What has instant retail changed?

Author: Wang Bin

Cover: Unsplash

Every September, being able to get your hands on the latest iPhone right away is something to brag about. Although the iPhone's annual product launch is often criticized for lacking novelty, countless people still line up outside stores as soon as they go on sale. This year, when the iPhone 16 series opened for pre-orders, Apple's official website was temporarily overwhelmed, and it even trended on Weibo. Another change in September this year came from Huawei's entry. The Huawei Mate XT Extraordinary Master was launched and went on sale on the same day as the iPhone 16. On the 20th, the media crowded on Wangfujing Street in Beijing, where Huawei and Apple's flagship stores faced each other across the street, making it the frontline battleground for these two tech giants.

However, for average consumers, it's not easy to get their hands on the latest flagship phones from both companies on the 20th. The most popular iPhone 16 Pro Max is now almost sold out across the board, and consumers may have to wait up to 4 weeks for delivery. The Huawei Mate XT Extraordinary Master is even harder to come by, with media outlets describing it as 'selling out in seconds,' and scalpers offering it for tens of thousands of yuan, still in short supply.

Some consumers, however, are quicker than others. One iPhone user posted on social media that while the iPhone 16 Pro she ordered on an e-commerce platform would take 3 days to arrive, she later spotted it in stock on a food delivery platform, promptly placed an order, and used the new phone the same day.

Times are changing, and instant retail has joined in the September digital frenzy. With its faster speed, higher user stickiness, and appeal to younger consumers, it has launched a surprise attack on e-commerce platforms.

01｜30-minute delivery: Young people prefer buying phones through food delivery apps

How can you get your hands on the latest iPhone as soon as possible?

Queuing up at a store is the most direct option, but only if you can successfully pre-order a week in advance. On the night the iPhone 16 opened for pre-orders, Apple's official website was quickly overwhelmed by a surge in traffic, leading to a crash and trending on Weibo. By the time the website recovered, the iPhone 16 Pro series was out of stock across the board.

Not everyone has the option to pick up their phone from a physical store. Apple has only opened a handful of official stores in a few cities, mostly concentrated in first-tier and provincial capital cities. It's also difficult for most consumers to take time off work during the week.

E-commerce platforms are undoubtedly a more convenient option - if you're not bothered by having to wait until the day of release to use the new phone, not to mention that several e-commerce platforms are currently out of stock, requiring you to endure a wait of almost a month.

Instant retail platforms are trying to capture users with faster delivery times. Even before the iPhone's launch, platforms like Meituan, Ele.me, Kuaishou, and Douyin announced hourly delivery services for the new iPhone. Meituan and Ele.me, with their vast armies of delivery riders, are even more aggressive, promising delivery within half an hour.

The vast network of offline mobile phone stores across the country is one of the strengths of instant retail platforms. Meituan first partnered with Apple Authorized Resellers in 2020 when the iPhone 12 was launched, and has since connected nearly 7,000 Apple Authorized Resellers, covering over 2,000 counties, districts, and cities nationwide. Apple has even become the brand with the largest number of stores on Meituan Flash Buy. Ele.me began supporting pre-sales of new products this year, with the first batch of nearly 4,000 Apple Authorized Resellers going live.

Compared to couriers that can take days to arrive, the millions of delivery riders who crisscross cities can deliver goods much faster, sometimes in just minutes.

According to reports, since last year, smartphone manufacturers like Apple, Huawei, and vivo have successively launched new products on Meituan Flash Buy, with over 75% of users receiving their new phones within 30 minutes.

This isn't exclusive to first-tier cities. In fact, users in lower-tier markets may feel the benefits of faster delivery even more acutely on instant retail platforms. In the past, these users often had to wait several days for their orders placed through official websites or e-commerce platforms, unlike in first-tier cities where same-day delivery was possible. With instant retail, they can now enjoy delivery times on par with or even faster than those in first-tier cities.

