The new game of the giants: why the sprint 30 minutes to deliver?

Retail is still changing.

In the past, the cost of opening stores was so heavy that the price of goods was greatly inflated, and the traditional e-commerce with slow timeliness, the retail format quickly evolved into a battleground with the advantages of high efficiency, low cost and high cost performance.

On February 13, the national "Opinions of the CPC Central Committee and the State Council on Comprehensively Promoting the Key Work of Rural Revitalization in 2023" was officially released.

In this document, it is mentioned that "comprehensively promote the construction of the county commercial system... Vigorously develop new models such as co-distribution and instant retail..."

For a long time in the past, the commercial and economic format of the county was once ignored by the blindfolded rush of high-tier cities.

The issuance of this document means that instant retail has become one of the country's grasps of county economic formats. Business horizons are also shifting to county formats.

High efficiency is the theme of county economic development.

According to different fulfillment timelines and channels, the hourly home service of instant retail can not only become the second sales channel of merchants, but also further develop with the help of traffic means under the minds of mature takeaway users.

According to data calculated by Soochow Securities, the user ceiling of instant retail is 550 million to 640 million, which is in the range of catering takeaway and comprehensive e-commerce.

Unlike the formats we have seen in the past, their initial growth is often accompanied by an explosion, and instant retail is subtle.

At a certain moment in your daily life, you will find that the price of a product on a certain platform is cheaper than offline, the same as that of an e-commerce platform, and faster than the latter.

Xinjieer read the Internet e-commerce industry in-depth report "Instant Retail Industry Research: Spatial Outlook and Sand Table Deduction Based on the Perspective of Channel Comparison" by Soochow Securities. What will it change? Why is it a new retail battleground for giants?

01 Why 600 million people?

The so-called instant retail is "non-meal takeaway".

Channels and distribution provide commercial extension, and the essence of retail must still be products.

Instant retail is dominated by high-frequency, low-value, and immediacy standard products, such as fresh food, snacks and beverages, grain, oil, rice and noodles, and daily FMCG products, which are highly consistent with the consumption scenarios and consumption motivations triggered by instant retail, and such products used to be the main source of income such as offline supermarkets and traditional grocery stores.

The reason why these products can cleverly skip traditional e-commerce and offline traditional grocery store and supermarket channels is to accurately find differentiated competitive advantages.

First of all, look at the "saving" and "multi" advantages of e-commerce channels, which are more suitable for purchasing products with high unit prices, non-standard demand and long consumption cycles.

The most typical is clothing, which is replaced in years.

On the contrary, looking at offline channels, it has category advantages that e-commerce platforms do not have.

Offline stores are suitable for selling short-term fresh goods, the unit price is relatively low, and the fulfillment speed can be ensured efficiently and quickly.

It will be found that the characteristics of offline stores and online e-commerce formats determine the cognition of categories and corresponding consumer groups.

The online platform provides consumers with recommended local products, and consumers can get products within hours and minutes after placing an order.

The extent to which the potential demand value of just-in-time retail is being developed is a major point of contention in the market.

If it is for high-income people in high-tier cities, they have more standard requirements for delivery time, and this is also destined to be a niche track. But if it is facing a sinking market, it means that the goods must meet the needs of local consumers for product richness and cost-effectiveness.

This problem needs to find overlapping in the value provided by the just-in-time retail model to consumers itself, and the demographic portrait of the target audience.

According to Meituan flash sale data, the compound annual growth rate of instant retail users is expected to reach 47% from 2019 to 2022.

These core users range from 26 to 40 years old, all of which belong to relatively young consumers in high-tier cities, and the core users of instant retail have stronger spending power than e-commerce users.

These users are mainly distributed on multiple platforms such as Meituan.

According to the company's data, the number of Meituan flash sale buyers in 2021 was 230 million, the number of consumers in 12 months of JD.com's home arrival was 62.3 million, the average monthly transaction users of Dingtone grocery shopping were 8.8 million, and the annual active consumers of Hema were 38.47 million as of the end of September 2020.

