Instant retail: a trillion market on electric two-wheelers

Reporter Wang Xiaoxuan

During the "13th Five-Year Plan" period, China's e-commerce has made great achievements, and the "14th Five-Year Plan" proposal further clearly states that it is necessary to "comprehensively promote consumption" and encourage the development of
new consumption models and new formats.
As one of the key development targets of the new retail model, instant retail has seen rapid growth in business in recent years and attracted the attention
of the industry.
The "2022 China Instant Retail Development Report" (hereinafter referred to as the "Report") recently released by the China Chain Store and Franchise Association looks forward to the new trend
of China's instant retail development model in the next few years.
The report pointed out that in the next few years, the compound growth rate of instant retail will remain high, and it is expected that by 2026, the relevant market size will exceed 1 trillion yuan
.

Meet the need for immediacy

The "Report" defines instant retail as consumers placing orders on online trading platforms, and offline physical retailers within 3-5 kilometers around perform door-to-door delivery services through third-party (or retailer-owned) logistics, providing products including food and beverages, vegetables, fruits and fresh food, etc.
, and the delivery time is usually 30-60 minutes
。 The "Report" pointed out that instant retail was born with the rapid rise of retail digitalization and instant delivery business, and the biggest feature is that physical stores are used as the supply chain and the instant fulfillment and distribution system as the support to provide consumers with higher convenience and more timeliness of home business, and meet consumers' emergency needs or new retail formats under normal conditions
.
According to the Report, instant retail mainly presents the following distinctive features:

Highly time-sensitive The delivery time from the consumer's online order to the delivery of the goods to the consumer's hands is generally controlled within 1 hour, and in most scenarios, fulfillment can be completed within 30 minutes, and the timing can be accurate to the minute
.
For the delivery time of instant retail, there is no unified time standard in the industry, and major platform companies such as JD.
com, Meituan, and Ali are usually defined as completing fulfillment within 2 hours, and in most cases can achieve delivery in 30 minutes to 1 hour, which is also the time range generally recognized by the industry
.

Service radius of 3-5 km Instant retail, like food delivery, matches offline stores, merchandise and delivery capacity
based on the geographical location of consumers.
Consumers place orders through the online platform App, and the platform matches customers with offline merchant stores and goods and delivery capacity
within a radius of 3-5 kilometers according to the geographical location of the consumer.

Online ordering, offline fulfillment Instant retail is a complete retail system
that includes online trading platforms, offline physical retailers, brand owners, third-party (or merchant-owned) distribution logistics.

Peer-to-peer service Instant retail is usually a peer-to-peer service, where the delivery person picks up the goods from the merchant and delivers them directly to the consumer, with no transit links
.
In addition, the delivery is mainly carried out through the same city delivery riders, and the means of transportation mainly rely on electric two-wheelers for delivery, which is also different
from the traditional e-commerce express brother's "last mile" delivery mainly relying on electric tricycles.

The O2O market is expanding rapidly

The Online To Offline model (hereinafter referred to as "O2O"), which combines offline business opportunities with the Internet, is in a period of
rapid development.
The report pointed out that in recent years, the overall market size of O2O has continued to expand, and the market size has exceeded 3.
3 trillion yuan in 2021, of which home business is the internal driving force for the growth of the O2O market, with a growth rate of 64%
in the past five years.
Just-in-time retail, as an important part of the O2O home business, has grown significantly
.

The "Report" analyzes that the overall O2O market is mainly composed of home-to-home business and in-store business, during the epidemic, the risk of offline consumption hindered some consumers to spend in store, while consumers' acceptance of O2O home-to-home business gradually increased, and O2O home-to-home business began to lead the overall market
.
Instant retail, which is an important part of the O2O home business, has arrived and will usher in rapid growth
.

O2O home business is currently mainly composed of two sub-businesses of catering takeaway and instant retail, of which catering takeaway developed earlier and accounted for a relatively high proportion of home business, while instant retail currently accounts for relatively low, but the growth rate is higher than the overall O2O home business growth rate, taking the main model in instant retail - open platform model as an example, its compound annual growth rate during 2016-2021 is 81%, becoming one of the driving forces for the rapid development of
O2O home business 。 It is expected that in the next few years, the scale of the instant retail open platform model will exceed the threshold of one trillion yuan, reaching about 1.
2 trillion yuan, becoming an important part of the O2O home business in one fell swoop, and is expected to drive the growth
of the overall O2O market scale.

Consumption supply "two booms"

According to the analysis of the report, the development trend of the real-time retail model in the future will show the characteristics of
wide consumer groups, wide scenarios, wide demands, wide categories on the supply side, wide brands and wide regions.

On the consumer side, the customer base of instant retail will gradually expand to each family member, forming a concept of common consumption of instant retail households; With the gradual maturity of consumption concepts and the cultivation of consumption habits, people's acceptance of instant consumption is getting higher and higher, and instant consumption scenarios gradually extend from single to home to other scenarios, among which the consumption of hotels, guesthouses and administrative institutions shows a rapid growth trend; In terms of appeal, it will develop from "daily buying" and "emergency buying" to "big promotion buying", "early adopter buying" and "gift buying
".

On the supply side, the category of instant retail will gradually develop from supermarket categories such as food and beverage and fresh food to all categories; From only leading brands cooperating with leading brands to many brands joining the cooperation with the instant retail open platform, helping brand marketing to become omni-channel; Geographically, instant retail is currently emerging in first- and second-tier cities, and the penetration rate in high-tier cities is 3.
3 times that of lower-tier cities, but the penetration rate of lower-tier cities has grown rapidly in recent years, and the future will show a trend
of development from high-tier cities to lower-tier cities and from developed regions to the central and western regions.
With the expansion of geography, the scope and number of merchant stores covered by instant retail have gradually expanded, more retailers have access to the open platform, and more consumers can enjoy the convenient services
of instant retail.

The report points out that from "helping traditional retailers integrate omni-channel service resources" to "providing service supply chains based on consumer big data to help product and related service innovation", instant retail has expanded from providing basic product fulfillment services to product-related peripheral services
.
In the future, based on consumer big data, instant retail will provide service supply chains for brands and retailers, guide product development and its associated product service model innovation and design through consumer portraits and demand information, and quickly and efficiently form the products and services
that consumers need.

China Food News(November 14, 2022, Version 02)

(Responsible editor: Gao Jiaodi).