For example, when the iPhone 15 was launched last year, the fastest delivery on Meituan took just 10 minutes and 42 seconds, and it wasn't in Beijing or Shanghai but in Shangqiu, Henan Province. This year, the fastest delivery was in Erdos, Inner Mongolia, where a consumer placed an order on Meituan as soon as sales opened and received their Desert Titanium iPhone 16 Pro Max from a delivery rider just 10 minutes later.

One reason for this is the increased number of stores joining the platforms. Last year, about 4,700 Apple Authorized Resellers joined Meituan, and this year, the number has increased to 7,000, with more of the growth coming from third- and fourth-tier cities and even rural areas.

An Apple Authorized Reseller in Jinghong, Yunnan Province, joined Meituan Flash Buy in 2021, and now online sales have become the main driver of business, with over 60% of sales coming from instant retail. On September 20th alone, more than 30 yellow-clad delivery riders arrived at the store to pick up iPhone 16s.

Delivery riders picking up phones at an Apple Authorized Reseller

'People are increasingly getting used to buying phones on food delivery apps,' said Yang Tao, the manager of the Jinghong store. Jinghong is a relatively small place, and customers trust offline physical stores more. 'Although Apple offers global warranty, it's still more convenient to go to a physical store for services like trade-ins, file transfers, and screen protector installations,' he added.

Instant retail platforms offer genuine product guarantees and online discounts, making them more appealing to users. Yang Tao explained that some tourists from first-tier cities, upon discovering discounts on Apple products and coupons online, would even check out the models in-store before placing an order through food delivery.

02｜Starting with a charging cable

The rise of instant retail can be seen as a microcosm of changes in China's consumer market.

Over the past few years, China's online retail sales growth has continued to slow, but the instant retail market has maintained an average annual growth rate of over 50%.

Consumer electronics, represented by mobile phones, have grown even faster. The White Paper on Instant Retail Consumer Electronics Industry released by iResearch this year estimates that the compound annual growth rate of consumer electronics in the instant retail market will reach 68.5% from 2021 to 2026, and the market size will exceed RMB 100 billion by 2026.

White Paper on Instant Retail Consumer Electronics Industry

Why are more and more consumers willing to buy phones through food delivery apps?

Speed is the top priority. Compared to e-commerce, the advantage of instant retail is that it can deliver within half an hour. Many consumers' first experience with digital products through food delivery apps is often for emergency accessories. If you forget your charging cable on a business trip, you can simply open a food delivery app, choose the nearest store, place an order, and have it delivered within 30 minutes.

With repeated consumption, users develop deeper trust in the platform, and buying electronics through food delivery apps gradually shifts from a rigid need to a non-rigid scenario, from an emergency to a regular demand.

For example, a 28-year-old female consumer in Guangdong, surnamed Liu (pseudonym), initially only ordered meals through food delivery apps. After buying a charging set in an emergency, she gradually developed a habit of ordering phone cases and routers through food delivery as well. When the iPhone 15 was launched last year, she saw promotions on food delivery apps and ended up buying the phone from an authorized store.

This is a notable characteristic of the younger generation that has grown up in the era of food delivery, distinct from past consumers. Their consumption behavior is highly 'contagious,' with a habit of making related purchases such as accessories, phones, computers, digital products, and household appliances.

The White Paper on Instant Retail Consumer Electronics interviewed over 3,000 users who have purchased electronics through instant retail platforms, noting that the accumulation of trust and surprises through daily rigid demand has driven these users to form a solid habit of buying electronics on food delivery apps.

Brands have seen the potential of instant retail earlier. Over the past few years, many digital brands, including Apple, Huawei, Xiaomi, vivo, and OPPO, have joined Meituan Flash Buy. When Xiaomi announced the integration of all its stores into Meituan in 2022, Lu Weibing explained that their earliest decision to partner with Meituan Flash Buy was to allow Xiaomi fans to buy Xiaomi products just like ordering food delivery.

