The instant retail market is ushering in a giant melee. Alibaba, Meituan and JD.com have increased subsidies in an attempt to occupy a place in the trillion-dollar market. However, subsidies are only superficial, and ecology is the key to the future. This article will provide an in-depth analysis of the strategic layout, competitive logic and future development direction of the three giants in the field of instant retail, and explore the core competitiveness and potential win-win situation behind this “Three Kingdoms”.
After more than three months of “fierce battle”, the “war” of instant retail has not been extinguished, but has become more and more prosperous. Alibaba and Meituan have successively increased their weight, directly raising the takeaway subsidy war to a new height.
On the first day of the single rush, the marketing team of Taobao Tmall came up with a budget and battle comparable to Double 11, and painted the opening screen of major applications orange, and finally won more than 80 million orders.
After reacting, Meituan also quickly followed up with the increase, relaxed the restrictions and full subsidies, and did its best to follow up the subsidy war of Taobao flash sales, and all kinds of coupons were issued at the same time, and even prepared a lot of free coupons for decentralized users to limit consumers to pick up. According to the official “battle report” released by Meituan, before 11 o’clock that night, all takeaway orders on the platform exceeded 120 million.
If you add JD.com’s takeaway, which fired the first shot of this round of takeaway war, it is conservatively estimated that the single-day order volume of the entire Chinese takeaway market has soared to 220 million.
From the outside to the inside, looking closely behind this takeaway war, we can actually gain insight into the “drunkard’s meaning” of the platforms lies in instant retail. However, in this major change in online retail, Meituan, Taobao and JD.com want to achieve their own results, but the path to achieve them is surprisingly consistent.
01 The logic of the three “melees” is different
The 100 billion scale war started by instant retail is just the beginning, and various platforms will invest more resources in the future.
Alibaba announced that it will invest 50 billion yuan in the next 12 months to rush orders every Saturday; Meituan subsidized 30 billion yuan last year and is expected to increase by 10 billion to 20 billion yuan this year; JD.com launched the “Double Hundred Plan” and invested more than 10 billion yuan to support merchants.
In fact, behind the investment of real money, it is not that they want to compete in the takeaway market.
The first is Alibaba, as the largest Internet business among the three, its core goal is to expand instant retail through takeaway and transform the Taobao ecosystem.
To achieve these three challenges, product managers will only continue to appreciate
Good product managers are very scarce, and product managers who understand users, business, and data are still in demand when they go out of the Internet. On the contrary, if you only do simple communication, inefficient execution, and shallow thinking, I am afraid that you will not be able to go through the torrent of the next 3-5 years.
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In the past few years, Alibaba’s biggest problem is that the growth rate of e-commerce main line business is very limited (less than 10% year-on-year), while the growth rate of instant retail is more than 20%. Although the AI business began to increase at the beginning of the year, it is still too early to talk about the return on capital given the current maturity of the AI industry.
The basic business is facing the risk of stalling, and the innovative business is still in its infancy, and Alibaba urgently needs a growth campaign with tangible results from top to bottom to maintain the confidence expectations of the capital market and the cohesion of internal organizations. Instant retail happens to be the most reasonable anchor point for this.
Alibaba hopes to transform users from “shopping on Taobao several times a month” to “weekly multi-order takeaway” through the high-frequency demand of the takeaway business, such as daily ordering, and drive non-catering consumption. According to Taobao flash sale data, on July 5, orders for grain, oil, mother and infant and other categories increased by more than 100% year-on-year, and non-catering orders were 13 million, a sixfold increase from last year.
▲Photo/Screenshot of Taobao flash sale page
In addition, Meituan is reported to be building a “retail version of Taobao” (flash sales cover multiple categories), but the richness of products (especially high-margin categories such as fresh food and mother and baby) has not yet been perfected. Alibaba’s move at this time is intended to weaken its expansion foundation, forcing Meituan and JD.com to continue to invest in subsidies and consume the cash flow of their opponents.
From Alibaba’s point of view, the core reason for vigorously increasing instant retail is to prevent opponents from “sneak attacking” while growing. To a certain extent, Meituan’s layout in instant retail is the fruit of natural growth of the takeaway business.
