Source | Bohu Finance and Economics (bohuFN)

Author | Lin En

This year, Lightning Warehouse continues to shine brightly in the retail sector.

In April, Meituan enhanced its supply chain service platform, "Lightning Help," for all Lightning Warehouse merchants. The primary goal is to steer them clear of the "race to the bottom in terms of price and quality."

As platforms intensify their efforts to optimize Lightning Warehouse operations, the era of unregulated growth for Lightning Warehouses is drawing to a close.

01 Competition in the Lightning Warehouse Space

In September 2020, Meituan pioneered the Lightning Warehouse model in cities like Beijing and Shanghai. Initially, these warehouses operated as front-end storage facilities to cater to local product demands.

2022 marked a pivotal shift. That year, the click-through rate and Gross Merchandise Volume (GMV) of the Lightning Warehouse business soared. Meituan recognized this as a burgeoning market and initiated a nationwide rollout, officially branding it as "Lightning Warehouse."

This model represents a novel approach to instant retail supply. In essence, merchants lease a warehouse spanning 120-300 square meters, stocking 3,000-5,000 SKUs to serve a 3-5 kilometer radius, operating around the clock. Once users place orders, Meituan's delivery network ensures delivery within 30 minutes.

By around 2023, Meituan's Lightning Warehouse business entered a phase of rapid expansion, with the emergence of "top-performing chain-brand Lightning Warehouses" across various regions.

For instance, Jiamei Xiaocang in Beijing and Baihui in Shandong have emerged as leading regional brands, adept at leveraging Meituan's Lightning Warehouse supply resources.

To further bolster branding and integrate supply chain resources, Meituan Flash Purchase launched the "Lightning Warehouse Procurement Platform" in 2022, primarily aimed at assisting new warehouses in stocking up.

In April 2025, Meituan Flash Purchase upgraded Lightning Help to version 2.0, offering comprehensive product operation support. Beyond enhancing supply capabilities, it incorporated data analysis tools to leverage the platform's precision in identifying unmet end-consumer needs. This facilitates prompt organization of upstream supply chain deliveries, targeted subsidies, and aids Lightning Warehouses and merchants in accelerating product lineup upgrades and iterations.

Subsequently, the "Lightning Help" brand underwent a rebranding, introducing a service provider program to enhance the capabilities of the Lightning Warehouse merchant groups it supports.

By the second quarter of 2026, the number of Meituan Lightning Warehouses had surpassed 50,000. Meituan Flash Purchase has set an even loftier goal: by 2027, Meituan Lightning Warehouses will exceed 100,000, covering all categories and regions, with an estimated market size reaching RMB 200 billion.

Despite this rapid growth, underlying market opportunities remain abundant.

Alibaba and JD.com are accelerating their entry into this space.

In August 2024, Ele.me launched the "Qinglan Plan" and further upgraded it at the year's end, implementing measures such as technical service fee reductions and traffic support for newly settled merchants.

Last May, following the launch of Taobao Flash Purchase, it offered substantial subsidies to top comprehensive Lightning Warehouse merchants in uncovered cities and business districts.

Large merchants received a RMB 50,000 subsidy for opening a new warehouse, while small merchants received RMB 30,000, nearly covering one to two months' profit for a Lightning Warehouse.

Taobao Flash Purchase also experienced rapid growth. As of July 12, 2025, the number of comprehensive warehouses under Taobao Flash Purchase had reached nearly 15,000, nearly tripling from the same period the previous year.

On the other front, JD.com is also ramping up its efforts. In 2025, JD.Logistics introduced the "Second-Delivery Warehouse" integrated warehousing and distribution service, adopting a "shared front-end warehouse + self-operated delivery" model. Claiming to be the nation's first provider of integrated instant retail warehousing and distribution solutions open to the entire industry, it offers merchants "minute-level" instant fulfillment services upon warehousing, lowering the barrier to entry for merchants in instant retail.

A veteran from a Meituan Lightning Warehouse startup revealed that JD.com poached core personnel from Meituan's Lightning Warehouse operations center and launched the "Second-Delivery Warehouse," directly competing with Meituan's Lightning Warehouse. Leveraging substantial subsidies and profit margins, it entices merchants to "join multiple platforms."

02 Opportunities in the Lightning Warehouse Landscape

From a purely profitability standpoint, instant retail may not seem like an ideal investment avenue.

Currently, products with relatively high penetration in instant retail are primarily fast-moving consumer goods, fresh produce, and other supermarket convenience items. Given the 2%-5% net profit margin in the supermarket sector, instant retail's net profit performance lags significantly behind the 5%-10% seen in the catering sector.

Some institutions have pointed out that, from an EBIT/GMV perspective, the current profitability of instant retail is expected to be lower than that of food delivery.

However, internet giants like Meituan remain steadfast in their commitment to this "challenging business." There are three layers of reasoning behind this stance.

