---
title: "Where Are the Opportunities in the Trillion-Yuan Instant Retail Market, and How Can Latecomer Merchants Dance with Wolves?"
description: "According to the 'Instant Retail Open Platform Model Research White Paper' released by the China Chain Store & Franchise Association, China's instant retail market is projected to reach 1.2 trillion yuan by 2025, with a compound annual growth rate of over 50%. What exactly is instant retail? Is this new concept just old wine in a new bottle or a genuine market opportunity? What are the reasons behind its rise, and where do the transformation opportunities lie for retail merchants?"
author: "李相如"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-11-01"
language: "en"
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# Where Are the Opportunities in the Trillion-Yuan Instant Retail Market, and How Can Latecomer Merchants Dance with Wolves?

> According to the 'Instant Retail Open Platform Model Research White Paper' released by the China Chain Store & Franchise Association, China's instant retail market is projected to reach 1.2 trillion yuan by 2025, with a compound annual growth rate of over 50%. What exactly is instant retail? Is this new concept just old wine in a new bottle or a genuine market opportunity? What are the reasons behind its rise, and where do the transformation opportunities lie for retail merchants?

According to the 'Instant Retail Open Platform Model Research White Paper' released by the China Chain Store & Franchise Association, China's instant retail market is projected to reach 1.2 trillion yuan by 2025, with a compound annual growth rate of over 50%. What exactly is instant retail? Is this new concept just old wine in a new bottle or a genuine market opportunity? What are the reasons behind its rise, and where do the transformation opportunities lie for retail merchants?

**01**
## **Multi-Dimensional Forces Drive the Instant Retail Market**

Simply put, instant retail is a new retail model that meets consumers' immediate consumption needs by leveraging resources such as physical supermarkets, convenience stores, chain stores, and brand stores to deliver products to consumers within one hour or even half an hour. Similar to food delivery, instant retail essentially exchanges consumers' purchasing power for riders' delivery services. However, unlike food delivery, **instant retail offers a wider range of categories, more diverse consumption choices, and stronger delivery timeliness.** The concept of instant delivery emerged as early as 2014, primarily serving food delivery needs. From 2015 to 2017, with the rapid development of e-commerce O2O, instant delivery services upgraded, expanding to fresh produce retail, errands, and other services, gradually improving the business scenario. After 2018, instant delivery entered a mature stage; order categories diversified, logistics companies responded to instant delivery business lines, and the industry entered a period of stable growth.

**From the demand side**, the development of instant retail is driven by the trend toward convenience and catalyzed by the home economy brought about by pandemic prevention. In recent years, the average household size in China has been shrinking and declining; rising household costs have pushed consumption toward socialization and convenience. In a five-person household, having the elderly use spare time to buy groceries and cook is commonly replaced by food delivery in urban three-person households. On the other hand, the number of elderly living alone with limited mobility is increasing, and population aging raises the demand for home delivery of medicines, health products, and daily necessities, especially for those in old residential areas without elevators. Most notably, pandemic prevention policies have promoted the development of the home economy, stay-at-home economy, and lazy economy, accelerating consumers' awareness and habit formation for home delivery platforms.

**From the supply side**, the sharp decline in offline store traffic due to pandemic prevention has forced offline stores to transform to online operations, pushing retail merchants to adopt digital technologies to reduce costs and improve efficiency. From a user value perspective, the convenience of 'fast' better meets the needs of young people in high-tier cities for fresh fruits, leisure retail, grain and oil, dairy products, and alcoholic beverages.

**02**
## **Three Strong Competitive Landscape, Distinct Brand Advantages**

The core competitive factors of instant delivery can be divided into three points: fulfillment and delivery capability, mind-share capture capability, and category linkage capability.

**(1) From the perspective of fulfillment and delivery capability**, delivery timeliness and cost become key competitive factors. Delivery cost is determined by platform order scale. According to relevant platform financial reports, Meituan Waimai first achieved profitability in Q2 2019, with an average daily order volume of 22.9 million and a delivery cost of 7.5 yuan per order. In contrast, JD Daojia and Dingdong Maicai have delivery costs of approximately 22.9 yuan and 18.8 yuan per order. In terms of delivery timeliness, the number and stability of riders determine delivery speed. Meituan Flash Shopping can reuse Meituan Waimai's 4 million riders, while Dada's total rider scale is only 630,000. JD Daojia lacks food delivery business support, and its riders are mostly crowdsourced, with stability far inferior to Meituan's full-time riders.

**(2) From the perspective of mind-share capture capability**, user scale and cognitive relevance are crucial. Meituan Flash Shopping, which reuses the super app Meituan, has significantly more users than newly built independent apps like JD Daojia and Dingdong Maicai. According to Questmobile data, in May 2022, the DAU of Meituan/JD/ele.me/Meituan Waimai/Dingdong Maicai/Hema/JD Daojia were 82.1 million/96.4 million/15.2 million/14.5 million/7.8 million/6 million/1.4 million/0.8 million, respectively. In terms of mind-share, Meituan's '30-minute delivery' speed accumulated in the food delivery field is stronger than JD's 'same-day/next-day delivery'. In terms of cognitive relevance, Meituan's cognition focuses on fresh produce categories related to 'eating', which is closer to the essential needs of instant delivery than JD Daojia's focus on 'home appliances'.

