I. What is Instant Retail?
In a world where shopping at brick-and-mortar stores and buying from e-commerce platforms have already become routine, why has instant retail suddenly attracted massive investments from leading companies? To answer this, we first need to clarify what it is.
Instant retail is a new retail model defined by online instant ordering and offline rapid fulfillment. It relies on local stores, front warehouses, and delivery networks. Once a customer places an order through an app, the system allocates it to the nearest store or warehouse, and a courier completes the “last three kilometers” of delivery. The entire process usually takes 30 minutes to one hour.
Several everyday scenarios illustrate how it works:
These examples show that instant retail is not simply “faster e-commerce.” It is a structural shift in shopping habits, compressing waiting times from “days” to “minutes” and enabling consumers to resolve urgent or spontaneous needs at any time.
II. Industry Evolution
The rise of instant retail is not accidental; it is the natural outcome of retail innovation and evolving consumer demand. Its development can be divided into several stages:
Overall, instant retail has been shaped by the intersection of consumer demand, technological maturity, and capital investment.
III. Instant Retail vs. Traditional Retail and E-commerce
To better understand instant retail, it is useful to compare it with traditional retail models.
In short, e-commerce solved the problem of “I can buy anything,” while instant retail addresses “I need it now.”
IV. Market Size and Future Projections
Instant retail is currently in a phase of rapid expansion. According to industry data, the market size was only RMB 68.7 billion in2018 but surged to RMB 650 billion in 2023, representing a 9.46-foldincrease in five years and a compound annual growth rate (CAGR) of over 56%.Projections estimate that the sector will reach RMB 780 billion in 2024and surpass RMB 1 trillion by 2025. Its share of overall online retail has also grown from less than 1% in 2018 to 4.2% in 2023.
User adoption has accelerated alongside this growth. In2023, China had 1.092 billion internet users, of which 580 million were active instant retail users, up 34. 9% year-on-year, representing 53.1% of all netizens. This indicates that nearly half of potential consumers remain untapped.
Looking at the broader local retail market, which totaled around RMB 35 trillion in 2024, instant retail penetration is still less than 2.5%. This means the long-term market potential could reach several tens of trillions of RMB. In other words, the current RMB 650 billion scale is only the appetizer—the real “main course” lies ahead.
V. Driving Forces
Why are giants like Alibaba, JD.com, and Meituan all betting heavily on instant retail? The answer lies in multiple growth drivers converging.
1. Shifts in Consumer Behavior: The pandemic made consumers accustomed to ordering groceries and medicine online. Even after restrictions eased, the convenience and sense of security remained part of daily routines.
2. Digitalization of Local Commerce: Pharmacies, convenience stores, and supermarkets have been rapidly digitizing and joining platforms. For example, in 2023 Meituan partnered with over 300,000 pharmacies across China, greatly strengthening the supply side.
3. New Growth Opportunities Beyond E-Commerce: Traditional e-commerce traffic growth has slowed, and customer acquisition costs continue to rise. Instant retail, however, creates new consumption scenarios and time windows:
4. Advances in Technology and Supply Chains
AI-driven forecasting and dispatching make operations more efficient. For example, during rainy days, systems automatically anticipate higher demand for instant noodles and hot drinks, adjusting inventory accordingly. In Shenzhen, drone delivery networks are already in place, with 25 aerial routes completing more than 220,000 orders to date.
5. Strategic Competition
Instant retail has become a battleground for major platforms. If Alibaba does not invest, it risks losing share to Meituan; if Meituan does not expand into retail, it risks losing ground to Douyin; if JD.com does not participate, it risks ceding the space entirely. As a result, Alibaba announced plans to invest RMB 50 billion annually for the next three years, a clear example of both defensive and offensive strategy.
VI. Global Landscape
China: The World’s Most Dynamic Market
China is the fastest-growing and largest instant retail market globally, thanks to three key advantages:
Market structure highlights:
Regional trends:
This shows instant retail is no longer limited to big cities but is spreading nationwide.
United States: A Retailer-Centric Model
The U.S. instant retail market differs significantly due to dispersed urban layouts and higher logistics costs, leading to heavier reliance on retailer partnerships.
In the U.S., instant retail is primarily about leveraging large supermarket partnerships. Instacart’s tie-ups with Costco and Kroger, for instance, allow rapid access to mainstream households
VII. Historical Lessons and Failed Experiments
Instant retail is not entirely new; multiple companies have experimented—some with notable failures that provide valuable lessons.
