Instant retail is stirring up a storm again. Douyin Mall has opened an independent entrance for 'hourly delivery', and JD.com has proposed to help 200 million local small and medium-sized retailers undergo digital transformation in the next five years. Suddenly, the instant retail track is ablaze with war. Alibaba, JD.com, and Meituan are all trying to get a piece of the pie. A few years ago, giants were keen on acquiring and investing in offline supermarkets, but the results were not ideal. For example, Bubugao, once invested by Tencent and JD.com and known as the 'first stock of private supermarkets', is on the verge of losing control. Even Gaoxin Retail, backed by Alibaba's forest, is barely surviving. With the wave of store closures at Carrefour and Walmart, topics like 'traditional supermarkets seem to have exited the stage of history' frequently top social media hot lists. In stark contrast, 'internet supermarkets' are advancing rapidly. Meituan Flash Purchase, stimulated by the pandemic, has shown strong retail vitality and has become a star project within Meituan. JD.com's instant retail has never stopped chasing, launching hourly delivery on top of JD Daojia, and now undergoing new transformations. Douyin, which excels at content, has also jumped in. The decline of offline supermarkets reflects people's habit of online consumption. Especially after the pandemic, the habit of online consumption has received positive feedback because it is convenient and fast without leaving home. JD.com, Meituan, and Douyin have all seen this change, and none wants to miss this window of retail transformation. At the slightest sign, war can break out at any time. New Catfish Douyin is a latecomer in instant retail. Its specific approach is to use an online supermarket as a carrier, under the framework of Douyin e-commerce, independent of Douyin's algorithm and content system. Around August last year, this business was piloted in the Guangzhou-Shenzhen area and was fully launched only at the beginning of this year. At that time, the supermarket section was embedded in the Douyin Mall page, mainly offering next-day delivery. Almost simultaneously, 'hourly delivery' was born. This business has hourly-level delivery capability. Initially, it did not have an independent entrance in Douyin Mall; it was attached to the Douyin Supermarket page, with the two parallel at the top of the page. Recently, 'hourly delivery' has gained an independent entrance in Douyin Mall, no longer buried deep in the 'Douyin Supermarket' interface, and the two can finally stand on equal footing. This seemingly insignificant position adjustment actually signifies a change in Douyin's emphasis on the 'hourly delivery' capability. Within Douyin's main site, hourly delivery will receive more traffic support. The change at the front-end entrance reflects organizational changes within ByteDance. At the beginning of this year, the Douyin Supermarket business team was significantly expanded from a small team of ten to over a hundred people, with the majority of manpower directly under logistics, supply chain front-end, and back-end. The head of Douyin Supermarket is Wang Haiyang, who has years of experience in supermarket e-commerce. He reports to Mu Qing, Vice President of Douyin E-commerce, and one level above is Wei Wenwen, President of Douyin E-commerce. Since the launch of ByteDance's Douyin e-commerce, it has pushed into shelf e-commerce, and Douyin Supermarket is one path, but it still needs more external help. Douyin Supermarket is simultaneously testing self-operated and third-party models. Currently, merchants入驻 'hourly delivery' are more likely to be local chain supermarkets with self-delivery capabilities and non-self-built surrounding front warehouses, such as Wumart, Yonghui, and Dingdong Maicai. Douyin Supermarket, on the other hand, is self-operated with next-day delivery. Compared to other mature self-operated systems, Douyin Supermarket's infrastructure is still weak. In July this year, LatePost reported that ByteDance has established some self-operated warehouses to serve Douyin Supermarket, but Douyin Supermarket still accounts for a very small proportion of ByteDance's e-commerce business. The author entered Douyin Supermarket and saw that on the search page, it emphasizes that Douyin Supermarket is officially self-operated, with unified packaging and direct shipping from warehouses. In December last year, media reported that Douyin Supermarket had only 7 categories. Currently, it has been upgraded to 12 major categories including paper products and laundry, snacks and sweets, beauty and skincare, daily necessities, digital