How quick commerce becomes a trillion-yuan market in China

In February this year, JD.com, a leading ecommerce platform in China, entered the food delivery market. We said then that JD’s real intention might be disrupting Meituan’s aggressive move into quick commerce, which erodes JD’s dominance in the premium customer segment in China.

Few realise that JD was once a pioneer in the space of quick commerce in China. Here is a brief history of quick commerce in China, excerpted from a blog post written by Zouma Caijin, a China-based blogger and stock analyst focused on the digital economy. Please note that the opinions expressed here are of the author, not Momentum Works.

1. A brief history of quick commerce in China

Over the past decade, China’s quick commerce industry has grown rapidly, marking yet another major retail transformation. The Chinese retail sector has historically evolved in 15-year cycles:

  • 1990–2004 saw the rise of supermarkets
  • 2005–2019 was dominated by aggressive e-commerce growth
  • 2020–2035 may become the heyday of quick commerce

In November 2014, Missfresh launched in Beijing, becoming the first dedicated quick commerce platform in China. However, the year 2015 is widely seen as the true starting point for this industry. Alibaba and JD, equipped with the billions of dollars of funding from their US IPOs the previous year, joined the competition.

JD Daojia (京东到家, JD.com’s on-demand retail platform) was launched in April 2015. In the same year, Alibaba founded Freshippo (盒马, Alibaba’s grocery chain blending e-commerce and offline experience), which opened its first store in Shanghai in January 2016. Ironically, Alibaba adopted self-operated retail for Freshippo, diverging from its traditional platform/marketplace model, while JD moved toward platform operations for Daojia—each adopting the other’s past strategy.

By 2017, the two ecommerce giants began to mirror each other even more. JD launched Seven Fresh, mirroring Freshippo’s format; Alibaba responded by launching Taoxianda (淘鲜达), a service similar to JD Daojia.

Meanwhile, other players emerged:

  • Pupu (朴朴超市, a Chinese grocery brand offering 30-minute delivery from its own dark stores) launched in Fujian in 2016
  • Dingdong Maicai (叮咚买菜, a fresh grocery delivery app with fast fulfillment from its own cold-chain system) launched in Shanghai in 2017
  • Meituan’s grocery service Maicai (美团买菜) began internal testing in 2019

From 2015 to 2019, JD led the industry, leveraging Dada’s (达达, a Chinese company that runs an on-demand delivery and retail platform) logistics network and forming strategic alliances with major retailers like Yonghui (永辉超市, a major Chinese supermarket chain focused on fresh food), CR Vanguard (华润万家, China’s largest supermarket chain), Walmart, and Sam’s Club.

A true challenger arrived in 2018, when Meituan went public in Hong Kong. In July that year, Meituan launched Meituan Instashopping. By 2020, Meituan Instashopping had surpassed JD Daojia in quick commerce scale, widening the gap further thereafter. In 2024, Ele.me (饿了么, Alibaba’s food delivery platform subsidiary) joined the game with the launch of Omni Supermarket (全能超市).

The membership retail model also gained traction. Walmart’s membership store Sam’s Club, with fewer than 50 stores in China, handled over 400,000 online orders per day in 2024 and surpassed RMB100 billion (US$13.7 billion) in sales. Costco, another American membership retail player, entered the Chinese market much later than Sam’s Club, opening its first Shanghai store in 2019 and reaching an estimated RMB10 billion (US$1.37 billion) in 2024 with just seven physical stores.

Both Sam’s Club and Costco use curated product strategies, limiting their SKUs to around 4,000 in a 10,000-square-meter store. This enables massive per-item sales—for instance, a Swiss roll alone generated over RMB1 billion (US$13.7 million) in sales annually in Sam’s club.

Today, all major quick commerce players in China are learning from these two in terms of supply chain management.

(For details of Sam’s Club success in China, read the following articles on Momentum Works’s account:

  1. Sam’s Club’s good days in China might be numbered!
  2. Sam’s Club model is the only sustainable model in social and live commerce?
  3. Sam’s Club is the real winner in China’s new retail war?)

