In 2003, Taobao was launched, and in 2004, JD.com's predecessor "JD Multimedia Network" went online. By 2024, China's e-commerce industry will have gone through approximately 20 years of development. Data from the Ministry of Commerce shows that online retail sales amounted to 15.42 trillion yuan in 2023, an increase of 11% year-on-year, making China the world's largest online retail market for the 11th consecutive year.

Behind the multi-trillion-yuan pie, e-commerce is thriving in various forms: C2C, self-operated B2C, platform B2C, group-buying e-commerce, community e-commerce, content e-commerce, cross-border e-commerce, private domain e-commerce, instant e-commerce, etc. Among these, instant e-commerce is undoubtedly the biggest wave at present: a report from the Market Research Institute of the Ministry of Commerce Research Institute shows that the instant e-commerce industry continues to maintain high compound growth, with an average annual growth rate exceeding 30%, and it is expected that by 2027, the market size of instant e-commerce will exceed 5 trillion yuan.

(The scale of instant e-commerce is expected to exceed 5 trillion yuan by 2027)

With a trillion-yuan market and rapid growth, the instant e-commerce market has attracted numerous brands and merchants to tap into its potential. The industry has also formed a competitive landscape led by platforms such as Meituan Flash Delivery and Ele.me (including JD Daojia, Pupu Supermarket, etc.). However, in terms of development paths, a clear divergence emerged among the leading platforms starting in October 2024.

100,000 stores vs. 100,000 warehouses: A divergence between Ele.me and Meituan

In mid-to-late October, Meituan Flash Delivery and Ele.me held their annual conferences almost simultaneously and announced their latest policies.

Meituan Flash Delivery is fully committed to its "Lightning Warehouses." These can be seen as a Meituan version of front-end warehouses, specifically designed for brands or merchants to engage in instant retail. They offer functions such as warehousing, sorting, picking, and delivery, and have corresponding physical stores on the Meituan platform. Compared to traditional retail stores and warehouses, they offer advantages in rent costs, SKU display numbers, business hours, sales per square meter, monthly sales, and profit margins.

Currently, there are over 30,000 "Lightning Warehouses" on Meituan Flash Delivery. By 2027, Meituan aims to have over 100,000 Lightning Warehouses covering all product categories and regions, with an estimated market size of 200 billion yuan.

On the other hand, Ele.me has launched "Nearby Brand Official Flagship Stores" for brand merchants. These flagship stores adopt a social supply chain model, connecting offline stores such as front-end warehouses, integrated store-warehouse outlets, and in-store warehouses. Unlike the multi-level distribution network of traditional retail, brands have autonomous management rights over their official flagship stores, allowing them to engage in independent distribution, accumulate data assets, manage membership systems, and set their own prices.

In the words of Ele.me CEO Han Liu, through the nearby brand official flagship stores, Ele.me will better help merchants achieve continuous improvement in operational efficiency, bringing structural growth dividends and turning traffic into retained users, thereby increasing both orders and profits.

(Ele.me CEO Han Liu)

To date, there are over 20,000 effective stores on Ele.me's official flagship platform, including benchmark brands such as Mengniu Group's Daily Fresh Dairy, Tsingtao Beer, Nongfu Spring, Wall's, Philips, and RIO. With the influx of more and more brands, Ele.me expects to have 100,000 "Nearby Brand Official Flagship Stores" on its platform within the next three years.

(Introduction to Ele.me's nearby brand flagship stores)

Meituan's goal of 100,000 "Lightning Warehouses" and Ele.me's target of 100,000 "Flagship Stores" represent important milestones set by the two leading platforms for the next three years. Both involve the number "100,000" and a timespan of three years. One focuses on "building warehouses," while the other emphasizes "opening stores." Upon closer inspection, it becomes evident that the two platforms are increasingly choosing divergent paths in instant e-commerce.

(Advertisement for Meituan Lightning Warehouses on WeChat Moments)

As optimizing supply-side efficiency by breaking time and space constraints becomes the next focus for industry breakthroughs, the role of "brands" as key players in the industry is becoming increasingly critical and sensitive.

How will nearby brand official flagship stores change the game?

What is instant e-commerce? The simplest explanation is an e-commerce model that delivers products faster and more "instantly" after an order is placed. For example, when a consumer places an order on a platform like Ele.me, they can receive their goods within 30 minutes.

