After the 618 promotion, the two giants Meituan and Alibaba quickly adjusted their layouts, and Meituan fully focused on instant retail and accelerated the expansion of categories and overseas markets; Alibaba has integrated Ele.me and Fliggy into the e-commerce business group in an attempt to strengthen the synergy between instant retail and e-commerce business. JD.com, Pinduoduo, etc. have also increased their weight, trying to get a piece of this fast-growing market. This article will provide an in-depth analysis of Meituan and Alibaba’s strategic shift in the field of instant retail, explore how Meituan can consolidate its advantages with focused resources, and how e-commerce giants are looking for new growth points in this emerging market.
If there is a consensus that Chinese Internet companies have reached for the future, one is AI and the other is instant retail. The former is still in the stage of technology exploration and verification, while the latter has made traditional e-commerce companies feel a real threat – at least three of China’s top five e-commerce companies have entered instant retail.
The adjustment continues. On the first working day after the end of the longest 618 promotion in history and the first e-commerce promotion in which instant retail participated, Meituan and Alibaba announced an increase in instant retail business at the same time.
As the number one player in the instant retail track, Meituan’s external caliber is to “comprehensively expand instant retail”, including comprehensively expanding flash sale categories, vigorously increasing the size of Little Elephant Supermarket, Meituan’s preferred transformation and upgrading, and actively exploring overseas markets. Meituan began to focus its resources on the instant retail field, trying to take the initiative while maintaining its original leading edge.
Alibaba also announced business adjustments on the same day, and Ele.me and Fliggy, which originally belonged to the local life sector, were merged into Alibaba’s China e-commerce business group, trying to strengthen the synergy between instant retail and e-commerce business.
In addition to the adjustment of Meituan and Alibaba, JD.com has also increased its investment in the instant retail track by laying out takeaways, wine and tourism, etc., and JD.com’s priority in the group has been continuously improved. Even Pinduoduo has reported the news of laying out instant retail.
No one will doubt the future of instant retail anymore. E-commerce platforms have abandoned their previous swaying and skepticism, and have invested in a market that they are not unfamiliar with but have never firmly invested in.
But it’s no longer an uncultivated wasteland, and Meituan is launching a new round of charges with a more mature business and a more focused strategy – the initiative is still in its hands.
The collective turn of express e-commerce companies
Even though Alibaba has made frequent moves around the field of instant retail in the past two months, it is JD.com that has felt the threat of instant retail earlier than Alibaba.
JD.com is a representative of the ultimate efficiency improvement in traditional express e-commerce. It is the first e-commerce platform in the industry to build its own logistics system, shorten the delivery time of express e-commerce to the next day, and shout “211 time-limited delivery”. Consumers in some first- and second-tier cities place orders before 11 a.m. on the same day and can receive the goods within the same day. Alibaba once followed up this policy in Tmall Supermarket, at the cost of allowing Cainiao to intervene more and more deeply in the logistics link.
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However, in the face of instant retail delivery time of only 30 minutes, the evaluation standards that these express e-commerce companies are proud of have expired. Once consumers begin to get used to the half-hour home delivery shopping experience, it is difficult to endure even express delivery that has achieved same-day delivery – even if this is already the limit of express delivery e-commerce.
This is also illustrated by the difference in growth between the instant retail market and e-commerce platforms over the past few years. The “Instant Retail Industry Development Report (2024)” released by the Research Institute of the Ministry of Commerce in October last year pointed out that in 2023, our country’s instant retail scale will reach 650 billion yuan, a year-on-year increase of 28.89%, which is 17.89 percentage points higher than the growth rate of online retail in the same period. The report predicts that our country’s instant retail will continue to grow in the next few years, and is expected to exceed 2 trillion yuan in 2030.
Instant Retail Industry Development Report (2024)
The same is true for the 618 promotion that just passed. According to Star Map data, the total sales of 618 comprehensive e-commerce this year increased by 15.2% year-on-year, while the instant retail sales of 618 for the first time increased by 18.7% year-on-year. This is still in the case that most of the current market is more concentrated in Meituan flash sale.
Star Map Data Report
Meituan’s flash sale, which participated in the 618 e-commerce promotion for the first time, reaped growth beyond expectations. During this year’s 618 period, more than 100 million users placed orders on Meituan flash sales, especially the overall turnover of more than 20 high-priced products such as mobile phones, liquor, and large and small home appliances increased by 2 times, the turnover of more than 60 products doubled, and the turnover of nearly 850 brands doubled.
Perhaps it was after the baptism of 618 by instant retail that Alibaba decided to integrate its instant retail business immediately after the promotion.
