---
title: "Traditional E-commerce Slows Down, Instant Retail Accelerates"
description: "Instant retail is rapidly capturing market share from traditional e-commerce, driven by the perfect match of supply and demand. With sustained high growth expected over the next five to ten years, instant retail is becoming a core engine for the FMCG industry."
author: "周群"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2025-07-24"
categories: "E-commerce & Instant Retail"
language: "en"
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citation: "周群. “Traditional E-commerce Slows Down, Instant Retail Accelerates.” New Distribution, 2025-07-24. https://xinjignxiao.com/en/articles/traditional-e-commerce-slows-down-instant-retail-accelerates-98ee6944/"
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---

# Traditional E-commerce Slows Down, Instant Retail Accelerates

> Instant retail is rapidly capturing market share from traditional e-commerce, driven by the perfect match of supply and demand. With sustained high growth expected over the next five to ten years, instant retail is becoming a core engine for the FMCG industry.

**Instant Retail's Disruption of Traditional E-commerce**
Recently, I spoke with the founder of a retail chain brand, who shared a viewpoint: **Instant retail will continue to see sustained high growth over the next five to ten years, and this is foreseeable.** "Open your phone and check—are you shopping on traditional e-commerce less and less?" he told me. I looked at my purchase records on Taobao and JD.com: Taobao had only a few orders, JD.com had more, mainly digital products, but compared to two years ago, orders had indeed decreased significantly. "Now open your food delivery app and filter for 'non-restaurant delivery and grocery' orders," he continued. Seeing the order count, I was truly surprised. Over the past year, I had over a hundred retail orders on two major instant retail platforms. Although the amounts were small, the frequency was very high. These orders included not only high-frequency FMCG items like beverages, snacks, and alcohol, but also long-tail items like phones, keyboards, and routers. "This is a fact happening right now: instant retail is rapidly cutting into traditional e-commerce's business. Instant retail's category penetration is very fast, expanding from traditional FMCG, fresh produce, and general merchandise to all categories, with supermarket categories essentially fully penetrated. In the past, long-tail categories were mostly purchased on traditional e-commerce. As instant retail's supply becomes vastly richer, market share will inevitably be redistributed."

**Traditional E-commerce's Midlife Crisis**
Over the past decade, traditional e-commerce platforms like Taobao, JD.com, and Pinduoduo have dominated the retail market with their advantages of "rich SKUs, low prices, and large-scale logistics," profoundly changing consumer habits and shifting consumers from offline to online. **Traditional e-commerce's core advantages:**
**1. SKU richness, covering the breadth of the 'long-tail market.'** Leveraging internet technology and platform-based operations, they expand product variety to levels offline retail cannot reach. In simple terms, it's an "infinite shelf." Consumers can find almost any product, from mass-market to niche, including long-tail items hard to find offline. This satisfies consumers' desire for "variety and choice freedom," making them prefer one-stop shopping on e-commerce platforms.
**2. Nationwide supply chain and logistics network, driving cost down through scale effects.** E-commerce platforms optimize product circulation efficiency and significantly reduce unit delivery costs through nationwide logistics networks and centralized warehousing. JD.com, as a representative self-operated e-commerce, has built its own logistics system to control the entire process from warehouse to consumer, offering relatively high delivery speed. Platform-based e-commerce like Taobao and Pinduoduo rely on third-party logistics networks to achieve nationwide delivery capabilities. Through large order volumes and centralized delivery, traditional e-commerce can spread costs over long-distance logistics, building a price advantage.
**3. Price-driven, low-price strategy to capture consumer mindshare.** E-commerce platforms connect directly with brands and suppliers, reducing intermediate links and further lowering prices. Intense competition among platforms has escalated price wars, and consumers, driven by price sensitivity, have gradually formed the impression that "e-commerce is cheaper." These advantages enabled traditional e-commerce to achieve exponential growth over the past decade. Although traditional e-commerce's business logic was once one of the industry's best solutions, its limitations are becoming apparent amid evolving consumer demands and market changes.

