Food delivery is no stranger to Chinese consumers. Today, the responsibility of food delivery platforms extends far beyond delivering three meals a day; more needs are emerging. Consumer Sheng Sheng is a representative of "buying everything with food delivery." She often uses food delivery apps to buy items from nearby large supermarkets, reasoning that supermarkets sit between e-commerce and small convenience stores—faster than e-commerce, cheaper than convenience stores. "Sometimes when I urgently need sanitary pads, I'll just have them delivered to my home." Sheng Sheng also buys items for her cat on a pet store's mini-program: "Sometimes when I run out of hairball remedy, and I see my cat vomiting hair in the morning, I need to give it to him right away, so I just order delivery." Instant demand is essentially a demand for "certainty." Such demand exists naturally and was especially evident during the pandemic. In the first half of this year, as outbreaks recurred in many places and express delivery was disrupted, consumers began using food delivery as a substitute for courier services, from food and drink to daily necessities, from beauty products to clothing. Instant retail is being accepted by more and more people. Connecting offline physical stores and delivering goods within 30 minutes via food delivery networks is a new retail format—instant retail. Industry insiders believe one difference between instant retail and traditional retail is that instant retail is driven by consumer demand. At the same time, for the first time, instant retail truly integrates the advantages of online and offline, rather than the previous simple substitution of online for offline. Feeding online traffic back to offline retail entities and keeping profits local is the greatest value of instant retail. The shift in the online-offline competitive relationship reflects the evolution of the entire retail industry. Driving the real economy, promoting employment, and providing convenience services—what other stories can instant retail tell? 01 Starting from Instant Demand: Fast, Urgent, and Homebound How important is food delivery in your life? On this topic, consumer An Xin from Beijing recently had a deep experience. "I rarely cook at home; I usually order food delivery. I've become accustomed to it; it feels like part of my life." But recently, due to home quarantine during the pandemic, her demand for food delivery expanded from meals to daily necessities and other household items. The biggest reason was that during the pandemic, express logistics were blocked, so using food delivery as a courier became the norm for An Xin. It was also during this time that she understood that the pursuit of "speed" is essentially a demand for "certainty," because receiving the goods is the beginning of all consumption. Besides speed, doorstep delivery is also a value of food delivery. "A while ago, the community didn't allow delivery riders inside, so all packages were placed on a shelf at the gate." Also due to pandemic prevention, An Xin said this was for safety, but she indeed felt that having to walk several hundred meters to pick up her order affected her mood. Delivery within 30 minutes and to the door solves most instant needs and provides the best online shopping experience. It's not necessarily about three meals a day; young people prefer to stay home and receive supermarket daily necessities, convenience store snacks, or even urgently needed cosmetics. Similarly, it's not only young people who need it; the elderly with mobility issues, parents with young children—any group can benefit from the convenience instant retail brings to life. Sheng Sheng told Shenran that she once went on a business trip to Beijing and only realized at the hotel that she hadn't brought facial cleanser or pajamas. It was already past 10 p.m. She opened Meituan and searched, finding that many stores could still deliver pajamas that night, mostly from department stores or convenience stores. "It was past 10 p.m. and I could still buy pajamas—amazing." Sheng Sheng said the pajamas she bought were pure cotton, cost 98 yuan a set, didn't look bad, and she still wears them. Accenture's report "Focusing on China's Post-95s Consumer Group" mentions that the post-95s generation places more emphasis on delivery speed: over 50% hope to receive goods on the same day or even within half a day, and 7% want to receive goods within 2 hours of placing an order. Xiao Qi from Beijing recently wanted to buy a yoga mat. After doing some research, she liked a Decathlon model. "I found that Decathlon's flagship store has same-city delivery. The same product is available with normal e-commerce express delivery or same-day delivery, which costs an extra 4 yuan." However, Xiao Qi also noticed that if she ordered in the afternoon, same-day delivery would only arrive in the evening. "I wondered if I could get it faster, so I had a brainwave and searched for yoga mats on a food delivery platform. I found many nearby stores that could deliver within 30 minutes, with even more brands." Consumer demand is forcing platforms to change. From consumers only needing food delivery for meals to needing delivery for everything, there are both "constant" and "changing" aspects of demand. The constant is that consumers still need 30-minute delivery and doorstep service. For example, netizens recently discussed on social platforms that in summer, many people order mosquito repellent products late at night. With e-commerce express, the fastest is next-day delivery. But consumers ordering late at night truly want to use the product within half an hour and continue sleeping well. Therefore, the speed and doorstep delivery of food delivery can meet consumers' instant needs in this scenario. Meituan data also shows that in early June, weekly sales of mosquito coils increased 112% compared to the same period in May, and mosquito repellent liquid increased 95%. The change lies in the expansion of categories. As mentioned in the data above, not only mosquito repellent products but also fruits, catering, daily necessities, medicine, and even clothing—over the past two or three months, consumers nationwide have significantly increased demand for 30-minute delivery of various goods. Amid the constant and the changing, food delivery has transformed into "ordering everything," and instant retail is gradually entering more consumers' lives. 