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after passing the profit turning point, what is the "new starting point" for instant delivery players? judging from the semi-annual reports disclosed by various companies, the focus may be on the degree of business penetration and the sustainability of scale expansion.

sf express and meituan announced their latest results on the same day (august 28). data showed that in the first half of the year, sf express's net profit was 62.17 million yuan, a year-on-year increase of 105.1%. it explained in its financial report that this was mainly due to the increase of more than 30% in orders compared with the same period last year, and the scale effect was further released. in the second quarter, the growth rate of meituan's flash purchase orders was more than three times that of food delivery. although the specific order volume was not announced, the total number of instant delivery orders composed of these two orders reached 6.2 billion.

image source: photo by kong zesi, reporter of china business network

a reporter from the daily economic news noticed that after being deeply integrated into jd.com's ecosystem and field, the newly renamed "dada express" saw its total order volume in the first half of the year increase by 15% year-on-year to 1.23 billion orders, boosting the overall market and revenue by 51% year-on-year.

in the past two years, instant retail has become a "potential stock" in the entire e-commerce retail market. as a supporting service for fulfillment, instant delivery will naturally show a collective growth in the scale of this business. more importantly, around "home delivery" and "store delivery", on the larger battlefield of local life, swords and swords are everywhere. taking over instant retail is the key, and only by truly leveraging local life can you become the final king.

after getting out of the dilemma of "difficulty in making profits"

after achieving full profitability for the first time last year, sf express's net profit in the first half of this year once again achieved significant year-on-year growth.

in the first half of the year, sf express's same-city gross profit was 473 million yuan, a year-on-year increase of 23%; the gross profit margin was 6.9%, a new high; the net profit was 62.17 million yuan, a year-on-year increase of 105%, which has exceeded the overall net profit level in 2023.

image source: screenshot of sf express’s intra-city financial report

in addition to being driven by a 30% year-on-year increase in order volume, sf express also explained in its financial report that on the one hand, it was due to the optimization of its business structure and the increased contribution of high-quality customers to revenue; on the other hand, it was due to the good maintenance of gross profit margin and expense rate.

the reporter noted that in addition to continued profitability, the revenue of the three major business lines, including same-city delivery services for consumers and merchants, and "last mile" delivery, all achieved double-digit growth. data shows that in the first half of this year, sf express's same-city delivery service revenue increased by 19.2% year-on-year to 4.038 billion yuan. revenues for merchants and consumers increased by 18.8% and 20.1% year-on-year respectively. in addition, the "last mile" delivery service revenue increased by 20.3% year-on-year to 2.841 billion yuan.

it’s not just sf express that has seen growth in revenue.

in a conference call after the release of the financial report, meituan cfo chen shaohui said that more and more categories have joined the flash sale business, and hopes to expand catering delivery to a wide range of on-demand delivery business, which is an important growth driver for meituan.

"the growth rate of flash sales orders is more than three times that of food delivery, and we expect this growth to continue in the next year." chen shaohui then gave specific forecast data for this continuation, "we are very confident that we can achieve a higher order volume during the peak season every year. during the peak season next year, perhaps our daily order transaction volume will exceed 100 million."

this growth is reflected in the financial report. in the second quarter, meituan's delivery service revenue for takeout and flash sales reached 23 billion yuan, a year-on-year increase of 12.7%. in the second quarter, meituan's total instant delivery orders were about 6.2 billion, a year-on-year increase of 14.2%.

in may this year, jd.com's miaosong completed brand integration and upgrade, and launched the "miansong zone" at the core position of the jd.com app homepage. after further integrating into jd.com's ecology and field, in the second quarter of this year, in the jd.com app field, the average monthly number of users and order volume of jd.com's miaosong increased by more than 100% year-on-year, and the high-frequency users of the jd.com app field increased by more than 110% year-on-year. excluding the impact of business adjustments, the average daily exposure users of the jd.com app field increased by more than 70% year-on-year, driving the average daily number of paying users to increase by more than 110% year-on-year.