appliances, etc., and SKUs are continuously expanding. During the same period, Tmall Supermarket had 19 major categories, and JD Supermarket had 18. Taking grain, oil, and seasonings as an example, JD Supermarket has 11 sub-categories, Tmall Supermarket has 12, while Douyin Supermarket has 10 on its shelves. It should be noted that although there are differences in categories among the three supermarkets, all three offer next-day delivery. Douyin Supermarket is continuously narrowing the gap with Tmall Supermarket and JD Supermarket. This year, Mu Qing, Vice President of Douyin E-commerce, said in an interview with Xinbang that Douyin Supermarket is in a very early trial stage, and the original intention of the business is to meet users' e-commerce shopping experience needs. 'For example, the supermarket business can meet the needs of some specific users in terms of platform services and logistics timeliness, forming an effective supplement to our existing platform and merchants.' Old Battlefield Li Changming, General Manager of JD Daojia, asserted that traditional retailers have only a one-year window for transformation; if they fail to transform smoothly, they will be replaced. After establishing a place in e-commerce, JD.com has always had a sense of crisis about instant retail. The internal incubation of JD Daojia in 2015 is proof. Later, it launched a second growth curve—the 'hourly purchase' business. Currently, the 'hourly purchase' business has two core entrances in the JD app: besides JD Daojia, there is also the 'hourly delivery' at the top core tab. In addition, in the JD Supermarket interface, 'hourly delivery' also has exclusive resource exposure. Recently, at a press conference on instant retail, JD.com emphasized the uniqueness of its model—'the only enterprise with B2C+O2O digitalization and supply chain integration capabilities.' In other words, JD.com integrates offline products online, connecting merchants and user needs, achieving precise matching of supply and demand. JD Daojia and hourly purchase are backed by Dada Group for delivery. In 2016, JD Daojia merged with Dada. Currently, Dada Group owns both JD Daojia and Dada Now. In the second quarter of this year, Dada Group's total revenue was 2.8 billion yuan (RMB, same below), a 23% increase year-on-year. Among them, JD Daojia platform revenue was 1.8 billion yuan, a 25% increase year-on-year. Dada Now platform revenue in the second quarter was 1 billion yuan, a 20% increase year-on-year. In the 12 months ending June 30, 2023, JD Daojia platform's total GMV reached 70.8 billion yuan, a 30% increase year-on-year. In 2022, Dada Now's delivery services covered more than 2,600 counties, districts, and cities nationwide, with a cumulative 1 million active riders. Players in the instant retail track are all seizing high-quality supply. Currently, JD Daojia has cooperated with over 380,000 offline physical stores, covering more than 2,000 counties, districts, and cities, providing hourly delivery services for all categories. However, Meituan and Ele.me start from small merchants and cooperate with key accounts (KAs), while JD Daojia starts from KAs in the opposite direction, using this to attract more small and medium-sized merchants to join. JD.com has made it clear that in its five-year action plan, it will help more than 2 million local small and medium-sized physical stores undergo digital transformation. Instant retail is a branch of long-term e-commerce competition, and this niche track is full of major players. JD.com is no stranger to the instant retail battlefield, though a few years ago it was the same-city retail war, in which Alibaba and Meituan also participated. At that time, Alibaba upgraded the Tmall Supermarket business group to the Same-City Retail Business Group. Even earlier than the same-city retail war, in 2018, Kuai Jiaqi, then founder and CEO of Dada-JD Daojia, was very certain that the era of 1-hour e-commerce had arrived, and that the retail industry would be dominated by 1-hour e-commerce in the future. At that time, Kuai Jiaqi analyzed the fundamental changes in cost structure and revenue models in the retail industry from five key factors: traffic, products, fulfillment, stores, and users. The core viewpoint was the change in personnel efficiency, store efficiency, and product efficiency. Five years later, the prediction of the 1-hour e-commerce era has come true. Old Players Instant retail has become Meituan's new strategic growth point, partly due to the pandemic, but also due to the need for business extension. In Meituan's first-half earnings report last year, the term 'Flash Purchase' appeared