JD.com's Self-operated Instant Delivery Begins Recruitment, Will Full Management Also Apply to Instant Retail?

Author|Wang Chi

Editor|Yang Zhou

According to exclusive information from "City Image", JD.com will soon launch its self-operated instant delivery service and has already begun inviting merchants through an invitation system. The recruitment materials obtained by "City Image" indicate that unlike JD.com's POP model instant delivery service, which was upgraded and launched in May, the self-operated instant delivery focuses on selecting high-quality partners from existing hourly purchase merchants to realize self-operation of JD.com's instant retail.

To attract high-quality partners, JD.com will offer three prime traffic positions: the homepage's instant delivery section, the instant delivery channel, and the JD Supermarket channel, providing one more entry point than the current JD instant delivery service. Beyond the increased traffic, this service will also use a unified "self-operated instant delivery" logo, leveraging JD.com's self-operated e-commerce user perception to boost instant retail conversion rates.

Throughout the entire ordering process, participating merchants only need to provide packaged goods. Marketing activities, customer service, and fulfillment services will all be managed by the JD.com platform.

The advantage of this is that for offline retailers who find home delivery services cumbersome, it allows them to earn additional online income with less effort. However, the downside is that merchants will lose control over their operations and become warehouses closer to consumers, using the platform's unified entry points, activities, and services.

Regarding JD.com's sudden entry into self-operated instant delivery, some industry insiders believe that JD.com excels at self-operation, and the long-standing perception of guaranteed quality can improve e-commerce traffic to home delivery conversion rates, even being considered a fully managed approach for instant retail. However, how fast this heavier model can scale remains to be seen.

Prior to this, Ele.me launched a semi-managed model in May to recruit merchants for its self-operated project, Omnipotent Supermarket, launched in 2022. However, as of now, the self-operated model has not become the mainstream in instant retail. Platform models, represented by Meituan, dominate the market with more partner merchants and forward warehouses.

In the past, self-operation was JD.com's path to success, modeled after Amazon, and a choice to differentiate itself from Taobao. Its emphasis on better products, services, and efficient shopping decisions is the greatest advantage JD.com has cultivated in the traditional e-commerce field over the past 20 years.

However, it is unclear whether JD.com can regain ground in its competition with Meituan when bringing its self-operated IP to instant retail.

On the one hand, the essence of self-operation is retail. In this model, JD.com plays the role of a large retailer rather than a platform, naturally prioritizing retail metrics such as inventory and turnover rate during operations. This poses a problem: self-operated SKUs have natural boundaries, tending to favor standardized products with high turnover rates and low transportation costs.

However, in the context of instant retail, fast-moving consumer goods (FMCG) are often used as traffic drivers due to their transparent pricing. Non-standardized products such as "unique items" and long-tail products in special scenarios are the main profit points.

An instant retail operator stated: In the transparent FMCG system, the profit margin on a smartphone costing a few hundred dollars may be lower than that of a pair of rain boots during rainy weather. The profit margin on a box of face masks may be lower than that of a pair of stockings. Under the brand supply and marketing price system, FMCGs are usually discounted to attract traffic and then bundled to generate profits.

This means that while self-operated models have natural advantages in standardized products, they also have inherent low-profit category defects when applied to instant retail.

On the other hand, from a business perspective: Meituan's approach to instant retail is to convert low-monetization dining traffic into higher-monetization retail e-commerce. Even if selling low-profit FMCG standardized products, it represents business growth for the platform in terms of overall scale and profits.

For JD.com, although much of the current growth in instant retail comes from the incremental market, in the long run, instant retail will inevitably compete for market share from traditional e-commerce. As such, JD.com's development in this area will inevitably face internal resistance related to profit and market share redistribution.

Despite this, instant retail remains a must for JD.com.

Data shows that the average annual growth rate of the instant retail market was approximately 50% in 2022, and it is estimated that the market size will triple by 2025. In contrast, the traditional e-commerce market in China reached 50.57 trillion yuan in 2023, with a year-on-year growth rate of only 6.31% compared to 2022.

With traditional e-commerce losing its mainstream growth narrative, JD.com must adapt and bet on self-operated instant retail rather than face a slow decline. Waiting for instant retail to erode traditional e-commerce market share is not an option if JD.com wants to secure a seat at the instant retail table sooner. After all, keeping up with the times is the ultimate answer for enterprises to survive through time cycles.

As JD.com enters the fray against Meituan with its 20-year business card in self-operated mode, it signifies that for JD.com, this battle in instant retail, one of the three must-win battles of 2024, has just begun, entering a phase of full-on combat.

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