zhuang shuai, an e-commerce analyst and founder of bailian consulting, said in an interview with the daily economic news that the growth of the "instant delivery" market is due to the recovery of offline physical scenes and overall consumption. in addition, major formats such as discount stores, community stores and membership stores are increasing their layout, giving local retail and instant delivery more business space, penetrating more physical scenes, and naturally accelerating the scale of each business.

the competition for quantity is fierce, and we need to grit our teeth and do penetration

generally speaking, in the e-commerce business, if you want to perform refined "operations" such as penetrating all product categories and increasing repeat purchases, it is inevitable to sacrifice short-term high growth in scale. but from the current perspective, no one seems to want to sacrifice "penetration" at the expense of scale.

the most intuitive example is the shift from “delivering food to delivering everything” in recent years. according to the sullivan report, the penetration rate of instant delivery for food delivery has reached 24.5%, but the penetration rate for instant retail is only about 2.1%.

compared with traditional catering delivery, non-food categories come with more high-value, high-demand, and high-standard delivery services that need to be fulfilled. these scenarios can bring higher average order values ​​and higher added value to the instant delivery platform, reduce the cost ratio, and naturally enhance profitability.

representative players may be meituan and sf express. both companies have been continuously penetrating into multiple non-dining scenarios such as local retail, near-field e-commerce, and near-field services to increase their business scale. the financial report shows that in the first half of 2024, sf express's non-dining scenario revenue increased by 32% year-on-year to 1.67 billion yuan, and there was a high double-digit growth in key scenario services such as supermarkets, convenience stores, medicine, and beauty.

image source: photo by zhang haini, reporter of china business network

dada has made key catering customers a strategic priority. dada chief financial officer mao jun said in a financial report conference call: "in the second quarter, the overall revenue of chain merchants increased by nearly 50% year-on-year, of which the net income of chain catering merchants increased by nearly 80%, and the number of new stores increased by more than double year-on-year." mao jun believes that from the perspective of business development trends, the demand for on-demand takeaway services in catering, beverages, supermarkets and other industries is still growing rapidly. therefore, he emphasized that the key catering customer business is the top priority this year.

it is worth mentioning that while releasing the latest results, dada also announced that the board of directors has elected guo qing as a director and member of the compensation committee, and will replace shan su as chairman of the board of directors, effective from august 20, 2024. according to information, guo qing has served as a consultant to jd group and dada group since april 2024. he was previously a member of the s-team, the highest decision-making body within meituan.

mutual exploration: the king of instant retail remains undecided

in terms of business volume and market coverage, meituan is the leader in local life, but it is not the only company that dominates the local retail segment. the first half of the year's performance also shows that the number of orders and revenue of each company are continuing to grow. at the same time, they are also matching the structure and sorting out the business lines.

zhuang shuai told reporters that meituan still relies on its huge team of delivery riders and its understanding of user minds to carry out instant retail business.

"specifically, meituan covers more regions and categories by connecting with offline retailers, self-operated forward warehouses, and franchised lightning warehouses. the profit model is also relatively clear, which is advertising from brand owners, commissions from some high-profit categories, and delivery service income represented by riders," zhuang shuai further explained.

as for the focus of jd.com's instant retail business, zhuang shuai emphasized that, from the current perspective, it is more about the integrated development with b2c e-commerce. at the same time, jd.com also has a relatively complete offline ecosystem, such as qishen, convenience stores, etc., in addition to forward warehouses, etc., which ultimately constitute a relatively rich supply system.

"at present, sf express may still focus on providing services, including cooperation with ele.me, douyin e-commerce, etc., and it is more in the role of a service provider to seek expansion in the instant delivery market. subsequent development may also be limited to a certain extent by the small size and weakness on the platform side." zhuang shuai said.

however, it is foreseeable that the boundaries of instant delivery are constantly expanding, penetrating into supermarket convenience, flowers and cakes, mobile phones and digital products, personal care and beauty products, etc. instant retail will still be the biggest "arena" in the e-commerce retail battlefield for a long time to come.

after rounds of competition in transportation capacity, contract fulfillment and even price, each company has begun to focus on the two major categories of catering and non-catering, and has penetrated into each other's hinterland. who can become the "king of instant retail" depends on the competition for ka customers (key customers) in various business fields. whoever wins may have a better chance of success.

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