**(3) From the perspective of category linkage capability**, Meituan Flash Shopping and JD Daojia, due to their asset-light open platform models, can link a rich variety of categories, including vegetables and fruits, household daily necessities, medical and health products, flowers and plants, etc. However, the problem lies in less control over product quality compared to self-operated models. In contrast, brands like Hema Fresh, Dingdong Maicai, and Dingdang Kuaiyao adopt self-operated models. Since the linked categories are relatively single, they need to deepen their focus on niche areas, further polishing differentiated brand awareness, unique product supply, higher product quality, and faster picking speed to enhance user stickiness and service value.

In short, the platform model represented by Meituan and JD, due to its massive customer base and delivery network, as well as lower asset-light operating costs, has become the mainstream development model for instant retail, with greater development space and profitability. So far, the competitive landscape of instant retail has moved from the 'Seven Heroes' to the 'Three Strong' stage. The market share of Meituan, Alibaba, and JD may change from 40%, 32%, and 16% in 2021 to 60%, 24%, and 11% in 2025.

**1. Meituan: Flash Shopping Business Leads Significantly, with Obvious Competitive Advantages**

Because Meituan Flash Shopping reuses Meituan Waimai's riders and the brand asset of 'delivering anything fast', it has gained competitive advantages in fulfillment capability, mind-share capture, and user base. As of the end of 2021, Meituan Waimai had 200 million MTU and 440 million ATU. Currently, Meituan Flash Shopping has 200 million ATU, with significant room for penetration improvement. In terms of category linkage, Meituan Flash Shopping links more categories and covers more merchants. As of Q1 2022, Meituan had 9 million active merchants, of which Meituan Flash Shopping merchants numbered about 700,000, far exceeding competitors. In terms of merchant types, Meituan Flash Shopping not only has large supermarkets but also many convenience stores, mom-and-pop shops, and other small stores. These small stores deliver fresh and FMCG products faster (due to closer distance and quicker picking). Besides supermarkets and convenience stores, Meituan Flash Shopping also has merchants in medicine, flowers, cosmetics, etc., with advantages in categories with higher immediacy needs, such as medicine. Its Meituan Maicai business, though launched in early 2019, started later than Dingdong Maicai and Hema Fresh. In terms of coverage, Meituan Maicai focuses on four first-tier cities (Beijing, Shanghai, Guangzhou, Shenzhen), far less extensive than competitors. However, by leveraging Meituan's vast customer traffic and focusing on first-tier cities to reduce regional expansion costs, after the pandemic, its market share in first-tier cities has gradually increased, surpassing Dingdong Maicai in Beijing and Shenzhen.

**2. Alibaba: Reuses ele.me's Delivery Infrastructure but Lacks Unique Mind-Share**

The advantage of being the second-largest food delivery platform helps Alibaba's instant retail enter the top three. However, due to scattered business lines, coordination among Taobao, Tmall Supermarket, Taoxianda, ele.me, Lingshoutong, Hema Fresh, and Sun Art Retail is difficult. Local retail and same-city retail do not share delivery networks, resulting in no advantage in delivery capability or mind-share. Its Hema Fresh, despite strong product capability, high private brand ratio, and strong fresh supply chain, has limited self-owned delivery capacity, large store size leading to long picking times, and slower delivery than the front-warehouse model, making its competitive advantage in fresh produce not prominent. Sun Art Retail, although completing digital upgrades as early as 2019 and transforming offline stores to develop home delivery business, still faces significant market share impact and challenges as major hypermarkets like Walmart enter the instant retail industry.

**3. JD: Strong in Supermarket Market, Focusing on Home Appliances**

Due to JD's crowdsourcing model, its delivery capability is lower than Meituan's, and its mind-share for home appliances does not match well with the fresh and daily life categories of instant retail. However, from 2018 to 2021, JD Daojia's GMV compound growth was still as high as 80%, with average order value compound growth of 39% and order volume compound growth of 30%. For JD, instant retail is a sales position that cannot be lost, and it is also a deep exploration of omni-channel marketing. Therefore, on the day of iPhone 14's launch, when Meituan announced 'buy iPhone 14, fastest delivery in half an hour', its subsidiary Dada Logistics subsequently stated 'enjoy hour-level or even minute-level delivery upon ordering', and 'JD Daojia is the only instant retail platform to obtain Apple's pre-sale qualification'. At the same time, JD Daojia has established strategic cooperation with 80 of China's top 100 supermarkets, strategically invested in Walmart and Yonghui Superstores, and is actively transforming its cognition from 'home appliance mall' to 'life supermarket'. However, since large supermarkets tend to cooperate with multiple platforms, the 'life supermarket' cognition is being eroded by Meituan Flash Shopping. JD Daojia still needs to continuously deepen its moat in product supply and unique brand awareness.

