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Takeout in China? More than Just Food | In-Depth

By TAN XINYU|Nov 10,2023

File photo shows Meituan delivery drivers collecting food in Jinan, capital of East China's Shandong province. (Photo/Xinhua)

Chongqing - The newly released iPhone 15 series has benefited from the thriving market in instant retail in China, which centers on swift delivery, usually within an hour of receiving online orders.

Shortly after the sales launch on September 22, consumers who pre-ordered through Tmall's Apple flagship store already shared their thoughts on the new iPhones in comment sections. Alibaba's grocery and fresh goods retail chain Freshippo promised to deliver iPhones within 18 minutes once its App users placed an order.

Apple's release of new devices just before China's Singles' Day shopping festival, also known as "Double 11", provided an opportunity for major e-commerce platforms to rehearse for the anticipated surge in demand for fast delivery during the shopping extravaganza.

As the Double 11 shopping carnival marks its 15th year, consumer expectations for product quality, shopping experiences, and discounts are growing. The shopping spree, akin to Black Friday, occurs every year on November 11 but typically kicks off early, with major e-commerce platforms unveiling the Double 11 event around October 20 this year. Alongside price cuts, boosting the speed of deliveries is now among the top priorities for internet giants.

Chinese e-commerce giant JD announced on October 18 that for this year's Double 11, its O2O platform JD Daojia, which merged with Dada in 2016, will partner with over 400,000 physical stores to offer free shipping and hourly delivery in all categories.

Meituan Shangou, the quick-commerce arm of Chinese online food delivery platform Meituan, launched its Double 11 event on October 24, with 56 percent growth in the range of products available to consumers compared to last year. Shoppers can enjoy guaranteed delivery in as fast as 30 minutes.

As speedy delivery services now mean "everything can be ordered out," the instant retail market in China is experiencing rapid growth. A September report released by the Chinese Academy of International Trade and Economic Cooperation found that instant retail has sustained an annual growth rate of more than 50 percent in recent years, with the market size reaching 504.29 billion yuan ($69.22 billion) in 2022. By 2025, the report projects this sector will triple in size compared to 2022.

A picture taken at one of the florist Huang Hong's shops in Chongqing. (Photo provided to iChongqing and Bridging News)

Digitization empowers local businesses

The pandemic has also driven increased demand for instant retail, with safety and crowd avoidance being paramount. In addition, this demand has accelerated the digital transformation of more brick-and-mortar stores, with the florist Huang Hong being no exception.

Huang started his flower business in Chongqing around 2015. However, it wasn't until many people were confined to their homes due to COVID in 2020 that he managed to surpass annual sales figures of one million yuan for each of his shops. This change came about when his business adopted Meituan's digital platform.

Inspired by Meituan's data-driven approach, Huang has been working to release the potential of market factors such as exposure, click rates, and purchases. He discovered the color and name of his storefront design influenced the number of online customer visits, while the quality of product images and their layout affected order placements.

Huang said the digital module provided by Meituan has assisted him in grasping the process of digitization, which is equally applicable offline.

"Before, I never thought in a digital manner. I never considered there was a connection between store traffic and purchase rates among customers at my shop. If someone entered my shop and left without purchasing, I didn't pay much attention to it. If customer feedback pointed out that a specific variety of flower wasn't available in my store, I would stock it immediately, but was then unable to make the sale once it arrived."

With life returning to normal after the pandemic, Huang's flower business has dropped by 40 percent due to non-local competition, but he remains confident that local brands will gain prominence in the future.

Huang explained, "Outside capital struggles to enter local markets, as the latter is mostly non-standardized, with low-profit margins and complex management. Success is challenging without a deep understanding of local market conditions, so I believe local brands like ours will rapidly flourish."

Staff members promote cosmetics sales via livestreaming at a Shijiazhuang, North China's Hebei province shopping mall, on November 10, 2020. (Photo/Xinhua)

Consumer habits shape retail

"Instant retail is not random like an emergency purchase, but a highly predictable lifestyle phenomenon," Wang Puzhong, senior vice president of Meituan, said at the company's conference on the instant retail industry on September 14.

Wang Yufei, a university student in Chongqing, said that she often buys daily necessities through these online platforms due to fast delivery, including Meituan Shangou, JD Daojia and Alibaba's Ele.me. However, she admitted the quality of received goods can vary.

Huang also realized that ensuring product quality and consumer confidence is key to the long-term development of his flower business. To that end, he has planned to set up a cloud warehouse to improve the efficiency in order fulfillment and expand his business from three shops to six in the local area by 2024, which will enhance his supply chain and enable faster delivery.

Shao Bingjia, a professor at the School of Economics and Business Administration at Chongqing University, stated that instant retail offers an opportunity for offline stores to boost in-store foot traffic, allowing shoppers to physically experience products and then place orders at their convenience, with quick delivery.

In fact, Shao suggested that in order to achieve more transactions, businesses should convey their product information through means that align with consumer habits.

"All sales channels should be utilized. In addition to traditional product selling methods, various online platforms such as websites, WeChat, mini-programs, and live streaming should be leveraged for product promotion."

Still, he acknowledged that instant retail faces challenges, such as platforms increasing fees for businesses to attract customers, requiring the lowest possible price cuts on the platform, and merchants engaging in aggressive low-price order competition.

"These behaviors undermine fair trade and competition," Shao said, adding that such phenomena persist as platforms use more covert means to impose restrictions on businesses. Also, there are technological barriers and difficulties in enforcement and supervision.

But Shao insisted, "The overall trend indicates that online platforms should provide more options for merchants to enhance competition and better serve customers."


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