02 Ordering Everything: Demand Upgrade, Partnering with Physical Stores For instant retail, China Merchants Securities research report gave a complete definition: it is a high-timeliness home consumption format based on an instant delivery system. Its key feature is that it generally seeks supply within a 5-kilometer radius of the consumer, meeting consumers' urgent and immediate consumption needs, with delivery typically controlled within 1 hour. We can simply understand instant retail as using the advantages of food delivery to deliver everything, supported by "instant delivery and local supply" to solve consumers' instant needs. There are four important endpoints. First, the supply side. To fulfill instant needs, the supply side cannot be too far away. The 5-kilometer radius mentioned in the report is a reasonable distance to ensure delivery within 30 minutes to 1 hour. Therefore, the value of local supply is highlighted. Local supply often includes large supermarkets such as Walmart, Carrefour, China Resources Vanguard, and brand chains like Muji, Xiaomi, Watsons, and other offline physical retail formats, as well as convenience stores like 7-Eleven and Bianlifeng, small department stores, individual merchants, and also local warehouses such as flash warehouses and front warehouses. Second, the fulfillment side. Having goods within 5 kilometers requires efficient and sufficient delivery capacity. This necessitates the role of network riders and other delivery personnel. With technological development, more intelligent delivery hardware such as drones and autonomous delivery vehicles will be put into use in the future, continuously expanding the application scenarios and efficiency of instant retail. Third, the platform side. Platforms and fulfillment parties often cooperate. Platforms like Meituan provide information and, through intelligent dispatch mechanisms, assign instant retail orders to nearby riders, ensuring delivery within 5 kilometers in 30 minutes to 1 hour. Fourth, the C-end consumer. In the closed loop of instant retail, consumer demand is the start, and receiving goods is the end. The efficient cooperation of the above three parties ensures timeliness and helps consumers become more accustomed to this format, so they can continue to make demands in the future, forming a virtuous cycle. It is worth mentioning that the pandemic has catalyzed the development of instant retail. In April, as outbreaks recurred in many places, some consumer habits changed. People preferred to buy needed goods from nearby physical stores and expected fast delivery like food delivery. "Using food delivery as courier" became common. On the other hand, during periods of repeated outbreaks, even if the convenience store is downstairs, consumers cannot go in person, so they need instant retail's doorstep delivery service. Even without pandemic restrictions, instant retail saves consumers enormous time costs, and with reasonable prices and free delivery, it brings more comfort. Local supply is key to instant retail, and offline physical retailers were the first to sense the opportunity. In May, Yan Qian, the new chairman of 7-Eleven China, announced that the company would focus on instant retail strategies such as food delivery in the future. Supermarkets like Yonghui, Carrefour, and China Resources Vanguard, as well as brand chains like Sephora and Jenny Lou's, have also expressed intentions to expand online transaction scale. Similarly, platform companies are also making efforts in instant retail. Comprehensive retail platforms such as Meituan, JD.com, and Alibaba are all involved. Based on market results and industry analysis, it is generally believed that Meituan and JD.com are doing relatively well. Their years of heavy investment in local supply and fulfillment have formed long-term competitive and developmental advantages. A rider picking up goods at a convenience store Starting from consumers' instant needs, physical retailers have successively made efforts, platforms have taken over, and instant retail has truly integrated online and offline. iiMedia Consulting predicts that by 2025, the industry scale of instant retail will be about 1.2 trillion yuan, with a penetration rate of about 7.8% of China's total retail sales of consumer goods, and a compound annual growth rate of 56%. Zheshang Securities also predicts that instant retail has a potential penetration space of 4 trillion yuan, and instant retail channels will account for one-fifth of residents' daily consumption. It can be seen that instant retail is not simply a variant of food delivery, but a new retail format that is developing and maturing, requiring the joint participation of offline physical stores and online platforms. The new story it brings to the retail industry is just beginning. 