Firstly, there is genuine demand on the consumer side.

Industry reports indicate that, through collaborative innovation among platforms, supermarkets, brands, small stores, and instant delivery services, instant retail will continue its robust development, with the market size expected to exceed RMB 2 trillion by 2030.

The trend of "buying everything via food delivery" is spreading from cities to counties and townships, with instant retail transforming from "emergency consumption" to a "daily lifestyle."

In the past, people only resorted to instant retail in emergencies: buying medicine late at night, purchasing an umbrella during sudden rain, or realizing they were missing seasoning while cooking. However, now, more and more daily consumption is completed through instant retail.

Instant retail has become a crucial area that some businesses cannot afford to overlook. Guosen Securities predicts that if the penetration rate of instant retail exceeds 20% by 2030, businesses that fail to布局 (layout) instant retail may experience negative GMV growth.

Secondly, the low barriers to entry and replicability on the supply side are also key to the rapid expansion of instant retail.

In recent years, many entrepreneurs have emerged in the instant retail sector, precisely as franchisees of Lightning Warehouses. The barrier to joining a Lightning Warehouse is not high, with investments ranging from hundreds of thousands to several hundred thousand yuan. Lightning Warehouses operate purely online, eliminating the need for prime street-front locations.

At the same time, platforms provide substantial support. For example, Meituan offers merchants a complete set of digital systems, including the Baichuan Retail Management System and the Qianniuhua System, covering product management, fulfillment management, employee management, financial management, user management, and supply chain management.

The "asset-light" model of instant retail has attracted many entrepreneurs to join the fray.

Furthermore, the fulfillment capabilities of platforms have been a core driving force behind the rapid development of instant retail in recent years.

Taking Meituan as an example, the rider delivery network it has built over the years has become a crucial foundation for its instant retail business. Currently, Meituan's delivery network covers 2,800 districts and counties, with a rider force of approximately 7.4 million, capable of processing tens of millions of orders daily.

The "Second-Delivery Warehouse" launched by JD.Logistics is, to some extent, a direct manifestation of JD.com's fulfillment capabilities.

Demand, supply, and platform empowerment have jointly driven the operation of instant retail. During this process, more opportunities have been discovered and met. For instance, demand has gradually become more segmented, leading to the emergence of specialized instant retail stores for beauty products and alcoholic beverages.

03 The Second Half of Rapid Expansion

What is certain is that although Meituan was the first to propose the concept of Lightning Warehouses, instant retail is no longer a business exclusive to a single platform.

According to the "China Instant Retail Market Report for the Fourth Quarter of 2025" released by Analysys, in the fourth quarter of 2025, Taobao Flash Purchase accounted for 45.2% of the transaction volume in the instant retail market, closely followed by Meituan with a 45% share. The two are essentially tied.

Additionally, JD.com's instant transactions held an 8.4% share, ranking third, while Douyin's Hourly Delivery platform accounted for a 1.5% market share.

In other words, after a year of fierce competition, the instant retail market has evolved from Meituan's dominance to a duopoly between Alibaba and Meituan.

This also reflects the intense market competition and the numerous uncertainties involved.

Besides the fierce competition, as the market transitions from an early dividend period (bonus period) to a phase of intensive cultivation, the "challenging business" nature of Lightning Warehouses has become more pronounced.

This point is most vividly reflected in the feedback from franchisees.

A Lightning Warehouse franchisee stated that his first store coincided with the "food delivery wars," when daily order volumes could reach 800 to 1,000. However, now, order volumes have halved, sometimes even dropping to 200 to 300 orders.

The instant retail market is shifting from relying on platform subsidies to testing the "true capabilities" of business models. Furthermore, the industry has become a business that increasingly relies on location selection, supply chain efficiency, and detailed management capabilities.

The cost of traffic, profits eroded by hidden losses, and the demand for refined operational capabilities have all become challenges faced by operators today.

To address these challenges, many operators are no longer solely pursuing low prices and order volumes but are instead choosing to raise average order values and optimize product mixes.

However, it is clear that within the same operational system, the challenges faced by franchisees also affect the platforms.

For platforms, the real test has just begun. Questions about profitability models, differentiated competition, the game of interests (interest game) between platforms and merchants, and the competition for supply chain influence await answers from the platforms.

These answers will also determine how high the ceiling is for the instant retail business.

References:

1. Shixiang: Alibaba and Meituan are Competing in Lightning Warehouses, but Victory May Lie Hidden in 1688

2. LatePost: The Invisible Convenience Stores: The Covert Battle for Instant Retail Between Meituan and Taobao

3. Jiemian News: Taobao Flash Purchase's Market Share Surges to 45.2% in the Fourth Quarter, Just 0.2 Percentage Points Behind Meituan

4. Economic Observer: Survey on the Current State of Lightning Warehouses: Order Volumes Decline, Profits Thin, Operators Scrutinize Every Detail in Business Operations

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