Key takeaway: instant retail is not a business that can succeed purely through subsidies or speed. Long-term survival requires scale, capital strength, operational efficiency, and patience.
VIII. Key Players: Strengths and Weaknesses
1. Meituan Flash Buy (China)
2. JD Daojia
3. Instacart (U.S.)
4. Pupu Supermarket (China)
IX. Challenges and Opportunities
Challenges
While instant retail is expanding rapidly, it faces a series of structural challenges that may constrain long-term sustainability. The first is high cost pressure. Delivery is the core of instant retail, yet courier expenses typically account for 20% to 30% of platform revenue. When combined with the fixed costs of front warehouses and store-warehouse hybrid formats—such as rent, labor, and infrastructure—the overall cost burden remains heavy. This means that even with surging order volumes, profitability is often squeezed. The second challenge is complex inventory management. Instant retail involves a vast number of SKUs, spanning fresh produce, medicines, and fast-moving consumer goods. Demand is highly volatile—driven by weather changes, holidays, or sudden events—and inaccurate forecasting can lead to either frequent stockouts or costly spoilage, placing unprecedented demands on supply chain efficiency. Third, platforms struggle with user retention. In such a competitive environment, consumers are highly price-sensitive and face minimal switching costs, resulting in low loyalty. Platforms are therefore forced to rely on subsidies, coupons, or membership programs to maintain engagement, further amplifying costs. Finally, there are growing regulatory and environmental pressures. Stricter enforcement of rider welfare and social security requirements, as well as tighter controls on food and drug safety, are raising compliance costs. At the same time, the push for sustainable packaging increases operational expenses: biodegradable packaging is estimated to cost roughly 30% more than conventional alternatives—an especially heavy burden in an already low-margin industry.
Opportunities
Despite these challenges, the opportunities ahead remain significant. The most obvious is continued market expansion. Industry forecasts suggest the market will surpass RMB 1 trillion by 2025, with long-term potential measured in tens of trillions—far from reaching saturation. Second is the underutilized user base. By 2023, active instant retail users in China totaled 580 million, only 53.1% of the country’s 1.09 billion internet users. This leaves nearly 500 million potential users untapped, particularly among older demographics and consumers in lower-tier cities. Third, the rise of county-level markets is accelerating. In 2023, county-level instant retail reached RMB 150 billion, growing 23% year-on-year—already outpacing first-tier cities. Both Meituan and JD Daojia are expanding aggressively into these regions to capture future growth. Finally, the industry is likely to benefit from multi-model coexistence and complementarity. Platform-based models (e.g., Meituan Flash Buy, JD Daojia) will continue to dominate mass markets, front-warehouse models (e.g., Dingdong, Pupu) will achieve scale advantages in dense urban areas, while store-warehouse hybrids (e.g., Freshippo) will cater to premium and membership-driven demand. The coexistence of these models strengthens the industry’s resilience and provides more avenues to achieve sustainable profitability.
X. Conclusion
Instant retail has evolved from food delivery into a full-fledged retail infrastructure, reshaping how people access daily essentials. It fulfills consumers’ demand for convenience and immediacy, while offering retailers and platforms a new growth frontier.
Over the next decade, instant retail will likely develop along four main dimensions:
In conclusion, instant retail is no longer a short-term trend but a long-term structural shift in the retail sector. Its essence lies in transforming “in-store” shopping into “at-home” fulfillment, driving efficiency gains across the supply chain and reshaping consumer behavior. Over the next decade, as the market continues to expand, user penetration deepens into lower-tier cities, and technology advances, instant retail will gradually evolve into a critical infrastructure of global commerce.
From a competitive perspective, we believe that Meituan and Alibaba are best positioned to emerge as long-term winners. Meituan’s strength lies in its massive and mature rider network, combined with a broad, high-frequency user base that ensures strong fulfillment efficiency and stickiness. Alibaba, on the other hand, has the financial firepower to deploy large-scale subsidy strategies, enabling it to rapidly capture market share. In contrast, JD.com, though pursuing a strategy similar to Alibaba’s, lacks equivalent capital strength, which may constrain its ability to sustain aggressive expansion. As such, the dominant positions in China’s instant retail market are likely to consolidate around Meituan and Alibaba, while JD.com may focus on leveraging its supply chain capabilities to carve out a differentiated niche.
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