The users of each platform have overlapping situations, considering that some platforms use monthly data, and there are also mini programs or APPS of regional merchants in various regions, and other comprehensive situations, it is conservatively estimated that the number of instant retail consumers in 2021 will be about 300 million.

This part of the core consumers proves that instant retail has effectively solved a certain consumer demand of consumers.

In fact, the reason why instant retail has accurately reached 300 million people, mainly in high-tier cities, is mainly to meet product demand, time demand and spatial dimension.

Different from traditional e-commerce, it is more to meet the product demand dimension of consumers, that is, more, good, and provincial, such as the high delivery quality of JD.com, but also to match the category structure of the platform.

Therefore, in addition to the product dimension, the existing traditional e-commerce has failed to solve the problems of time dimension and space dimension.

Consumers will trigger consumers to use just-in-time delivery products in the just-in-time retail model within a specific time and space.

For example, after dinner, when you need to buy cold beer, nearby convenience stores and small supermarkets are closed, and if you don't go to the supermarket to stock up recently, you will place an order on the platform to buy and deliver.

Such goods are often available at nearby convenience stores or hypermarkets.

Just-in-time retail plays to its strengths at this point.

According to Meituan flash sale data, the order volume of "17:00-20 o'clock" in 2021 accounted for less than 30% of the order volume throughout the day. In addition, the proportion of orders placed in instant retail in non-residential and office places has reached a certain proportion, and it has shown a rapid growth trend.

You will find that you will see the shadow of food delivery from instant retail.

One of the consumption drivers of instant retail and food delivery is indeed the lazy economy, but instant retail has another component of business potential, that is, rationalization of consumption.

In terms of consumer mind, users who accept just-in-time retail tend to be more time-efficient.

But it also cannot be argued that just-in-time retail is not suitable for a slow-paced sinking market.

According to O2O MIND, in Q1 2021, different types of stores such as Meiyijia, Jingdong convenience store, Lawsen, MINISO and Pagoda all achieved rapid growth in the home business launched in the sinking market.

For example, Meituan data shows that between January and July 2022, instant retail orders in convenience stores in Guangxi increased by 42%, large supermarkets increased by 119%, and mom-and-pop grocery stores increased by 317%.

As of 2021, the number of online shopping users is 842 million, and the number of takeaway users is 544 million, and the user ceiling of instant retail is about 550 million to 640 million in terms of the number of users in different levels of cities in the two industries.

Through consumer momentum, product characteristics and comparative advantages, we further see the future value of just-in-time retail.

02 The supply side stimulates vitality

Looking back at the outbreak of e-commerce in 2012, the competition between various e-commerce platforms was fierce, and vertical e-commerce platforms bloomed for a while, and e-commerce quickly penetrated into thousands of households.

In contrast, the explosiveness of instant retail is weaker than that of e-commerce platforms, and it has not encountered the same era dividends as e-commerce.

This phenomenon is directly related to the supply and demand attributes of the platform and the development time node.

On the one hand, platforms such as Taobao and Meituan were founded between 2007 and 2014, coinciding with the rapid growth of Internet penetration, and the emergence of instant retail, the entire e-commerce landscape was set.

While JD Dajia was established in 2015, and the Meituan flash sale brand was released in 2018, the growth rate of instant retail is naturally not comparable to that of e-commerce.

On the other hand, in the business model of just-in-time retail, an important product requirement is "many". Sufficiently rich categories can be distinguished from offline store SKUs, which determines the supply and demand matching efficiency of the platform.

For example, Taobao's Taoxianda has been expanding its supply of subdivided categories in large quantities.

On the contrary, small and medium-sized stores and pendant stores with rich category advantages are an important support and driving force for the diversification of instant retail brands, and the platform can take advantage of high turnover and regional precision marketing to attract brands to increase investment.