The quick commerce industry now follows four major business models:

  • Platform model: Meituan Instashopping, JD Daojia, Ele.me Omni Supermarket
  • Dark store model: Xiaoxiang Supermarket, Pupu, Dingdong Maicai
  • Warehouse-store integration: Freshippo, JD Seven Fresh
  • Membership-based stores: Sam’s Club, Costco

In 2025, the quick commerce market in China is expected to approach RMB1 trillion (US$137 billion), continuing to grow at over 20% annually. When a sector reaches such scale while maintaining high growth, it signals a transformative trend.

2. How the trillion-yuan market was built

In 2024, platform-based quick commerce generated approximately RMB412 billion (US$56.7 billion) in sales and is projected to reach RMB535 billion (US$73.7 billion) in 2025, growing at 30%.

Before 2019, JD Daojia was the largest player, with 1.2 times the scale of Meituan Instashopping and triple that of Ele.me. The dark store segment was still nascent, and other players like Freshippo and Sam’s Cub focused on offline operations.

The COVID-19 pandemic in 2020 was a turning point. Meituan Instashopping capitalised the most and invested heavily in its supply chain, notably through “lightning warehouses” (闪电仓), enhancing its capabilities on the supply side.

By 2024, the dark store top three reported the following sales:

  • Meituan (小象超市，原“美团买菜”): RMB38 billion (US$5.2 billion)
  • Pupu (朴朴): RMB33 billion (US$4.5 billion)
  • Dingdong (叮咚): RMB25.6 billion (US$3.5 billion)
    Total: RMB94.6 billion (US$13 billion), expected to reach RMB119.5 billion (US$16.4 billion) in 2025 (24% growth)

The membership and hybrid models had combined sales of RMB176 billion (US$24.2 billion) in 2024:

  • Costco: RMB10 billion (US$1.37 billion)
  • Freshippo: RMB66 billion (US$9.1 billion)
  • Sam’s Club: RMB100 billion (US$13.7 billion)

For 2025, their projected online sales are:

  • Costco: RMB6 billion (US$826 million)
  • Freshippo: RMB49.5 billion (US$6.8 billion)
  • Sam’s: RMB60 billion (US$8.26 billion)
    Total: RMB115.5 billion (US$15.9 billion), with ~21% annual growth

Additional players in that sector—like Seven Fresh (七鲜, JD.com’s premium supermarket brand combining fresh food retail with in-store dining and online delivery), Walmart, and Yonghui—contribute RMB80 billion (US$11 billion) more, leading to an overall market scale of RMB850 billion (US$117 billion).

At this pace, the market is expected to exceed RMB1 trillion (US$137 billion) by 2026.

Quick commerce should not be seen as a local extension of e-commerce. Rather, it is the digital transformation of local retail, just as food delivery digitized dining:

  • The platform model digitizes offline retail stores by expanding from food to include all local categories.
  • Dark store model focuses on fresh groceries, with higher demands on speed and quality
  • The quick commerce part of the membership-based warehouse store is essentially about digitizing its own stores.

The total retail market size in China for 2024 is RMB 50 trillion (US$6.9 trillion), with RMB 15 trillion (US$2.1 trillion) coming from online sales. This means that the remaining RMB 35 trillion (US$4.8 trillion), which is from offline sales, represents the potential market for growth.

The growth momentum of quick commerce comes from a full upgrade in consumer experience:

  • More choices: Thousands of nearby stores aggregated online, visible without leaving home
  • Faster delivery: You pay to save time, your time becomes more valuable
  • Lower prices: Richer supply and shorter procurement chains make products cheaper
  • Better products: Dark stores and warehouse models curate selections more effectively

This upgrade is comprehensive, irreversible, and represents a shift in consumer habits.