**Traditional E-commerce's Current Pain Points:**
**1. Weakness in high-frequency, low-ticket items.** Traditional e-commerce's logistics and warehousing are better suited for high-ticket, low-frequency items like appliances and clothing. For low-ticket, high-frequency items (e.g., snacks, beverages), traditional e-commerce faces high delivery costs and low profit margins. A distributor friend in traditional e-commerce told me that selling beverages on traditional e-commerce is basically zero-profit, just serving as a "drain" to meet manufacturer sales targets.
**2. Insufficient service capability for regional products.** Traditional e-commerce's SKU richness relies on nationwide uniform supply, but consumer needs often have distinct regional characteristics. With a nationwide supply chain at its core, it appears too rigid in responding to rapid changes in regional and local demands. For example, southern consumers may have higher demand for herbal tea and fresh fruit, while northern consumers prefer hot drinks or convenience foods.
**3. Long fulfillment times, failing to meet immediate needs.** Traditional e-commerce delivery typically takes 1-3 days, relying on cross-regional logistics networks. While it covers the national market, it has clear deficiencies in "last-mile" delivery efficiency. For planned purchases, like large items or non-daily goods, consumers can tolerate longer delivery times. But for high-frequency, immediate needs, such as beverages and fresh produce, consumers prefer models that offer "buy now, get now." Traditional e-commerce still holds an advantage in "planned consumption," but its shortcomings in fulfillment speed, high-frequency delivery capability, and regional services are exposed as consumer demand for immediacy and convenience surges. These pain points represent potential growth areas that traditional e-commerce could have captured, but with the emergence and iteration of instant retail, they have become entry points for instant retail to seize market share, fueling its rapid rise.

**Instant Retail's Certain Growth: Perfect Match of Supply and Demand**
In July 2022, the Ministry of Commerce's official website released the "2022 China Online Retail Market Development Report (First Half)", which first explicitly proposed the concept of "instant retail." However, the development of instant retail actually began with the emergence of food delivery in 2014.
**Phase 1 (2014-2018):** The industry was more commonly called O2O, with retail stores going online, such as KA and convenience stores joining platforms like Meituan and Ele.me.
**Phase 2 (2018-2020):** Fresh e-commerce rose, represented by Miss Fresh, Taocaicai, and Dingdong Maicai, focusing on fresh produce warehousing models.
**Phase 3 (2020-2023):** Various front-warehouse models, represented by flash warehouses, began to emerge, starting with supermarket-type flash warehouses and expanding to vertical category flash warehouses, such as beauty and pet supplies.
**Phase 4 (2023-present):** Category penetration. At this stage, supermarket categories have been fully penetrated, and expansion is gradually extending to all categories, including 3C digital, apparel, and general merchandise. For example, Xiaomi, Nike, Miniso, and HLA have started opening stores on instant retail platforms.
By the fourth phase, instant retail's growth remains certain. This can be examined from the demand and supply dimensions.
**First, demand.** According to data from the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, in its "Instant Retail Industry Development Report (2024)": In 2023, China's instant retail market reached 650 billion yuan, a year-on-year increase of 28.89%, accounting for 4.2% of online retail sales, 17.89 percentage points higher than the online retail growth rate, making it a new growth point for consumer spending. In 2023, the number of active instant retail users was approximately 580 million, a year-on-year increase of 34.88%, accounting for 53.11% of netizens.
**Total demand should be viewed from two dimensions: user numbers and user needs.** The number of instant retail users is already substantial, but it is still growing rapidly. A friend running a front warehouse told me that each year, new 18-year-old users are likely to become instant retail users. Simply put, the younger generation, starting from the post-90s, are heavy users of food delivery. For this generation, instant retail is equivalent to e-commerce. For their children, this mindset will be passed on, making instant retail the first choice for shopping.
**At the same time, users' needs on instant retail are multiplying, shifting from early emergency needs to a definitive lifestyle choice.** For example, I spoke with a flash warehouse merchant whose store had a female consumer who placed over 300 orders in 2024. This order volume indicates that the vast majority of her daily shopping needs were met through instant retail. This example may be a minority, but we should recognize a definitive change: consumers are gradually getting used to instant retail as the primary choice for daily product needs. Beyond daily basic needs, there is another variable: **new demand generated by scenario stimulation.** When I spoke with the head of instant retail at an FMCG brand, he mentioned that instant retail has a significant role in quickly capturing demand generated by scenario marketing. For example, this summer, ice cups became very popular. Brands ran "ice cup+" seeding campaigns on Xiaohongshu. When consumers saw it, they immediately wanted to try it. At that moment, whether going to a store or buying on traditional e-commerce, the time cost was too high; instant retail was the best choice. So, both in terms of user numbers and user demand, instant retail is continuously growing.
**Second, supply.** In the O2O era, product supply was relatively scarce, centered on bringing offline store inventory online. Platforms served merely as online traffic entrances, relying on offline store inventory, with limited SKU numbers and essentially no differentiated supply. Supply was constrained; users couldn't buy what they wanted, and what was available had high infrastructure cost premiums. Brands treated it as a supplement to offline retail channels, with no dedicated departments, just small teams. **This phase can be understood as: "I sell what I have."** But today, instant retail's supply has greatly enriched, and "everything to home" is gradually being realized. On one hand, the sustained high growth of instant retail has made all brands take this channel seriously, proactively co-creating with platforms to improve supply. In this process, mainstream supermarket categories have achieved full penetration, and even differentiated product offerings have emerged. On the other hand, user demand drives product supply, leading to the emergence of various vertical front warehouses. Instant retail's shortcomings in long-tail products are gradually being addressed, and "everything can be delivered" is becoming a reality as supply matures. **This phase can be understood as: "I provide whatever consumers want."**
**Another crucial point is that instant retail's core is local supply, which adds incremental value to local physical businesses.** Therefore, supply stability is also guaranteed.

