They think this is the lowest-cost way to transform, but in reality, they are burdened with additional costs on the new battlefield of instant retail. "These costs include picking, fulfillment, and platform commissions," an industry insider told the author. Taking Wang Peng's store as an example, for a 30-yuan online order, the platform commission, fulfillment and delivery costs, and platform full-reduction activities combined can easily eat up nearly 10 yuan in costs. "If the gross margin of the product itself is below 30%, this business is almost equivalent to doing it for nothing." If high internal costs are the "internal worry," then the external competitive environment is the "external threat." When Wang Peng put his products online, he suddenly found that competitors were not just neighboring peers. "My previous competitive advantage was a good location," Wang Peng said with deep feeling. "Now when I open the delivery app, within a five-kilometer radius, there are more than a dozen 24-hour 'warehouses' and several online stores of large chain supermarkets. My 'location' advantage has been instantly flattened." A bigger challenge comes from the scale gap. Professional online players have SKUs ranging from five to six thousand to even ten thousand, and their traffic operation techniques are more than adept. "'0.01-yuan traffic-driving items' and 'minimum order of 9.9 yuan' are just the most basic tactics," revealed a lightning warehouse operator. "Our core strategy is to attract traffic with low-price, high-frequency items, while the real profit comes from high-margin emergency items and impulse purchases." This complex traffic operation and pricing model is like a "black box" for traditional supermarkets accustomed to the "cost-plus pricing method." Facing eroded profits and an incomprehensible competitive landscape, Wang Peng began to try self-rescue. For example, he packaged "binge-watching sets" or spent a lot of time every day manually comparing and adjusting prices across multiple platforms like Meituan and Ele.me. But these tactics relying on personal effort quickly exposed their limitations. "The biggest problem with multi-platform operation is chaos. Just after adjusting prices on Meituan, I forget to change JD.com, leading to customer complaints. When running traffic-driving activities, I can't predict sales, often resulting in 'coupons sold out but goods out of stock,' which leads to a bunch of negative reviews," Wang Peng told the author bluntly. Wang Peng's struggle reveals the essence of the problem: behind instant retail competition is the digital capability to efficiently manage multiple platforms, accurately predict demand, and complete fulfillment. This "digital divide" is becoming an obstacle that traditional supermarkets must cross. A signal is that while retail enterprises are generally caught in profit anxiety, the technology service providers that supply them with "ammunition" are the first to run a profitable model. For example, Duodian Intelligence (02586.hk) recently released its semi-annual report, achieving a net profit of 62.17 million yuan in the first half of 2025, a significant turnaround in performance. For the entire industry, the financial data changes of such companies not only reflect their own operational capabilities but also serve as a weather vane: the demand of retail enterprises for digital solutions is continuously being released, and the market has gradually accepted paying for improved efficiency and optimized operations. Breakthrough Point: The "Digital Rebuilding" of Supermarkets "To be honest, I've almost given up several times," Wang Peng admitted to the author. "Every day, I have to spend several hours switching back and forth between the backends of Meituan, Ele.me, JD.com, and others, and my eyes are getting blurry." Wang Peng's energy drain is a manifestation of the "digital capability" shortcomings of traditional supermarkets. To solve this pain point, a unified backend or delivery middle platform that integrates multiple platforms is gradually becoming standard infrastructure for more and more supermarkets. The greatest value of such systems is to help stores completely get rid of the tediousness of multi-platform operation, achieving "one backend to manage all platforms." Operators no longer need to repeatedly switch between different apps or manually synchronize; they can manage products, prices, and promotions across all platforms in one unified middle platform system. Taking Duodian Intelligence as an example, it has already provided such digital solutions for supermarkets. In Duodian's system, real-time synchronization of omni-channel inventory can be achieved. When a product is sold offline through a POS machine, the inventory on all online platforms is automatically deducted synchronously. This not only effectively avoids operational accidents like "coupons sold out but goods out of stock" but also greatly reduces order cancellations and customer complaints due to stockouts. After the problem of chaotic backend management is gradually solved, supermarkets face another challenge: how to proactively acquire new growth? Traditional retailers like Wang Peng generally lack the genes for online marketing, but new digital tools are providing them with the possibility of a "breakthrough." Taking "Douyin Suixintuan" as an example, some leading technology service providers have achieved deep integration with Douyin's local life services. As one of the first entrants, Duodian helps retail customers launch highly attractive traffic-driving activities on the Douyin platform, such as "9.9 yuan group purchase for a box of eggs." The innovation of this model is not just simple group buying, but more importantly, the conversion loop that follows. After users are attracted by low prices and place orders, they can directly redeem conveniently within the Douyin app through an embedded mini-program developed by Duodian for merchants, and the redemption page intelligently recommends "add-on purchases" of other items. This closed loop of "Douyin group coupon → redemption within Douyin + add-on purchase" achieves a leap in user value at the moment of redemption—converting the "public domain traffic" attracted by low-price coupons into instant retail users with higher average transaction values. Behind this smooth experience, AI also plays the role of a "data strategist." Service providers use AI tools to optimize coupon strategies for merchants based on user profiles and redemption data; at the same time, through historical data modeling, they predict redemption peaks and assist merchants in precise stocking and dispatch scheduling. This proactive growth paradigm, from traffic reception to creation, is opening a door to growth for traditional supermarkets. The Ultimate Form of Supermarket Digitalization However, a deeper question arises: when digitalization becomes standard, what truly remains as the core competitiveness of supermarkets? A reference case is Pangdonglai. In the industry, Pangdonglai is known for its service and employee management model. But behind its corporate culture, there is also a digital system as the underlying support. It is reported that Pangdonglai began cooperating with Duodian Intelligence in 2022 to systematically upgrade its core modules such as membership, products, and supply chain, and uses this to manage over 20 million online members. Behind this, it reflects a business logic: through digital systems, handle backend tasks that can be standardized—such as inventory management, order flow, and membership points settlement. The result is to free store employees from tedious transactional work, allowing them to focus on front-end, non-standardized customer service and the delivery of product value. From this perspective, technology and service are not opposites. An efficient backend system actually provides the operational foundation and guarantee for front-end service. It allows Pangdonglai's service capability to be experienced by customers not only offline but also managed through the online membership system, ultimately forming the core competitiveness of the enterprise. The Pangdonglai case provides traditional supermarkets with a way of thinking in the instant retail war: this is no longer a simple "going online" but a deep "digital rebuilding." For traditional supermarkets today, digitalization and AI are no longer just "bonus points" for icing on the cake. A glimpse can be seen from Duodian Intelligence's financial report: the AI-driven "retail core solutions" and "retail value-added services" both achieved double-digit year-on-year growth. This indicates that more and more retailers are viewing digital investment as a necessary choice to improve backend efficiency and drive front-end growth. In this instant retail competition measured in "minutes" and oriented toward "efficiency," digital capability has evolved into the threshold for entry and become new business infrastructure. For supermarkets like Wang Peng, who are at a critical juncture of transformation, embracing digitalization may be an important path for them to stay at the table and usher in the next round of growth in this competition without an end.