As early as 2018, Meituan set up a flash sale division to try to solve consumers’ temporary procurement needs. In 2022, Meituan began to promote “lightning warehouses” on a large scale, and 30,000 have been built by 2024. With a capacity moat of 7 million riders and a mature distribution system, Meituan shouted the slogan of “everything is home in 30 minutes”, and the average daily order volume of flash sales has exceeded 12 million.
It is worth mentioning that Meituan’s Little Elephant Supermarket is not only a representative of its self-operated retail, but also a “pioneer” in its involvement in traditional e-commerce retail categories from catering.
For Meituan, instant retail is not only an extension of its business, but also a key role in consolidating the moat of local life services. The high penetration rate of catering takeaway makes Meituan have to find new growth points, and instant retail just undertakes high-frequency consumption scenarios outside of catering: fresh food, alcohol, medicine, flowers, and even temporary needs such as grain, oil, rice and noodles, frozen food, home cleaning, mother and baby, personal care, etc.
At present, Meituan’s flash sale business has accounted for 15% of the overall GMV, covering multiple categories such as supermarkets, convenience, and digital home appliances. In other words, Meituan doesn’t just want to do takeaway, it wants to do more.
Although JD.com’s entry into instant retail is late, its competitiveness should not be underestimated with its own warehousing, logistics system and other infrastructure advantages. And JD.com’s logic of takeaway is also different from Meituan and Alibaba, mainly to serve the fresh supply chain. Liu Qiangdong also made it clear in his speech: “Selling meals at the front end can never make money, I just need to make money through the supply chain.” ”
In fact, JD.com will be officially launched in 2023, when it integrated the hourly delivery and JD home business, and the delivery time was shortened from one hour to half an hour, and the fastest can reach 9 minutes, which is also the confidence of JD.com to do takeaway. Based on its self-operated genes, it strengthens the competitiveness of high-frequency categories such as catering, fresh food, and FMCG, opens up the full-link fulfillment system of local life, including wine and tourism, and enhances the user experience of the platform. Behind this is Liu Qiangdong’s great importance and self-confidence in the “hard power of the supply chain”.
Coincidentally, although the purpose and logic of Alibaba, Meituan, and JD.com to “attack” instant retail are different, for now, the style of play is similar to that of heroes.
02 One road leads to three ends
Judging from the current actions of the three companies, the means of each company are very simple and crude, that is, they rely on a large number of subsidies, and they all start at the level of tens of billions.
The effect of this is also very direct, with consumers enjoying benefits, merchants exploding orders, takeaway brothers making big profits, and platform GMV also rising, forming a seemingly win-win situation.
However, the core value of instant retail lies in “high frequency”, and takeaway, fresh food, daily necessities and other categories are almost the categories that users have to consume every week or even every day, which is the core source of traffic. High-frequency consumption scenarios (such as milk tea and fast food) can cultivate user habits and dependence, and ultimately precipitate traffic as platform entry value.
In addition, subsidies directly impact users’ price-sensitive points. For example, JD.com’s takeaway of 1.68 yuan of milk tea coffee, Meituan and Ele.me issued large no-threshold coupons, this kind of “ultra-low price” strategy has triggered fission spread on social media, forming a “national wool” effect, and quickly increasing platform exposure.
▲Photo/JD Takeaway
Of course, subsidies are not only aimed at consumers, but also extend to merchants and distribution ends, forming an ecological closed loop of “tripartite binding”: the platform attracts high-quality merchants to settle in through commission-free, traffic support, explosive product operation and other measures, this subsidy strategy helps merchants increase order volume in the short term, and in the long run, it enhances merchants’ dependence through data empowerment (such as intelligent product selection and inventory management) to form exclusive cooperation.
As for the capacity side represented by riders, subsidies are also the core means of competing for distribution resources. JD.com has played a clear card of paying five insurances and one housing fund for full-time riders, while Meituan and Taobao flash sale have reduced the rider’s empty running rate through high order density and a dynamic pricing mechanism to consolidate the advantages of the distribution network. This combination of “subsidy + guarantee” not only improves the quality of service, but also forms a barrier to rider migration.
In fact, when it is difficult for platforms to form significant differences in categories, timeliness, and services, subsidies have to become the most direct competitive weapon. This logic of “burning money for the market” is essentially to quickly establish user scale barriers through capital advantages and compress the living space of competitors. Similarly, high investment also means that this is a long-lasting liquidity confrontation.
