According to the Zhitong Finance APP, Huaxi Securities has released a research report stating that the instant retail industry is currently in a period of rapid growth. Platform-based Meituan Flash Purchase, along with front warehouses Dingdong Maicai and Pupu Supermarket, are gradually becoming profitable, and the industry is about to enter a &#34;scale expansion + profit realization&#34; dual-phase. Related beneficiaries include the leading Meituan (03690), which, relying on a user pool of 670 million, a network of 7.45 million couriers, and a lightning warehouse model, is expected to exceed 300 billion yuan in GMV for instant retail by 2025. Additionally, JD.com (09618), which has scenario synergy advantages, relies on the Dada fulfillment network to focus on &#34;hourly delivery + takeout&#34; across all scenarios, targeting a GMV of 100 billion yuan by 2025, with attention to the release of synergy effects with JD.com's main site. Dingdong Maicai (DDL.US), which is steadily expanding and achieving profitability, serves as a benchmark for refined operation of front warehouses, has been profitable for nine consecutive quarters, and the pre-prepared food/ outlet format opens up downward space.
<h2>The main points of Huaxi Securities are as follows:</h2>
E-commerce enters the era of stock competition, instant retail reconstructs the e-commerce landscape
Current e-commerce growth is slowing, entering a stock competition phase, while instant retail maintains a growth rate of over 20%. The e-commerce market occupies 35% of the overall retail market share, with annual growth rates around 10% since 2020, and the industry increment is gradually shrinking. In contrast, instant retail maintained a growth rate of over 50% from 2020 to 2022, with a year-on-year growth of 29% in 2023, becoming the incremental engine of e-commerce.
As an innovative model of e-commerce under localized and instant demand, a trillion-yuan market scale can be expected in the future. According to the International Trade and Economic Cooperation Research Institute of the Ministry of Commerce, the scale of instant retail in China reached 650 billion yuan in 2023, a year-on-year increase of 28.89%, accounting for 4.2% of online retail sales and 1.4% of the total retail sales of social consumer goods of 47.15 trillion yuan in 2023. According to the Ministry of Commerce's &#34;Instant Retail Industry Development Report (2024),&#34; it is predicted that the scale of instant retail will exceed one trillion yuan by 2025 and two trillion yuan by 2030, with a CAGR of about 15% over the next five years.
Business model superior to traditional retail, establishing barriers through efficiency
Compared to traditional retail, the business model of instant retail is better at forming barriers, making it difficult for competitors to replicate. Although significant initial investment and a longer profit cycle are required, once scaled, it has better customer stickiness, more stable market share, and profitability will increase with the rise in order volume.
1) Under the platform model, traffic and delivery networks are key competitive factors, with the latter being the main barrier for the platform. Similar to the logic of e-commerce, a larger traffic scale can attract more merchants to settle on the platform, increasing commission and marketing revenue. However, traffic can be acquired through various means, making it difficult to form differentiated barriers. What distinguishes instant retail from e-commerce is that the platform builds and enhances its delivery network to better meet consumers' demand for &#34;speed,&#34; establishing competitive barriers that are difficult to replicate. Referencing Amazon's FBA system, it adapts to local supply and demand distribution structures, establishing a deep moat through efficiency
2) The business model of front warehouses is more similar to traditional retail, where products are the key to competition, including differentiated supply chains (private labels, product selection) and supply chain management (quality control, loss management). At the same time, delivery efficiency will also affect repurchase rates, becoming another key factor. Front warehouses are moving towards profitability, with Dingdong Maicai achieving Non-GAAP net profit for nine consecutive quarters, and the Non-GAAP net profit margin for Q4 2024 reaching 1.9%. Its private label GMV accounted for 20% in 2023.
The landscape is solidified, with &#34;category expansion + penetration&#34; becoming the decisive factor
The multiple capabilities of platform companies can be reused, including chain merchant resources, delivery networks, etc., allowing for rapid scale expansion. However, the expansion of front warehouses must be based on differentiated supply chains and management, thus the strategy focuses on deep cultivation in core areas and then expanding to surrounding regions. The platform-based instant retail market presents a &#34;one strong, many strong&#34; pattern: Meituan's flash purchase leads with a 35% market share (with daily order volume exceeding 10 million), followed by JD.com and Ele.me in second and third place. Emerging forces are accelerating their entry: Douyin's &#34;hourly delivery&#34; relies on the live e-commerce ecosystem, with local life GMV expected to exceed 560 billion yuan in 2024.
The bank believes that the future competition will shift to &#34;full-category expansion + penetration&#34;: 1) Category expansion: Meituan's flash purchase is expanding into the digital home appliance category, collaborating with Apple/Xiaomi to establish 3C front warehouses; JD.com is launching a takeaway business, planning to cover 500,000 catering merchants by 2025.
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<li>Penetration: In 2023, the scale of instant retail in county areas reached 150 billion yuan, a year-on-year increase of 23.42%, accounting for 23.08% of the total instant retail scale. From January to August 2024, the order volume of Meituan's instant retail in county and other sinking markets grew by 54% year-on-year. The top three front warehouses are Xiaoxiang Supermarket, Pupu Supermarket, and Dingdong Maicai, collectively accounting for about 36% of the vertical market share.</li>
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Technology drives an efficiency revolution, focusing on leading certainty
Currently, the application of AI in instant retail mainly focuses on four aspects: intelligent pricing, product selection and inventory management, intelligent delivery optimization, customer service and experience enhancement, and precise recommendations, site selection, and layout optimization. The technological empowerment of instant retail has shifted from breakthroughs in single links (such as logistics) to full-chain intelligence, with future competition focusing on technological synergy capabilities and the depth of scenario penetration. Improving profitability from multiple dimensions such as fulfillment costs, inventory management, and operational costs. As of the end of December 2024, Meituan has opened 53 routes in cities such as Shenzhen, Beijing, Shanghai, Guangzhou, and Nanjing, completing over 450,000 orders, covering various scenarios including offices, communities, scenic spots, municipal parks, campuses, libraries, and ports, and can deliver over 90,000 types of goods, with the fastest delivery time being 6 minutes and 37 seconds

MPNGY

03690

09618

Huaxi Securities released a research report indicating that the instant retail industry is currently in a period of rapid growth and is expected to enter a "scale expansion + profit realization" phase. Platforms such as Meituan and JD.com are gradually becoming profitable, with the GMV of instant retail expected to exceed 300 billion yuan by 2025. While the growth rate of the e-commerce market is slowing down, instant retail maintains a growth rate of over 20%, becoming the incremental engine of e-commerce. In 2023, the scale of instant retail has reached 650 billion yuan, with a CAGR of approximately 15% over the next five years

- Huaxi Securities reports that the instant retail industry is experiencing rapid growth, with platforms like Meituan and Dingdong gradually becoming profitable.  
- The market is expected to exceed 1 trillion yuan by 2025, driven by a user base of 670 million and a robust delivery network.  
- Instant retail is reshaping e-commerce dynamics, maintaining over 20% growth while traditional e-commerce faces stagnation, indicating a shift towards a competitive landscape focused on efficiency and technology.

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Huaxi Securities: The Incremental Engine of E-commerce, Instant Retail Industry Embraces the New Blue Ocean of the Lower-tier Market