China’s Meituan, Alibaba Enjoy a Boom in ‘Instant Retail’ Deliveries

China’s “instant retail” sector – which refers to online purchases delivered within an hour – is booming. Leading food delivery group Meituan reported a first-quarter net profit of 10.9 billion yuan ($1.52 billion), up 46% from 5.2 billion yuan in the same period a year ago, while e-commerce giant Alibaba has passed 40 million daily orders within a month of launching a similar service. Alibaba said on Monday its Taobao Instant Commerce portal, which delivers items within 60 minutes, brings merchants from its food delivery arm Ele.me onto its main domestic shopping app, Taobao, and is part of a broader move among Chinese online platforms in recent months to invest billions in so-called “instant retail”. Meituan – which operates an app providing services as varied as bike-sharing, ticket-booking and maps – reported revenue on Monday for the three months to March 31 of 86.6 billion yuan ($12.1 billion), compared to 73.3 billion yuan in the same period a year earlier. That represents a slightly larger-than-expected 18% rise as it targeted cost-conscious Chinese consumers with value-for-money products and services. Fourteen analysts polled by LSEG had expected a 16.5% revenue gain. This year has seen e-commerce giants jostle for position in the burgeoning “instant retail” sector. China’s Ministry of Commerce has said the instant retail market reached 650 billion yuan ($89 billion) in 2023 and it is expected to surpass 2 trillion yuan by 2030, growing at 28% annually — well over the 11% growth of standard online retail. Instant retail is also reshaping consumer habits, according to a report early this month that said a NielsenIQ survey found that 72% of instant retail users are under 35, with Gen Z making up a dominant share. Gen Z’ers reportedly value speed and experience more than price; saving time and having instant access to goods is becoming critical in purchasing decisions, it said. Alibaba and JD.com vs Meituan In February, online retailer JD.com responded to Meituan’s moves to expand beyond meals to other product categories that it delivers within the hour by moving aggressively into Meituan’s core food delivery business. Alibaba, which operates the second-largest food delivery app, Ele.me, has also moved to increase its bets on the instant retail space. Meituan has nearly 70% of the delivery market, Morningstar analysts said. Defending that customer base could prove expensive amid the intensifying competition, squeezing profit margins, they said. Another challenge could come from regulators, with China’s State Administration for Market Regulation recently drafting new guidelines about how platforms such as Meituan, JD.com and Alibaba should charge fees to merchants. Meituan’s revenue from core local commerce, which includes food delivery and non-food delivery service Meituan Instashopping, rose 17.8% to 64.3 billion yuan.

China’s Meituan, Alibaba Enjoy a Boom in ‘Instant Retail’ Deliveries

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