According to Alibaba’s statement, Ele.me and Fliggy will “focus on goals and unite operations” with China’s e-commerce business group in the implementation of business decisions. Wu Yongming said, “This is our strategic upgrade from an e-commerce platform to a large consumption platform.” ”
Previously, although Alibaba launched an instant retail business in the Taobao App, due to the rush of launch, the synergy with the e-commerce business was not strong. According to Jiang Fan’s statement on Alibaba’s earnings call, “618 We did not very deliberately connect this new business with the e-commerce business very strongly. ”
But even so, just adding an instant retail entrance to Taobao has already made Alibaba gain a lot during the 618 period.
Even Pinduoduo, which has been extremely cautious about exploring new businesses, has begun to end, and later said that Pinduoduo has been experimenting with self-built commodity warehouses in first-tier cities, and will launch instant delivery services as soon as August.
Times are changing. The growth of express e-commerce has peaked, and players have even fallen into low-quality competition at low prices. Integrating online and offline instant retail, it is growing rapidly with a more efficient and imaginative business model, even encroaching on the basic market of express e-commerce players.
Whether active or passive, express e-commerce companies eventually inevitably began a collective shift towards instant retail.
A strategic focus of Meituan
In the face of the collective counterattack of express e-commerce companies, Meituan’s style of play is to focus on resources and pursue the victory.
Looking at several major adjustments to Meituan’s official announcement of comprehensively expanding instant retail, whether it is the transformation and upgrading of Meituan’s preferred, or increasing investment in Meituan flash sales and Little Elephant Supermarket, or even taking away and Little Elephant Supermarket going overseas in the Middle East, there is only one core keyword – focus.
When evaluating Meituan, the outside world often quoted Wang Xing’s speech many years ago, emphasizing that the business has no boundaries. Meituan’s earliest exploration of instant retail is the same, and it has previously counted Meituan’s various business attempts in the field of instant retail, including Kuailu, Little Elephant Supermarket, Tuan Haohao, Caiquan, Meituan Preferred, Lightning Warehouse and other explorations in different directions, involving almost completely different business models such as self-operated fresh food, group buying e-commerce, and B2B supply chain.
When instant retail was still in the exploration stage, it was understandable to explore in such a different direction, after all, there was no precedent to follow at that time, which was also a difficulty that industry pioneers had to overcome. However, at a time when instant retail has entered saturated competition, whether it is the needs of business development or changes in the competitive dimension, Meituan needs to concentrate its advantageous resources and focus more on strategic deployment.
Meituan flash sale and Little Elephant Supermarket, which have been verified by the market, have begun to become the two core points of Meituan’s current focus in the field of instant retail, representing the two major directions of platform and self-operation respectively.
Meituan’s flash sale can be traced back to Meituan’s flash sale division established in 2018, which is the official beginning of Meituan’s transformation from food delivery to delivery. In the past 7 years, flash sales have developed rapidly, and the service categories have gradually expanded from daily necessities to daily necessities, and have become one of the most important players in instant retail. In the first quarter of this year, Meituan’s daily orders for non-catering instant retail exceeded 18 million. In April, Meituan Flash Sale was officially launched into the market as an independent instant retail brand.
It may also be one of the biggest threats to traditional express e-commerce businesses. Thanks to Meituan’s previous attempts in product supply, you can now buy almost all the categories you need in life on Meituan Flash Sale, from simple daily necessities to 3C digital, large and small home appliances and even clothing accessories, which can be delivered in 30 minutes, which is the product of optimizing online transaction efficiency and offline supply to the extreme.
The basic business logic of Meituan’s flash sale has been run, and what Meituan needs to do in the next stage is to continue to expand its leading edge and widen the moat. Meituan’s focus on the next stage of flash sales is also this, starting from the aspects of category richness and warehouse network density, continuing to actively expand flash sale categories, and working with retailer brand partners to further expand stores and flash warehouses.
Little Elephant Supermarket represents the direction of fresh food self-operation in the instant retail track. It was first launched by Meituan in 2019 as a self-operated fresh food supermarket, and then gradually expanded to a full range of online supermarkets, including fresh food and daily necessities.
Compared with other players in the same field, Little Elephant Supermarket is not the first to launch the market, Dingdong Grocery was launched two years earlier than it, and the bankrupt Daily Fresh was established in 2014, but Little Elephant Supermarket is the fastest growing one, and even has a tendency to catch up.