For smartphone manufacturers, instant retail represents an entirely new market. Their user base is younger, with Meituan Flash Buy reporting a penetration rate of 48% among post-2000s. They have a higher frequency of phone replacement, with an annual replacement rate of 8% through instant retail channels, twice that of non-instant retail channels. Their average spending is also higher, with 34% of users spending over RMB 6,000 on a phone, and the average purchase price approaching RMB 5,000.

White Paper on Instant Retail Consumer Electronics Industry. Now, smartphone manufacturers have begun to view instant retail platforms as equally important new product launch channels as online e-commerce. The manager of an Apple Authorized Reseller in Chaoyang District, Beijing, explained that food delivery orders have been booming since pre-sales began this year, and 'instant retail has become increasingly significant for our dealers.'

03｜Bridging online and offline: Instant retail revitalizes offline stores

Compared to traditional e-commerce or offline channels, instant retail's advantage lies in combining the strengths of both online and offline.

Compared to e-commerce, instant retail offers greater certainty and faster fulfillment capabilities, and consumers don't have to worry about fake products - most instant retail stores are located near consumers. Compared to offline stores, instant retail breaks the dilemma of high prices and limited promotional offers in offline channels, allowing even offline stores to introduce online promotional offers.

Digital manufacturers with a large number of offline stores are naturally suited for instant retail. In the past, offline stores struggled under the impact of e-commerce platforms due to limited promotional offers and inflated prices, making it difficult to attract young people. However, with the added boost of instant retail, these traditional offline stores can also thrive.

For example, this year, Meituan Flash Buy launched promotions for the mobile phone market, including up to 12 interest-free installments, free bike-sharing cards, hotel vouchers, and other platform benefits. From September 13th to October 7th, Meituan also offered free 16-month savings wallet benefits worth RMB 1,600 to users who purchased multiple brands' annual flagship new phones.

For consumers, this means they can buy a phone without paying extra and still enjoy after-sales service at a physical store near their home. In addition to services like installment payments and trade-ins available on all retail platforms, they can also save money on future offline 'eating, drinking, and entertainment' activities. These active and consumer-potential young people are exactly what smartphone brands need.

During the launch of the iPhone 16, many users posted on social media that buying the iPhone through food delivery was faster and more affordable. 'Don't blame me if you can't grab one, I'm ordering food delivery and getting a 16-month membership coupon,' one user wrote.

User posts on social media

Especially during traditional e-commerce promotion periods, offline stores can also launch promotional offers simultaneously with the support of instant retail. During last year's 618 shopping festival, Xiaomi Home offered the same promotions on Meituan Flash Buy as online, with discounts of up to RMB 1,800. During the 2023 Double 11 shopping festival, GMV for mobile phones on Meituan Flash Buy increased by 800% year-on-year.

Earlier this year, Lenovo partnered with Meituan Flash Buy, making it an official channel for brand new product launches. With 2,000 offline Lenovo stores joining the instant retail platform, monthly sales exceeded RMB 100 million within three months.

'Platform promotions play a significant role in boosting online sales for stores,' said a staff member at an Apple Authorized Reseller in Beijing. Consumers are already strongly inclined to look for online promotions. Many users compare prices online before placing orders and sometimes even choose to place orders online after visiting the store, 'waiting for the rider to pick up the order and then collecting it directly from them,' the staff member explained.

Many brands are also exploring new supply models, including forward warehousing, to revolutionize their offline systems. They aim to sell more products on instant retail platforms, not just phones but also major appliances like air conditioners and washing machines. Currently, brands like Haier, Hisense, and Xiaomi already offer integrated installation services for major appliances on Meituan Flash Buy.

Since the beginning of this year, more e-commerce platforms have also increased their focus on instant retail. For example, Taobao revamped its homepage to include hourly delivery as a top-level tab, and JD.com launched a new brand called 'JD Instant Delivery' this year, merging JD Hourly Delivery and JD Daojia into one service.

From delivering charging cables to delivering phones, routers, air conditioners, and washing machines, the transformation of China's consumer market landscape by instant retail may only just be beginning.

©️ All rights reserved by Shangshan. Reproduction is prohibited without authorization.