**On one side is continuously growing demand; on the other, gradually enriching supply. The efficient match between the two brings about the certain growth of instant retail.**

**Final Thoughts**
Competition between new and old channels is natural; no one is necessarily the winner because China's market is large enough for various channels to survive, just in varying degrees.
The competition between instant retail and traditional e-commerce is not a simple substitution but a deep game around "time value" and "supply-demand scenarios." Instant retail is not a replacement for traditional e-commerce but an important supplement to the retail model. The relationship between the two will eventually evolve from "competition" to "symbiosis."

With the ongoing three-party food delivery war intensifying, the demand for "everything to home" continuing to surge, and post-pandemic consumer habits being deeply reshaped, the instant retail track is expanding at a remarkable pace, becoming a core engine for FMCG industry growth.

How can brands and distributors leverage local commercial flows and digital infrastructure to achieve counter-trend growth in a stock market? How can they efficiently integrate online and offline to seize new community consumption entry points?

In August, at the 2025 7th China FMCG Conference in Shanghai, themed "New Demand · New Supply," a dedicated forum on "Instant Retail Reconstructing the FMCG Offline Market" will focus on instant retail market trends, platform cooperation strategies, supply chain efficiency optimization, and new channel growth paths, exploring how FMCG can embrace instant retail for breakthrough and win-win outcomes.

At the conference, you can gain:
• Industry outlook: Instant retail experts will interpret strategic layouts and ecosystem opportunities.
• Brand case studies: Discover how China Resources and Okamoto embrace instant retail channels and build efficient instant retail operations.
• Full-chain insights: Brands, distributors, and local service providers will discuss supply chain efficiency and localized service upgrades.
• Strategy guidance: Share channel transformation trends and core growth strategy guides for FMCG in the instant retail environment.

Join us to explore the new opportunities and possibilities instant retail brings to the FMCG industry. See you in August!

🔺


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## Citation metadata

- Publisher: New Distribution
- Author: 周群
- Published: 2025-07-24
- Canonical: https://xinjignxiao.com/en/articles/traditional-e-commerce-slows-down-instant-retail-accelerates-98ee6944/
- Original source: https://mp.weixin.qq.com/s/Lerghh4ewHPc9dYSOwl9lw

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