STATUS OF CHINA’S INSTANT RETAIL BATTLE - PART 2: WHAT DOES ALIBABA PLAN NOW?

First, check out part 1: substack.com/@techbuzzc…

Then, let's examine where Alibaba plans to take this battle …

▶️ Currently, Alibaba's work focuses on two areas: in food delivery, increasing the AOV to RMB 30, reducing losses per order, stabilizing order volume, and continuously bringing traffic to Taobao; in instant retail, improving the supply chain, including building their own platform city warehouses, partnering with high-quality lightning warehouses, and attracting as many brand merchants as possible.

▶️ The 2nd phase of Alibaba’s strategy is to sell non-food retail goods through its courier delivery system. Taobao Instant Commerce has added 600K offline pharmacies, 15K lightning warehouses (independent dark stores), 37K brand stores and Alibaba’s own Hema and Tmall Supermarket. Alibaba expects instant retail to bring RMB 1 trillion of incremental GMV over the next three years.

▶️ As an example of brand cooperations, customers can now select ‘instant commerce’ on the product pages of Uniqlo’s Tmall store to have them picked, packed and delivered from a store in half an hour.

▶️ Products with instant delivery are still limited, and the experience is far from perfect. Various brands report that instant retail is still a small part of their current sales (single digits), but it is the fastest-growing channel. Alibaba has begun piloting the establishment of front-end warehouses in select cities to attract brands that lack sufficient offline stores.

▶️ Taotian (Taobao + Tmall) now offers merchants the fulfilment solutions in the image below. To achieve a 4-hour delivery time, at least one warehouse is needed in each city, which would require between 200 and 300 warehouses nationwide. At 30 30-minute delivery time, this would require tens of thousands of warehouses.

▶️ Alibaba recently launched Taobao Convenience Store, recruiting leading integrated lightning warehouse merchants. It is expected that 2,000 warehouse stores will be opened by the end of next year. In the future, brands can quickly increase their inventory and place it in Taobao Instant Commerce's central warehouse. The platform will then distribute it to these lightning warehouses scattered throughout the country.

▶️ Meanwhile, Meituan firmly adheres to its 30-minute instant delivery model. An industry insider close to Meituan stated, "Either deliver in 30 minutes or wait several days for the package. These intermediate options, like 4 hours or half a day, are pseudo-demands and pseudo-innovations."

Source: Latepost