3. Why quick commerce and AI are a natural fit

Quick commerce addresses modern Chinese consumers’ desire for certainty in a high-paced society: certainty of supply (real-time mobility, goods follow people), of speed (30-minute delivery), of quality (platform regulation and digitalized reviews), and of pricing (transparent and competitive).

As productivity rises, lifestyles accelerate. Mobile-native generations already expect rapid fulfillment; AI-native generations will expect even more. The shopping experience will evolve—from searching, live streams, comparisons, consultations, and reviews, to a single intelligent assistant handling everything in seconds.

These shifts are irreversible. Just as we never returned to button-controlled TVs after using remotes, or to Nokias after smartphones, people won’t easily return to the search engine era once they get used to LLMs offering direct answers.

As local retail becomes more digitalised, quick commerce supply will expand, and its model – centered on curated, high-demand items located near consumers – will drive lower unit costs and faster turnover. Retail brands like Costco and Sam’s Club have already demonstrated this advantage.

In FMCG (fast-moving consumer goods), pricing in dark store models is already on par with traditional e-commerce. The cost difference now lies in fulfillment: e-commerce averages RMB2–3 (US$0.4) per order; quick commerce still doubles that.

But if AI enables automation in warehousing and delivery, this gap could close rapidly.

4. Who will lead the trillion-yuan quick commerce market?

Retail is, at its core, a battle of cost and efficiency. Traffic and supply chain capabilities matter only if they support these two fundamentals.

Some people believe traffic is key – but even with vast traffic, companies like Tencent or Baidu didn’t dominate retail. Platforms like Douyin and Kuaishou grew rapidly because their video recommendation systems allowed merchants to actively reach consumers, shifting from passive search to proactive targeting.

Pinduoduo uses similar logic through text and images; the format differs, but the mechanism is the same.

Others claim supply chains are the core. But while Suning (苏宁, a major Chinese retailer offering electronics and home appliances) and Gome (国美, a traditional Chinese electronics retailer ) had strong procurement channels, they lacked in technology, labour efficiency, and fulfillment speed—ultimately losing to JD. A strong supply chain alone isn’t enough.

We can compare quick commerce business models according to those dimensions:

  • Procurement costs: Self-operated models have the advantage.
  • Warehousing costs: Early on, platforms are more flexible; In the long run, dark stores and membership models are more efficient.
  • Fulfillment costs: Platforms initially benefit by reusing delivery networks; long-term, dark store model is superior.
  • Customer acquisition: Platforms lead, though strong supply chains (e.g. Sam’s Club) can drive organic growth.
  • Turnover, operational, and delivery efficiency: All favor self-operated models.
  • Matching efficiency (supply to demand): Platforms have the edge.

In the short term, platform models are more scalable and benefit faster from AI-driven improvements in matching and logistics. In the long term, self-operated models offer better cost control and operational efficiency.

Top players are Meituan, Alibaba, and JD. Others like Pupu and Dingdong are too small to influence the industry. Costco and Sam’s Club are strong in retail but face limitations in local adaptation.

Douyin and Pinduoduo are technically strong, but their local supply and delivery capabilities are weak. If one is weaker, it’s likely Douyin, even though it has tried “1-hour delivery” for a while. Pinduoduo tends to enter mature markets aggressively and executes well.

Among the core three:

  • Meituan and Alibaba are Tier-0 players—balanced, with few weaknesses. Meituan leads in both platform (Meituan Instashopping) and self-operated (Xiaoxiang) supply models and has unmatched fulfillment capabilities. Dark stores, with fewer legacy burdens, may outperform warehouse-store hybrids long-term.
  • Alibaba has the technical edge, especially in AI and cloud infrastructure. If it launches a leading AI product for consumers, it could leapfrog Meituan.
  • JD is a Tier-1 player—its strengths lie in procurement scale and mega-warehouse experience. With RMB1.5 trillion (US$206 billion) in self-operated procurement, it dominates all categories except fresh food. However, JD’s technical and fulfillment capacities lag behind the other two.