03 How to Tell the New Story of Instant Retail? In 1996, Walmart entered China and opened its first Walmart Supercenter and Sam's Club in Shenzhen. Modern retail concepts such as retail scenario iteration and refined retail management began to grow in China, promoting the development of modern retail formats. After the rapid development of the internet, offline physical retail was impacted. E-commerce online stores directly replaced offline physical stores, gradually taking away market share. With lower prices and more services, consumers shifted their focus online, while also forcing offline stores to open online channels. In this development process, online and offline were often antagonistic, with online eroding and replacing offline. Before the e-commerce era, offline retail was the mainstream, with production and consumption locations unified. After e-commerce retail developed, production and consumption locations separated, with more cross-regional supply and consumption. C-end delivery was slow, and offline business was partially taken away. Now, with upgraded C-end demand, the relationship between online and offline has changed. Online platforms no longer attack offline relentlessly, and offline no longer fears online. The instant retail format of local supply + local consumption + instant delivery has formed, bringing production and consumption locations back together, and integrating the strengths of both. That is, from this stage, instant retail connects online and offline, shifting from "competition" to "mutual assistance." Zhuang Shuai, founder of Bailian Consulting, told Shenran that the rise of instant retail represents China's retail entering a stage of stock growth and seeking new increments. Offline retailers, distributors, agents, and some new brands, as well as online platforms with same-city delivery services, and consumers will all benefit. From the perspective of local supply in instant retail, offline physical stores are the biggest beneficiaries. Simply put, the instant delivery system of instant retail expands the service radius of stores from the original 1 kilometer to 5 kilometers. Supermarkets, chains, KA, and other local physical formats can obtain more orders. Online traffic feeds back to offline, and profits stay entirely local. In addition, the construction of warehousing capacity in instant retail will also cultivate more physical formats, including front warehouses, flash warehouses, and regional logistics. Meituan data shows that from January to May, online order value for various physical retail stores such as supermarkets and department stores increased by 70%, and community department stores saw a year-on-year increase of about 45% in the first half of June. Zhou Yu runs a budget department store in Tongzhou District, Beijing. During the pandemic, the store was not affected but instead reached its business peak thanks to instant retail. In May, the worst month of the pandemic in Beijing, the store's online orders increased by more than 3,000, and online revenue exceeded 500,000 yuan, up 50% from April. "Most were daily necessities for nearby residents, with a particularly high repurchase rate." There are also examples from brands. After Muji joined Meituan, order volume reached 68 times that of the first day within a week, and the highest single-store performance growth was nearly 25%. The development of instant retail will also make the real economy more actively embrace online, "because what online brings to offline is no longer a zero-sum grab, but a gain." Convenience, driving the real economy, increasing employment... The benefits are obvious. So, what should platform companies do? In the instant retail format, the first core capability tested is fulfillment capability, reflected in the scale and cost of same-city fulfillment. The second is user scale. If user scale is insufficient, fulfillment costs will be too high. The third is the ability to organize and manage offline physical formats, i.e., ground expansion capability. The fourth is platform construction and management capability. Currently, platform companies like Meituan, JD.com, and Alibaba all possess these capabilities. Among them, Meituan has accumulated experience in local life services and has a first-mover advantage in instant retail. In terms of user scale, Meituan has 700 million active consumers, with core users concentrated in first- and second-tier cities. In terms of fulfillment capability, the instant delivery network Meituan has built over the years can take on the task. In terms of ground expansion, Meituan, which started by connecting online and offline, is better able to open up new paths. Instant demand, local supply, and instant fulfillment—for platform companies, the essence is to have sufficient capabilities to meet the three core elements of instant retail, and Meituan happens to possess all these elements simultaneously. In fact, the prosperity of local physical retail determines the ceiling of instant retail. Instant retail is based on local supply, providing a new opportunity for local producers and local brands. This has been initially verified in overseas markets: on Amazon Fresh shelves, the proportion of local liquor brands is not only much higher than on traditional e-commerce shelves, but also higher than in large chain supermarkets. This is why local offline physical retailers are the biggest beneficiaries of instant retail. Instant retail is a long-term, hard business. But the thicker the foundation, the longer the explosion cycle. The growth rate and magnitude of instant retail may not be as fast as pure online platforms, but the construction of offline space, innovation and upgrading of formats, and the establishment of product end will make the moat of instant retail higher and higher. The story of physical retail has reached the chapter of instant retail. How to tell it well and make it more substantial in the future requires joint efforts from both online and offline. The new story is already on its way. *Title image from Pexels. At the request of interviewees, An Xin, Sheng Sheng, and Xiao Qi are pseudonyms. Source: Shenran (ID: shenrancaijing), Author: Zou Shuai.