frequently 20 times, becoming the protagonist of the quarter's earnings, and the concept of instant retail was also strongly promoted and emphasized by Meituan. At the post-earnings conference call, Meituan CEO Wang Xing affirmed the Flash Purchase business. He said that in the past few years, Flash Purchase has reused Meituan's nationwide instant delivery network and has established its own core competitiveness. The long-term unit economics potential of Flash Purchase is similar to that of food delivery. Another major change in the quarter's earnings was that Meituan changed its performance report structure, placing 'Flash Purchase' in the 'core local commerce' segment. Ahead of it are Meituan's pillar businesses: food delivery and in-store, hotel, and travel. Previously, 'Flash Purchase' was included in the 'new businesses' that were loss-making for years, alongside Meituan Maicai and bike-sharing. Later, Meituan management mentioned Meituan Flash Purchase more than once in earnings conference calls, expressing confidence in the business's growth. Since then, Flash Purchase has become a star project within Meituan. In fact, this business is not new. In July 2018, Meituan established the Flash Purchase division, and Flash Purchase was launched as an independent brand, as a category extension supplement to the food delivery business. Wang Puzhong, Senior Vice President of Meituan and President of the Home Delivery Business Group, once recalled that when Meituan Flash Purchase was established in 2018, it was only to verify whether users in non-food areas still had a demand for purchasing goods within 30 minutes. At the end of 2020, Meituan's Home Delivery Business Group split the Flash Purchase division into three—Flash Purchase, Medicine, and Group Good Products became three independent business units, which some Meituan insiders called the 'Three Brothers of Home Delivery'. The Flash Purchase business was then handed over to Xiao Kun, who has been in charge until today. In the early days, Flash Purchase's business model mainly connected scattered stores, such as mom-and-pop shops. At that time, KA merchants still had abundant offline customer traffic and their own brand effects, so they were not highly dependent on online channels. LatePost once mentioned a set of data: in September 2021, Meituan Flash Purchase had already provided services to over 500,000 scattered stores. Today, the number of KA merchants on Meituan Flash Purchase exceeds that of scattered stores. This is opposite to JD.com's path from large stores to small stores. But in terms of product supply, Meituan Flash Purchase relies more on the lightning warehouses newly built since 2021, which to some extent has changed the stability of Meituan Flash Purchase's product supply side. Meituan's lightning warehouses adopt a front-warehouse model, where merchants sign up to join, with requirements on SKU quantity, and operate 24/7 on Meituan. It is worth noting that the warehouses are self-built by the merchants, and the Meituan platform provides the merchants with food delivery user scale and rider resources. The advantages of Meituan's lightning warehouses are obvious. Since they are not open offline, they acquire customers purely online, and the warehouse rental and labor costs are much lower than traditional convenience stores. According to industry research data from Tianfeng Securities in August 2022, replacing stores with warehouses breaks the SKU display limit of offline stores (lightning warehouse SKUs are 3,000-5,000, about twice that of convenience stores). A Meituan lightning warehouse partner merchant in Chifeng, Inner Mongolia, said, 'Opening a physical supermarket requires a street-facing store, and the annual rent for 260 square meters is 120,000 yuan; now opening an online convenience store doesn't need to be street-facing, and the annual rent for 500 square meters is only 50,000 yuan.' If it needs to operate 24 hours, the labor cost of a physical supermarket is also half higher than online. 'In the past, offline required 8 staff on shifts, but now online only needs 4 people.' 36Kr recently reported that the number of lightning warehouses has exceeded 5,000. In the instant retail track, Meituan has been steadily advancing with small steps, not only connecting small stores but also covering large KA merchants. From group buying to food delivery, and now to Flash Purchase, Meituan has finally found an opportunity to establish its position in the broader retail track. But Douyin, JD.com, and Alibaba are all formidable opponents that cannot be ignored. Meituan, skilled in warfare, needs a longer-lasting victory.