Around 2013, food delivery platforms began exploring non-food categories such as pharmaceuticals and flowers. Since it evolved from food delivery, instant e-commerce has inherited the "food delivery gene," with local stores serving as the core supply unit. When users search on Meituan Waimai or Ele.me, the product providers are generally "nearby stores" or merchants, such as large supermarkets, mom-and-pop shops, chain stores, and front-end warehouses. Meanwhile, the brands that supply products to these stores have remained "invisible," with no direct contact with consumers during transactions.

At this stage, supply in instant e-commerce is fragmented and bottom-up, leaving limited room for brands to make an impact. Ele.me, recognizing the needs of brands, introduced brand pavilions early on, allowing brands to participate in terminal operations by offering coupons, among other methods. After brands initially tasted the benefits of instant e-commerce, the need for a comprehensive layout or even strategic focus on instant e-commerce became increasingly urgent.

According to insiders at Ele.me, this is precisely the context in which Ele.me's "Nearby Brand Official Flagship Stores" were born. Their primary value to brands lies in bridging the disconnection between brands and consumers in instant e-commerce scenarios.

When users search for brand keywords like "Bright Dairy" or "Wusu Beer" on Ele.me, the official flagship stores of the corresponding brands will appear at the top of the results. Unlike official flagship stores on traditional e-commerce platforms, those on Ele.me have a "location" suffix, such as "Wusu Beer Official Flagship Store (Shanghai Luyuehui Store)." The "(Shanghai Luyuehui Store)" indicates the "nearby" attribute of this flagship store, which is also the fundamental guarantee for orders to be fulfilled instantly within 30 minutes.

(Brand official flagship stores on Ele.me)

With operational rights over their flagship stores, brands have greater autonomy in marketing and service. At the same time, official flagship stores enable brands to accumulate data assets, gain a more precise understanding of consumers, manage membership systems, and expand operating time and space at lower costs.

According to Hu Qiugen, Senior Vice President of Ele.me and Head of the Urban Retail Business, through brand official flagship stores, "brand merchants will enjoy greater operational autonomy and control over their instant e-commerce operations. Ele.me will also better help merchants improve operational efficiency by breaking time and space transaction restrictions in instant e-commerce, thereby bringing structural growth opportunities to merchants."

(Hu Qiugen, Senior Vice President of Ele.me and Head of the Urban Retail Business)

As a platform, Ele.me provides brands with digital tools and growth capabilities, such as product selection, pricing, and marketing advice. It also works with brands to identify market opportunities and even assists in new product development and launch. At the 2024 Instant E-commerce Future Business Summit, Ele.me introduced the OAIPL model, a scenario-based audience asset operation model that helps brands more precisely target audiences, see more segmented scenario audiences, and operate audience traffic more widely and intelligently.

(Ele.me's OAIPL Audience Asset Operation Model)

Like "Lightning Warehouses," Ele.me's goal with its "Flagship Stores" is to optimize supply in instant e-commerce. However, it is evident that Ele.me does not believe that front-end warehouses are the optimal solution. In fact, it believes that there is no so-called "optimal solution" in the supply chain network of instant e-commerce.

For example, mobile phones and 3C products may not be suitable for front-end warehouses due to high inventory costs. Brands like Apple, with over 4,000 authorized stores, can directly sell their products through these stores. On the other hand, grocery vendors in wet markets provide a service of carefully selecting the best produce, eliminating the need for front-end warehouses. Convenience stores located near residential areas have the advantage of faster delivery, sometimes within just 10-15 minutes. Ele.me aims to adapt to different business models, building a platform where merchants can learn from more advanced experiences and better serve consumers.

For consumers, official flagship stores offer more possibilities. In addition to flagship stores, consumers can also choose third-party merchants like Hualian Supermarket and Dingdong Maidan that offer corresponding products. Compared to these third-party stores, official flagship stores offer a richer selection of more differentiated products and targeted services. For example, ice cream brands can focus on ice cream delivery, while cake shops can ensure that cakes arrive undamaged during delivery.

Due to the diversity of consumer needs, both brand flagship stores and third-party stores have their place in the instant e-commerce platform. When users want to purchase specific items like beer, they can order from official flagship stores. If they need to buy a variety of products at once, such as snacks and drinks for watching a game, they can order from third-party stores like supermarkets. The coexistence of flagship stores and third-party merchants is somewhat similar to the current far-field e-commerce industry, where platforms like Taobao and Tmall together satisfy users' consumption needs.

Industry analysts believe that as a new model in instant e-commerce, Ele.me's nearby brand official flagship stores may fundamentally change the game rules - industry supply will no longer rely solely on local merchants operating independently but will instead be rolled out systematically for instant e-commerce.

