POTENTIAL BREAKTHROUGHS IN INSTANT RETAIL

Some highlights from a recent article by instant retail expert Lao Zhang.

Yesterday I shared how the growth of instant retail in China has slowed from 50% to 12.6% in recent years. But there are several possible breakthroughs for the sector.

Product Categories: Currently, snacks, beverages, and fruits and vegetables still dominate the instant retail market, as they are low-priced items. However, 3C digital products are growing at an annual rate of 68.5%, and pharmaceuticals, pet supplies, and apparel are also on the rise. Meituan Instashopping's 3C and home appliance orders have already reached nearly 40% of jd.com's instant retail orders. If large-item orders can be successfully managed, the average order value and profit margins will completely change.

Technology: Unmanned delivery and smart warehousing—these things that sound like science fiction are actually being piloted. If fulfilment costs can be reduced, "30-minute delivery" will go from a luxury to the norm, and consumption frequency will increase to a new level.

Front-end warehouses: Sam's Club opened 13 stores this year, compared to just 5 or 6 in previous years. Hema achieved profitability for the whole year, and Xiaoxiang (Little Elephant) Supermarket restarted its offline operations. The accelerated expansion of these asset-heavy players shows that their models are working and they are not just burning money to tell a story.

And that "impossible triangle" that no one dares to talk about.

Instant retail faces an "impossible triangle": speed, low prices, and a comprehensive product range; you can only have two at most. To be fast, you need to set up front-end warehouses and employ delivery riders, which keeps costs high. To be low-priced, you need to squeeze profit margins, which merchants are unwilling to do. To have a comprehensive product range, the complexity of inventory and dispatching increases exponentially.

Taobao Instant Commerce promotes "accelerated delivery" and "free delivery for late orders," using algorithms to optimise rather than burning money; Meituan deploys a network of lightning warehouses to reduce costs through scale; JD integrates its instant delivery service to shorten the fulfilment chain. This is actually a good thing. The industry has shifted from "who burns the most money" to "who calculates the best," resulting in slower growth but a more solid foundation.

 Traditional e-commerce sells "cheap" and "abundant," while instant retail sells "certainty"—certainty that it will arrive in 30 minutes, certainty that there's no need to stock up, and certainty that there's a safety net in case of emergencies. This certainty is becoming increasingly valuable in a fast-paced society.

Accenture conducted a survey that found over 50% of Gen Z (those born after 1995) are willing to pay a premium for instant delivery. It's not because they're foolish or have too much money; it's because time has become the scarcest currency. Young people in county towns earning 3,000 yuan a month still place orders, not because they're busy, but because they're lazy and used to it.

Once a consumption habit is formed, it's hard to reverse. The drop in growth rate from 50% to 12.6% is jarring. But from another perspective, this is a rite of passage for the industry, a transition from "wild growth" to "meticulous cultivation." The bubble has burst, the business model has proven effective, and the users have remained.

Picture: one of JD’s 7Fresh front-end warehouses in Beijing.