It should be mentioned here that merchant entry is only one of the ways to play in the instant retail channel, that is, the platform without inventory, called the platform type.

Conversely, a platform with inventory is self-operated.

The supplier of goods of a platform-type player is a local offline retailer, and the platform can recommend or guide measures to facilitate transactions;

Self-operated players lay out both the inventory side and the trading side.

In terms of delivery, both modes can choose to build their own delivery team or cooperate with a third party.

Of course, merchants can also choose to deliver themselves.

Looking at these two ways of playing, you will find that it does not seem to be a type of business.

Self-operated e-commerce is more like an online store, in addition to the main business, the platform has opened a large online supermarket, with high delivery efficiency and rich goods, adhering to its own platform and traffic advantages, opening a new growth curve.

The disadvantage is that the mode will be relatively heavy, and it is necessary to build a collection and warehousing near the user, and pay more attention to the use of big data to mine the precise needs of users.

The platforms represented are Meituan grocery shopping and Dingdong grocery shopping.

There is also a store-to-home model that can reuse offline resources, and the platform itself also has traffic advantages and brand advantages.

For example, RT-Mart, Hema Fresh and Yonghui Supermarket are representative players of the track.

Platform e-commerce is more like a store collection store, but also like an online shopping mall, there are a large number of stores in the mall, the product SKU is very rich, and the collection store for the merchant, means to open up a second sales channel and a new growth curve.

Platforms can charge commissions and advertising fees to offline stores, as well as delivery fees to consumers, such as Meituan Flash Sale and JD.com Daojia are representative platforms.

Overall, fresh food is the category with the highest penetration rate in the instant retail model.

The assets of the front-end warehouse players are too heavy, but the short shelf life of fresh food, coupled with the heavier back-end warehousing supply chain of the fresh self-operated model, requires the platform to have a high turnover operation level, and also tests the level of online and offline resource coordination, which has become the ceiling.

But platform players are more likely to complete large-scale expansion.

According to public data, as of November 2022, Meituan flash sale has entered 2,800 cities and counties, Ele.me has entered 2,200 cities, and JD.com has 1,700 counties, districts and cities, but the self-operated platform represents Hema and Dingtone to buy vegetables, only 28 cities and 27 cities.

Taoxianda's business has covered 227 cities in China, such as Shanghai, Guangzhou, Suzhou and Jinan, and 2,600 stores under supermarkets such as RT-Mart, Freshippo, Century Lianhua and Yonghui have also settled in.

In fact, just-in-time retail is not new, but in the past, retailers were not very interested. Until the emergence of the epidemic, people no longer have the freedom to travel, and merchants are willing to focus on instant retail platforms.

The biggest significance of the emergence of instant retail is that the original retail format has been taken a new step of growth.

In 2021, 78.5% of supermarket online sales increased year-on-year, and 80% of supermarket enterprises also increased their online sales proportion.

Although the revenue source of this online business is weak, it is conducive to improving the efficiency of single-store operations and developing private domain traffic, and these users will subsequently achieve repeat purchases.

It can also hedge the weakness of stores in geographical location, further improve the store model, and reduce sales costs.

The efficiency of interests at the merchant level is not so bright.

Instant retail stores will also continue to exhibit the characteristics of concentration.

For example, Yonghui is one of the strongest online merchants among domestic retailers, but their online transaction volume accounts for less than 4% of the total market.

The problem here is on the supply side.

Consumers of instant retail have more personalized product demand, and the corresponding offline store goods are more popular.

For example, skin care samples, disposable bed sheets, etc., such long-tail products are not suitable for offline stores, but just meet the temporary needs of instant retail consumers.

Under this detail, the lightning warehouse was born.

The most typical is Meituan's lightning warehouse, a project incubated in 2020, encouraging merchants to open daily necessities and pet supplies stores on the platform according to the front warehouse, without offline stores, pure online 24-hour operation, while Meituan provides full-process operation guidance.