In recent years, many brands have seen success in their self-initiated exploration of instant e-commerce before strategically deploying it. For example, many mobile phone stores in various cities have spontaneously opened stores on food delivery platforms and explored the market. Once they achieved initial success, mobile phone brands then collaborated with platforms to promote collective store openings and sales nationwide. For instance, in September 2022, over 3,000 Xiaomi Homes nationwide successively joined Ele.me, and during the initial sales of iPhone 16 this year, Ele.me partnered with nearly 4,000 Apple Authorized Resellers to support the simultaneous launch of iPhone 16 in stock.

By catering to brand needs and creating conditions for them to embrace instant e-commerce from the top down, Ele.me is likely to accelerate structural upgrades on the supply side, further igniting a surge in demand on the consumer end. Driven by the "flywheel effect," the instant e-commerce industry will accelerate its growth.

Instant e-commerce enters the second half, and retail competition divides

Over the past 20 years, China's e-commerce industry has evolved from a decentralized and extensive model to one that is refined, high-quality, and brand-oriented. For a long time, the suppliers on e-commerce platforms were primarily small and medium-sized merchants and individual sellers. It was only after the rise of Tmall, which focuses on brand flagship stores, and JD.com, which combines a platform and self-operated model, that the e-commerce industry experienced a massive explosion and diversification. Continuous upgrades on the supply side, coupled with marketing campaigns like Tmall's Singles' Day, attracted more users to become loyal e-commerce fans, rapidly expanding the industry's size.

A similar drama is now unfolding in the instant e-commerce industry, with the curtain just beginning to rise.

Before the pandemic, instant e-commerce was relatively small-scale. However, during the pandemic, the "stay-at-home economy" boomed, and driven by emergency needs, more users became accustomed to placing orders for everything on platforms like Ele.me. Even after the pandemic, users developed a dependence on the "more instant" shopping experience, making instant e-commerce a more deterministic consumption model. The latest report from the Market Research Institute of the Ministry of Commerce shows that as of 2023, the order volume of China's instant delivery industry reached approximately 40.9 billion, an increase of 22.8% year-on-year, with a market size of 341 billion yuan, up 24.8% year-on-year.

Today, with the coinciding launch of Ele.me's "100,000 Flagship Stores" and Meituan Flash Delivery's "100,000 Lightning Warehouses," instant e-commerce has transitioned from fragmented store operations to brand-level operations. This change in business models will propel instant e-commerce into a new era of quality, branding, and centralization.

(Chen Yanfeng, Vice President of Ele.me)

It is foreseeable that more brands will rise and grow on the soil of instant e-commerce, just as they did on far-field e-commerce platforms like Tmall, JD.com, and Pinduoduo in the past. For brands and merchants, embracing instant e-commerce and opening brand flagship stores not only provides a new growth point but also facilitates the integration of online and offline channels, enabling collaborative operations among brands, merchants, and stores.

At the 2024 Instant E-commerce Future Business Summit, Luochao Channel observed that many attendees were from brands such as Snowflake Beer and Castle Yogurt. In traditional retail formats, brands would send marketing teams to supermarkets and other terminals for "secondary sales" to help stores sell products better. For example, restaurants might have beer promoters, and supermarkets might have yogurt promoters. With the rise of instant e-commerce, savvy brands have established teams to assist in store sales, primarily through coupon distribution to drive secondary sales. Now, under the "nearby official flagship store" model, brands can engage in "primary sales" and collaborate with social supply chains.

Over the years, the e-commerce industry has not been short on new concepts. From O2O to new retail to community group buying to today's instant e-commerce, they have all aimed to achieve two primary goals: 1) Increase merchants' operational efficiency, enabling them to earn more money while obtaining more orders, strengthen brand power, accumulate user assets, and make business easier; 2) Enhance users' shopping experience by providing higher-quality products at lower prices, faster delivery, and better service.

In 2017, Lei Jun shared his understanding of new retail at Alibaba's World Internet Conference: New retail is more efficient retail, "using the same products and prices as e-commerce in offline stores, thereby achieving e-commerce efficiency in retail." Seven years later, instant e-commerce, which blurs the boundaries between online and offline, is continuing to refresh this efficiency by offering consistent efficiency, pricing, and experience across channels. Getting closer to consumers, gaining a more accurate understanding of their needs, and satisfying them more immediately is the essence of instant e-commerce and the ultimate goal of retail evolution. Although Meituan and Ele.me are increasingly choosing divergent paths, they are both fully accelerating their efforts.