Focused by the central government and valued by giants, real-time retail has also left opportunities for ordinary people

Real time retail is a game that "startles" the central government.This year's No

Real time retail is a game that "startles" the central government.

This year's No. 1 central document first mentioned instant retail; In the 14th Five Year Plan proposal, instant retail is one of the key development targets of the new retail model; The 2022 China Online Retail Market Development Report released by the Ministry of Commerce points out that real-time retail, characterized by hourly and minute delivery, has become one of the mainstream channels for consumers to shop and increase revenue in physical stores. As a new consumption model that has emerged in recent years, real-time retail has repeatedly attracted the attention of national ministries and central media.

In this game, internet giants with a large user base, years of retail experience, and a reputation for digital technology have become important participants. The most crucial thing is that these internet companies have been trapped, with traffic dividends peaking and market growth slowing down for a long time. The rise of real-time retail has become another increment of their new retail formats.

According to the data from QuestMobile's 2022 China Mobile Internet Annual Report, the number of mobile internet users in China has exceeded the 1.2 billion mark, while China's population in 2022 was 1.4 billion. Excluding the number of people who were unable to register as internet users due to age or youth, this almost 100% user penetration rate is also reflected from the side. The number of mobile internet users in China is approaching the ceiling, and the growth of e-commerce platform users is slowing down and approaching saturation.

In 2021, the e-commerce industry, which had grown for nearly 20 years, even experienced a regression. In November 2021, even with the Double Eleven platform, the total online retail volume showed a year-on-year negative growth for the first time, a decrease of 4%. Of course, this was influenced by the epidemic factors, but it is an undeniable fact that the traffic of traditional e-commerce has peaked, and the e-commerce industry has begun to enter a turning point in the cycle.

Although 1.2 billion mobile internet users have reached the ceiling, their user stickiness has further increased, with monthly average duration and usage exceeding 177.3 hours and 2633 times, respectively. People's online demand is still steadily increasing. In order to mobilize the "daily activity" of existing users, real-time retail has become a key layout object in the e-commerce industry, and the growth of 618 this year is contributed by real-time retail.

Source: Captain Jack's fortune telling Weibo

JD 618's key growth data is the home business. Data shows that the "integrated delivery and installation" service has driven a year-on-year increase of 173% in the number of users who place orders for JD Home Appliances, and a month on month increase of 170% in orders related to home furnishings. Based on service advantages such as "integrated delivery and installation", JD Home Refrigerator sales increased by 110% year-on-year, air conditioning increased by 220% year-on-year, washing machines increased by 150% year-on-year, and cigarette stove sets increased by 154% year-on-year. In the first quarter of this year, Meituan's fastest growing business was flash buying, with order volume increasing by about 35% year-on-year and the number of active merchants increasing by over 30% year-on-year.

The incremental stage of the previous high-speed development has begun to shift to a steady rise and viscosity increase based on the reserved users. For the mobilization of daily activities of reserved users and the commodities that meet the daily needs of users, the real-time retail with Unit of time of day, hour and minute in terms of transportation timeliness has become the key to stimulate activity. So, real-time retail that bundles local life will become a battleground for these internet giants doing online business, which is also the second half of industry growth after the era of traffic.

The 2022 China Online Retail Market Development Report points out that the online retail sales of physical goods reached 11.96 trillion yuan, a year-on-year increase of 6.2%, accounting for 27.2% of the total retail sales of consumer goods in society, an increase of 2.7 percentage points compared to the previous year. Among them, real-time retail, characterized by hourly and minute delivery, has become one of the mainstream channels for consumers to shop and increase revenue in physical stores. It has unique advantages in expanding high-quality supply and stimulating local consumption vitality.

The new retail format, which has only been put on the national agenda this year, has long been a popular competitive track for enterprises. In 2015, JD Home was officially launched; In the same year, Hema Fresh, the iconic business of Alibaba's real-time retail, was established; In July 2018, Meituan Flash Purchase, which provides 30 minute door-to-door and 24-hour uninterrupted delivery services, was officially launched.This new retail format, with JD, Alibaba, and Meituan as important participants, achieved a CAGR of 64% from 2016 to 2021.

Split the main real-time retail business of three major enterprises. JD to Home is a new business model developed from the traditional B2C business model to the higher frequency commodity service field. It is the O2O life service platform that JD.com focuses on building. Its main businesses include: intra city retail, store to store service, housekeeping convenience, community group purchase, intra city distribution, etc.After entering a new stage of cooperation with Dada Logistics in real-time retail, JD Home to Home business began to further expand. As of 2022, the total transaction volume (GMV) of JD Home to Home platform was 63.3 billion yuan, a year-on-year increase of 46.9%; The number of active stores exceeded 220000, a year-on-year increase of over 50%.

Hema Fresh has been "hidden" by Alibaba's financial reports before, and has become a key promotion target for the group after achieving profitability.As of September 30, 2022, Alibaba's direct sales and other revenue increased by 6% year-on-year to RMB 64.725 billion, mainly benefiting from the strong growth of Hema's revenue, with its online order revenue accounting for over 65%.As of May 2023, Hema has opened over 300 stores in 27 cities across the country, covering 18 provinces and 27 cities. In terms of instant door-to-door delivery of goods, Hema not only has its own dedicated team of riders, but also Hummingbird with over 3 million riders, providing consumers with two options of instant delivery services: 30 minute delivery and hourly delivery.