According to the data revealed by Meituan in the announcement, Little Elephant Supermarket has opened nearly 1,000 front-end warehouses in 20 cities across the country, and the sales of agricultural products are expected to exceed 20 billion yuan this year. In contrast, Dingdong’s grocery store total GMV including daily necessities last year was only 25.56 billion yuan, covering only 22 cities.
According to Meituan’s plan, Little Elephant Supermarket will continue to expand its categories and gradually expand to all first- and second-tier cities. This means that in terms of GMV scale and the number of cities covered, Little Elephant Supermarket has ranked among the first echelon in the industry and will continue to expand its lead.
To some extent, Little Elephant Supermarket and other players in the same field are not in the same competitive dimension. It relies on Meituan’s comprehensive experience accumulated in the instant retail track over the years, such as the large front-end warehouse model draws on the experience of flash sale business in flash warehouses, and the fresh food supply chain inherits Meituan’s accumulation in Little Elephant Fresh, Vegetable Daquan and Kuailu, and the team’s operational experience, industry cognition and other capabilities can also be further reused.
Even Meituan Preferred, which has been transformed and upgraded, can also provide support for key businesses such as Little Elephant Supermarket with its accumulated supply chain and warehousing network resources. Later, it was also pointed out in the report that the supply chain advantages accumulated before Opticals were turned to support Little Elephant Supermarket and Meituan Express Donkey, and the two businesses will accelerate the opening of the city and further expand the market size.
The most committed investor in instant retail
Even though instant retail has become a common force of express e-commerce companies, it is difficult to directly compare these players with Meituan, and they are not always consistent in business logic and strategic goals.
One of the reasons why Alibaba JD.com has begun to intensively increase investment in instant retail is that the e-commerce industry intuitively feels the threat of instant retail, and the market generally regards these actions as a defensive offensive move of express e-commerce to attack and defend. The growth of e-commerce is slowing down, and the high-frequency consumption of instant retail can effectively increase the user activity of the main website.
Alibaba’s latest adjustment fully incorporates Ele.me and Fliggy into China’s e-commerce business group, changing the independent positioning of the previous local life business. JD.com’s management has similar views to the outside world, emphasizing the drive of instant retail to JD.com’s main e-commerce business on different occasions.
Meituan does not have the burden of e-commerce, and its business extension is more direct. Consumers’ needs for 30 minutes to get takeout and 30 minutes to get a cable are the same, and riders don’t make much difference whether they are delivering burgers or flowers. Instant retail is a natural extension of Meituan’s takeaway business and a trend to meet consumer needs.
It is precisely for this reason that Meituan may be the one who has invested the most firmly and most persistently in the field of instant retail in the past few years. As early as 2015, JD.com launched the instant retail brand JD Daojia, and Alibaba is also exploring instant retail in different businesses including Tmall Supermarket, Ele.me, Hema and other businesses.
However, due to the strategic changes, frequent personnel adjustments and unfirm investment of the giants in the field of instant retail, they finally gave up the market.
In contrast, Meituan’s adjustment in the instant retail business is more coherent. Meituan’s re-increase in instant retail investment is also a continuation of the original advantageous business, identifying the deterministic opportunities of the instant retail track, focusing on valuable areas that it is better at, and not being affected by external disturbances.
Many of the standards in the instant retail industry have been determined by Meituan over the past years of exploration. Offline supermarkets and convenience stores cannot meet consumers’ wider product needs, so Meituan Flash Sale has launched a flash warehouse model that is more suitable for the instant retail track. With complex installation and high logistics costs, Meituan Flash Sale cooperates with home appliance brands to build a service system of “half-day delivery of home appliances” based on offline stores, and there is no need to wait for home appliance delivery.
Consumers are also gradually building a consumer mentality for instant retail. In the past, the consumption scenarios of instant retail were more concentrated in fresh department stores or emergency needs, but in this year’s 618, many consumers chose to buy high-value goods such as mobile phones, liquor, major appliances, and jewelry on Meituan flash sale, and more and more offline local brick-and-mortar merchants can also enjoy 618 dividends.
Not only that, Meituan is also trying to jump out of the domestic involution competition and export the instant retail business model that has been proven in China to overseas markets. In this adjustment, Meituan proposed to actively explore overseas markets. On the basis of the overseas expansion of Keeta’s takeaway business, since June, the overseas version of Keemart of Little Elephant Supermarket has also begun its journey to the sea, and has been tested and launched in two regions of Riyadh, the capital of Saudi Arabia, and will be expanded to other regions in the future.
As various platforms have successively completed the adjustment and upgrading of the instant retail business, the competition in the second half of instant retail may have just begun. In any case, Meituan has fired the first shot.