**4. Dingdong Maicai: Strategic Contraction, Narrowing Losses**

Since August 2021, Dingdong Maicai's strategy has shifted from 'scale first' to 'efficiency first', improving profitability by exiting inefficient cities. According to the Dingdong Maicai app, its service cities have decreased from 36 to 28. However, tactical moves cannot achieve strategic breakthroughs. Compared to Meituan Maicai's focus on first-tier cities and Hema Fresh's strengthening of fresh supply chain control, Dingdong Maicai's core competitiveness still needs refinement.

**03**
## **ACE Evolution Winning Route**
## **Helping Regional Merchants Transform to Instant Retail**

The 'Instant Retail Open Platform Model Research White Paper' released by the China Chain Store & Franchise Association proposes the ACE winning evolution route to help regional and local merchants transform to instant retail. The ACE route includes Ability Instantiation, Creativity Instantiation, and Experience Instantiation, along with various management supports. Retail merchants and enterprises enter the introduction period, development period, and breakthrough period by consolidating basic capabilities, executing innovative practices, and shaping customer experiences. In each stage, they improve corresponding capabilities to complete the transformation.

The **introduction period** is mainly marked by achieving store onlineization, forming a closed loop of fulfillment and delivery between stores and consumers, initially forming instant retail introduction, and achieving a breakthrough from 0 to 1. The **development period** is mainly marked by focusing on omni-channel marketing and integrated warehouse-picking-delivery construction on the basis of the introduction period, forming store-warehouse integration, integrating instant retail with offline business for efficient operation, and promoting the leap from 1 to 10. The **breakthrough period** is mainly marked by focusing on business model innovation empowerment on the basis of the development period, including consumer service innovation, scenario innovation, and fulfillment innovation, achieving growth fission from 10 to 100.

Take China Resources Vanguard (CR Vanguard) as an example. Under new consumption trends, consumption scenarios are diversifying, and diversity brings accelerated demand differentiation, more dispersed touchpoints and channels. However, most physical supermarkets still rely mainly on online promotions, with overly simple content formats, leading to insufficient customer stickiness. Therefore, in the first stage, CR Vanguard scaled up all formats and stores online, partnering with JD Daojia to launch all formats on JD Daojia. In the second stage, it conducted refined product management and user operations, using intelligent tools to provide suggestions for product expansion and category structure optimization, improving management efficiency and implementing refined management. In the third stage, it deepened operational refinement to achieve omni-channel digitalization, further increasing operational differentiation and refinement, and completing omni-channel marketing. In 2020, store sales increased 2.2 times compared to 2019, with premium format sales increasing 5 times compared to 2019.

Walmart, in the direction of omni-channel retail, completed 100% store onlineization in the first stage, enhancing user shopping experience through efficient delivery. At the same time, it partnered with Dada Now to create industry-leading retail innovations such as front warehouses and in-store full-category picking areas, shortening picking paths and expanding coverage through warehouse-delivery integration. In the second stage, it provided refined services to consumers, precisely managing the needs of omni-channel customers, achieving rapid user growth. In the third stage, it accelerated omni-channel transformation, developed diversified high-quality channels, deeply linked online customer traffic with offline physical formats, and met multi-scenario and diversified needs; it partnered with JD Daojia to pioneer the 'live shopping with 1-hour delivery' business, opening new models of store operations, live marketing, and offline rapid delivery. Through instant retail transformation, Walmart achieved growth from the adversity of shrinking offline store business and reduced store-in-store rental merchants. During the 618 shopping festival in 2022, it became the champion of chain supermarket merchants on JD Daojia for six consecutive years, with sales on 618 day reaching 7 times that of 2021.

Not only is it beneficial for large regional shopping malls, but mom-and-pop convenience stores are also transforming to instant retail at the right time. The convenience and speed of instant retail also depend on the offline density of retail entities; the two complement each other. The higher the local instant retail supply density, the richer the instant retail formats, and the more opportunities for small retailers. Therefore, for many small retailers, transforming to instant retail first requires a change in mindset, from the past extensive 'sitting merchant' thinking to proactive 'walking merchant' thinking. By developing online business to expand service radius, from serving a certain community or street to striving to serve a certain business district or delivery radius, they can further enlarge the retail business pie. Then, they need to implement digital refined management, analyze customer data in surrounding communities or business districts, systematically sort out the purchasing preferences and product awareness of relevant customer groups, and shift from passive 'one-size-fits-all' to proactive recommended and adaptive marketing. Finally, they should timely combine store and warehouse, greatly improving offline delivery efficiency, while preparing products and innovating services for multiple scenarios, channels, and models, leveraging the instant retail trend to seize the profit growth point for the next decade.

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