Meituan Flash Shopping is a third-party delivery platform created by Meituan that focuses on the real-time retail market, currently covering 2800 cities, counties, and flags. According to financial report data, the daily peak of Meituan flash purchase orders exceeded 11 million in December 2022. In that year, there were nearly 300000 convenience stores and small supermarkets related to real-time retail on the Meituan platform, with merchant sales increasing by over 400% compared to 2019, and the variety of products was three times that of 2019. Combining its own advantages and huge market size, Meituan has strong confidence. In September 2021, at the Meituan Flash Shopping Digital Retail Conference, Wang Puzhong, the President of Meituan Home Business Group, made a prediction,In the next five years, the market size of real-time retail will reach 1 trillion yuan, while Meituan Flash Buy will share 400 billion yuan, equivalent to occupying 40% of the market share.

The real-time retail business data sheets of these three companies are all eye-catching enough, but compared to the fierce competition on the enterprise side, consumers are starting to calm down. If it's just a year-on-year increase, both JD Home and Meituan's new business data, including flash purchases, will definitely increase. However, from the month on month comparison in the figure below, the real-time retail business of the two companies has not yet made a profit, but their operating revenue has started to decline first.

From the perspective of the nature of the model, compared to Meituan Flash Purchase and JD Home, which only provide platform services, Hema Fresh's business model, which not only covers the supply side but also has the delivery side, is more in line with the definition of real-time retail and has laid the brand concept of expanding to omnichannel retail in the future.According to the 2022 China Chain Top 100 released by CCFA on June 14, Hema Fresh ranked eighth with an annual sales revenue of 61 million yuan, and the news that it is expected to go public this year has attracted high attention from the market.

But it's still too early to conclude that it's the winner, after all, Hemamen has just reached 300 stores. In addition, in addition to JD Home and Meituan flash purchases, SF Express, which refuses to give up, has also launched local half day express services, and chain retail brands like Sam's Club also have their own 1-hour express service. Whether it's logistics companies, e-commerce giants, or physical retailers, anyone can take a share in this game, and the outcome will not be immediately apparent. The most important thing is that there are even larger market participants in real-time retail.

According to data from the China Chain Store Association, in the era of booming e-commerce industry, the growth rate of convenience store scale remains unchanged. In 2016, the sales growth rate of China's convenience store industry reached 31%, and the growth rate from 2019 to 2022 was not less than 10%, far higher than the overall growth rate of the physical retail industry. Even during the darkest years of the pandemic in the physical industry, convenience stores have maintained a growth trend.From 2020 to 2022, the sales of convenience stores in Chinese Mainland will reach 2961/3492/383.4 billion yuan, and the number of stores will reach 193/253/300100 respectively. And these convenience stores, which have maintained strong growth, have also started to follow the new retail format and become the largest and most simple players in real-time retail.

The proportion of convenience store enterprises that opened online services from 2020 to 2022 was 73%, 88%, and 92%, respectively. The proportion of online sales of enterprises that opened online services from 2021 to 2022 increased from 7% to 14%, and 63% of enterprises increased their morning and evening order volume and sales proportion through real-time retail. In order to better respond to consumers' immediate needs and establish closer connections with them, many convenience stores have begun to expand their coffee, fresh and other categories, and the whole family has also established a new brand called FamiSuper to lay out new business growth points such as fresh food.

Among the convenience stores with more than 90% online business, about 70% of enterprises rely on the third party for cooperation, that is, both the distribution end and the platform end rely on the third party, which is obviously a good factor for JD to Home and Meituan flash buying, which provide an instant retail Open platform. However, the cost of platform usage and excessive reliance on third parties can also exacerbate the operational risks of convenience stores to some extent. Some large chain convenience store enterprises that do not want to be coerced by any party are starting to improve their logistics networks and establish their own distribution mechanisms.

According to the 2022 China Convenience Store Top 100 released by the China Chain Association, Meiyijia has become the fastest opening and largest convenience store brand in China with over 30008 stores. And this king of convenience stores in China, which leads the per capita penetration rate of convenience stores in Guangdong and Guangxi to exceed the world level, has also begun to seize the opportunity of the times and further advance into the field of real-time retail.According to the official website of Meiyijia, Shijie Logistics Company will take over the warehousing, sorting and distribution business of Meiyijia in September 2023, marking the formal implementation of the Third-party logistics distribution strategy of Meiyijia.

Although the annual sales performance (39.18374 million yuan) was not as good as Hema Fresh, over 30000 Meiyijia stores achieved a complete victory in terms of scale and also achieved market decline earlier than Hema. Not only Meiyijia's over 30000 stores will independently complete real-time retail, but the three major Japanese brand convenience stores (Rosen, 7-11, and Quanjia) with a total of over 12000 stores in China also have the potential to independently complete real-time retail. However, without such a large platform entry and delivery scale, how should Meituan Flash Buy and JD.com Home respond?

In fact, in the central vision, real-time retail should not be monopolized by giants, but more importantly, it should empower local lifestyle stores.

On February 13, the Opinions of the Central Committee of the Communist Party of China and the State Council on the Key Work of Comprehensively Promoting Rural Revitalization in 2023 was officially released, which is the 20th No. 1 central document guiding the work of "agriculture, rural areas and farmers". The real-time retail described in this document is more of a new business format that meets diverse needs, helps local small stores increase revenue, enhances rural economy, and promotes the redevelopment of physical retail. And why is it just a local small store?

As of 2022, the online retail sales of physical goods have increased by 16.1%, 3.5%, and 5.7% for food, clothing, and consumer goods, respectively. From a scale perspective, clothing, shoes, hats, needles, textiles, and daily necessities still occupy an important position, accounting for 22.6% and 14.6% of the online retail sales of physical goods, respectively.

If more people only spend money on necessities and have less desire to purchase other high-end products, opening a local small store based on couples and combining real-time retail concepts is enough.

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