The advantage of the lightning warehouse model is that it reduces the investment of high-rent locations for merchants, and warehouse utilization and picking efficiency are better than traditional stores. On the consumer side, the platform's traffic advantage can cultivate local consumers' preferences and hot products and stimulate consumption.

With the help of both ends and the compression of store costs, merchants can make profits

Lightning warehouses have become the optimal solution for profitability in the real-time retail game.

According to data, in 2021, the Meituan Lightning Warehouse format has hatched 10+ merchants with sales of more than 100 million, and from June to August 2022, the number of Meituan Lightning Warehouses increased from 100 to 1,500.

With the interests of the platform, consumers and merchants, instant retail will bring more possibilities in the future.

03 Retention is a problem

At present, the main players in China are Meituan Flash Sale, JD Dajia, Taoxianda, Ele.me and Duodian.

Each of these players has their own strengths.

For example, Meituan Flash Sale and Ele.me are local life players, who link with a large number of offline merchants and retailers, and are known for delivering them within 30 minutes in a fixed route, attracting consumers to place orders.

In addition, there are e-commerce players, including JD Daojia and Taoxianda.

The two platforms mainly cooperate with high-end supermarkets and large retailers, focusing on high-tier cities to provide services.

There is also the retail service provider "Multipoint", which mainly focuses on the retailer resources of high-tier cities, providing 5-kilometer delivery services for chain supermarkets and convenience stores in 205 cities.

According to the data provided by the report, in 2021, the share of instant retail platforms of Meituan Flash Sale and JD.com Home was 37% and 19%, respectively, for a total of 56%.

The development of instant retail can be divided into two stages, the first stage is traffic, testing the platform's drainage ability and user mind, and the platform that solves the traffic problem first can eat a wave of industry dividends;

After the dividend, the problem of retention was naturally encountered.

In the second stage, the scalability and profitability of the platform are tested, and the supply problem is solved first, and it can run to the leading position.

At present, instant retail, represented by Meituan flash sale and JD Dajia, is in a transition period.

In contrast, the two platforms have many differences and commonalities.

In 2021, the number of Meituan transaction users was 560 million, JD.com 570 million, seemingly close to the total number of users, but in fact, Meituan's active buyers were 230 million, accounting for 41% of the total, while JD.com's total buyers were 62.3 million, accounting for 11%.

This phenomenon is formed by the user's mental interference.

Meituan itself concentrates the consumers with the strongest demand for instant retail, and these groups have long formed a mature takeaway user mentality, while JD.com's mentality is still a longer delivery time, which is a more fatal feature for instant retail.

The population characteristics of the two platforms are also different.

Meituan flash sale is mainly for high-tier young people, and the unit price of customers placed by everyone is low, and they prefer instant consumption.

Jingdong is mainly housewives, and these groups tend to purchase regularly, which also means high unit price consumption.

This is also determined by the supply side.

The two platforms distinguish themselves from their rivals from the supply side.

Meituan flash sale mainly cooperates with pendant merchants such as flower shops, small and medium-sized supermarkets and convenience stores, which have long hours and can meet the various long-tail needs of consumers;

Jingdong Dajia cooperates with large supermarkets to form the consumption habits of users on the platform and tend to our daily shopping and hoarding characteristics of offline supermarkets.

Both platforms are trying to break the circle.

In the third quarter of 2022, the GMV of mother and baby stores and clothing merchants increased by 2 times and 8 times year-on-year, and it also cooperated with regional top supermarkets such as Jiangxi Ganyuting.

There is also Meituan, which has increased cooperation with 3C brands and KA channels, and the number of 3C brands cooperated with in 2021 has more than tripled year-on-year.

The supply side determines the consumer side of instant retail, which also means the market size.

Compared with the offline store format, the emergence of instant retail has solved many problems in the former model. For example, the latter reduces the price level, becomes the second sales channel for merchants, and also realizes consumers' personalized demand for goods.

This is a new revolution in retail, and it also means a progress.