Moreover, there is a consensus in the industry: subsidies will develop users’ “nomadic” consumption habits, and when the platform stops subsidies, user retention may plummet. Therefore, in the short term, price war is the simplest, most direct and fastest and most effective way to increase platform traffic, but in the long run, homogeneous low-price subsidies may lead to the compression of merchants’ profits and the increase in food safety risks, which will bring negative feedback to the platform.
Burning subsidies are essentially the “ticket” of Internet platforms in the instant retail track, and their core goal is to exchange short-term investment for long-term users, merchants, and rider resources. Despite profit pressure and user retention challenges, it is still the most effective means of competition in the context of uncertain market pattern and sufficient capital support.
However, in the future, when the industry will shift from “price war” to “efficiency war” and “quality war”, there will also be a chance to have a win-win situation.
03 The future may be a win-win situation
As early as around 2016, the founders of the three companies frequently expressed their opinions on the instant retail market.
Alibaba’s Jack Ma proposed the concept of “new retail” at the Yunqi Conference in 2016, believing that in the next ten or twenty years, there will be no e-commerce, only “new retail”. It was also in this year that the first Hema Fresh in China opened in Jinqiao, Shanghai, focusing on instant delivery.
A year later, Liu Qiangdong of JD.com proposed the “unbounded retail” model, “In the next 10 to 20 years, the combination of consumption and technology will bring changes in retail infrastructure, which will trigger the fourth retail revolution and bring us into the era of ‘unbounded retail’.” ”
▲Photo/Financial Magazine
In the same year, Meituan opened the “Food+Platform” architecture and entered the “borderless” expansion stage, in addition to takeaway and group buying, it continued to enter online car-hailing, bicycle sharing, global homestays, intra-city delivery, offline new retail and other businesses. Meituan’s concept of “big retail” is based on instant retail, and by integrating multi-scenario and full-category retail services, it builds a “everything to home” ecosystem that covers daily consumer needs.
In fact, the strategic goals set by the three platforms nearly ten years ago have already doomed the current situation of “killing red eyes” in the instant retail market.
In the view of “New Entropy”, the three companies are not going to fight to the death, and they can also achieve a win-win situation by formulating different strategic goals. For example, if consumers shift from “emergency demand” to “full scenario and full category” demand, the platform can differentiate vertically in categories, Meituan holds the high-frequency demand cake of catering, and Alibaba digs into high-margin categories such as fresh food and mother and baby; JD.com gives full play to its advantages and focuses on instant delivery of high-customer unit prices such as 3C digital.
Of course, in the short term, both Alibaba and JD.com need a long-lost victory, and Meituan wants to take the opportunity to consolidate the moat. However, there is neither a shortcut nor a magic weapon for quick victory in this battle, and the competition in instant retail in the future will go beyond a simple “subsidy war”, but a comprehensive contest of supply chain efficiency, data capabilities, and user minds. It tests the platform’s patience, determination and ability to really do hard work and tiring work.
If instant retail wants to achieve a win-win rather than a zero-sum game, it needs to achieve value increment through differentiated positioning, ecological collaboration and technological innovation. If Meituan, Alibaba, and JD.com can find a balance between high frequency and low frequency, quality and low price, online and offline, and protect the interests of merchants, riders and consumers, it is entirely possible to form a pattern of “each has its own beauty, beauty and beauty”. As pointed out in the report of the Ministry of Commerce, the future of instant retail lies in “balancing the interests of platforms, merchants and consumers”, which requires giants to shift from “subsidy wars” to “value co-creation” and open up a sustainable growth path in the trillion-dollar market.
Resources:
Wang Zhiyuan, “Meituan Alibaba Begins to Bet on the Future”
Jinjin, “What is the difference between this round of “instant retail war”? 》
Spirit Beast, “Fighting Instant Retail: Why Are the Giants Pouring In?” 》
Sina Finance, “Why did Alibaba Meituan suddenly increase instant retail? 》
Later, “Exclusive丨Takeaway Melee Escalation: Taobao Invests Resources on Double 11, Meituan’s First Comprehensive Counterattack”
