This article is a translated excerpt of a blog post written by Zouma Caijing, a China-based blogger and stock analyst focused on the digital economy. You can find the original post in Chinese here. Please note that the opinions expressed here are of the author, not Momentum Works.
Meituan Instashopping (闪购，the 3P quick commerce platform of Meituan) is promising, but it’s still in its early days. Borrowing from martial arts novels of famous Hong Kong novelist Jin Yong, you could say Meituan Instashopping has only mastered the third level of the “Nine Swords of Dugu.”
Now entering its seventh year, the business has already achieved breakeven overall. Investors are well aware of it, but most consumers still have little idea what Meituan Instashopping is. It didn’t even have a unified app entry point in the past.
Yet somehow, it kept growing fast. By Q4 2024, Meituan Instashopping was processing over 10 million orders a day and is still growing at high speed. Its 2024 GMV is estimated to be around RMB270 billion (US$37 billion).
In simple terms, Meituan Instashopping covers all real-time retail services including groceries, medicine, flowers and electronics on Meituan, in addition to the platforms’ core of on demand food delivery.
In the past, these services were scattered across Meituan: homepage icons, feed ads, search results, even Meituan Food Delivery’s in-app banners. Now, they finally have a portal: “Meituan Instashopping” sitting in the homepage’s top icon row, right next to food delivery, group deals, hotels, and healthcare.
Why Instashopping matters: Potential, Obstacles, and Long-term Value
- Potential
Meituan Instashopping is a business with a strong moat, largely thanks to Meituan’s massive delivery rider network. Like food delivery, it enjoys a three-sided network effect: merchants, riders, and consumers. The effect is even stronger than in traditional ecommerce for two key reasons:
- Riders are exclusive: Unlike ecommerce logistics (a public utility), Meituan’s rider network is highly proprietary.
- Time-sensitivity: Users care deeply about speed. When urgency matters, the leading platform often dominates. The same logic applies here.
With Meituan holding roughly 70% of China’s food delivery market, we estimate Meituan Instashopping could reach around 60% share in real-time retail, slightly less than food delivery, as the urgency for time is less.
In our previous forecast, we projected the real-time retail industry would hit RMB770 billion (US$105 billion) by 2025 and cross the RMB 1 trillion (US$137 billion) mark in 2026.
Meituan’s Instashopping GMV will likely pass RMB 350 billion (US$48 billion) in 2025 and RMB450 billion (US$61 billion) in 2026, occupying a market share around 45%. With Xiaoxiang Supermarket (Meituan’s 1P dark store network) included, Meituan’s overall share of quick commerce might reach 52%.
But beyond market share, the bigger question is: what’s the ceiling for quick commerce?
Some investors think it’s a niche market with a cap at RMB1.5 trillion (US$206 billion). Others argue that as delivery networks grow and costs drop, supply and pricing will improve, making it a viable mainstream retail channel alongside ecommerce and offline retail.
We believe that it is too generic to look at the whole market, instead, the potential depends heavily on the specific category.
Out of the many retail categories in China, 15 core categories are well-suited for digitalisation: fresh produce, consumer electronics, home appliances, apparel, beauty, personal care, cleaning, home goods, medicine, sexual wellness, flowers, eyewear, sports goods, auto supplies, and beverages.
Among these, ecommerce will likely continue to lead in high-ticket or long-tail categories like electronics, home appliances, fashion, and so on. But quick commerce already has the edge in five key categories: fresh produce, medicine, flowers, sexual wellness, and beverages, mainly due to their urgency and low ticket size.
Over time, categories like personal care and cleaning might also tip toward quick commerce as delivery improves.
In contrast, high-value, low-frequency categories like phones or appliances still favor ecommerce. They are planned purchases where price differences matter more than speed. For low-value, high-frequency items, Meituan Instashopping’s speed is an edge.
We project that in the long term, real-time retail could account for significant portions of these categories. Aggregated across all suitable categories, this channel could hit RMB2.5-3 trillion (US$343 billion-US$411 billion). If Meituan maintains a 60% market share, its GMV could hit RMB1.5-1.8 trillion (US$205 billion-US$247 billion).
- Obstacles
Two major obstacles still remain: supply-side weaknesses and high delivery cost.
Meituan Instashopping used to suffer from high prices, poor availability, and bad after-sales. But this has improved thanks to competition and investment. With over 30,000 dark stores now online, supply coverage is much better, even in lower-tier cities. By managing procurement and inventory internally, Meituan has also narrowed the price gap with traditional ecommerce.
As for delivery, costs have gradually dropped as the network has scaled. Besides, automation like drones or autonomous vehicles will eventually become much cheaper than human labour. At that point, quick commerce’s relatively higher delivery cost disappears.
- Long-term Value
In the context of escalating trade wars, quick commerce represents the largest and most certain source of growth in the consumer market.
Firstly, it does not diminish the existing value of offline retail at all. All orders ultimately require storage, processing, packaging, and delivery through offline stores, making instant retail complementary to traditional offline consumption.
Secondly, it creates significant incremental value. Take Meituan Instashopping as an example: since the launch of its “Flash Warehouse” model (franchised dark stores) three years ago, its daily average order volume has soared to around 5 million.
Orders placed between 9 PM and 6 AM — traditionally the offline retail industry’s downtime — now account for 26% of the total, with 124 million consumers having placed night-time orders via Meituan Instashopping. This model has essentially turned instant consumption into a 24/7 operation. Even during the day, much of instant consumption involves consumer needs that, if missed, disappear entirely.
Thus, for offline retailers, quick commerce acts as a “white knight” amid crisis, empowering physical stores with internet-driven capabilities and upgrading them from passive “sitting merchants” to active “mobile merchants” who can proactively reach out to consumers.
This model has not only driven the establishment of numerous community-based dark stores but also popularised the “Flash Warehouse” system, directly creating a large number of new jobs. The industry now sees close to 7.5 billion quick commerce orders annually, generating more than 860,000 new rider jobs. If we further consider the value created across the whole supply chains, the increase of indirect employment opportunities would be even larger.
For consumers, quick commerce offers unparalleled convenience and diversity in everyday life — and does so at low cost and with high quality.
For the broader retail industry ecosystem, quick commerce has effectively shifted the value once concentrated in commercial real estate: stores and warehouses are moving away from high-traffic areas to neighborhoods, underground warehouses, and even remote suburbs. The savings on rental costs flow back to consumers, merchants, and riders.
Quick commerce is a sunrise industry, much like ecommerce, capable of accommodating many players. And ultimately, the market will decide who stands the tallest.
