Flash-express shows way to biz prosperity
Such warehouses have no specific requirements for location, thereby cutting costs
“You have a new Meituan takeaway order, please prepare for it.”
Each day, as this message gets played repeatedly on a loudspeaker, staff members at Feixiang Convenience Store in Harbin, Heilongjiang province, busy themselves, packing commodities according to their serial numbers and waiting for the delivery partners to pick them up.
Teaming up with a childhood friend, 35-year-old Sun Zhang opened their first flash-express warehouse — an emerging business model for instant retail delivery — in the ice and snow city in March last year, and named it Feixiang.
Flash-express warehouses essentially sell all their goods online via deliveries.
The partners opened their 10th store on March 20, and plan to open two more in April.
“The store has no specific location requirements, which may help us save on expenses such as rent and wages. Relying on online platform Meituan for sales and delivery, we can achieve an average delivery time of about half an hour per order, with deliveries covering a radius of about five kilometers. Moreover, unlike most traditional retail stores that close at night, our stores are open 24 hours a day,” Sun said.
China’s leading online delivery platform Meituan began the flashexpress warehouse in 2020, mainly focusing on fast-moving consumer goods and general merchandise.
Each warehouse covers an area of about 200 square meters with an average of 4,000 to 5,000 stock keeping units, according to Meituan.
Before the flash-express warehouse was set up, Sun had achieved success from his community group buying business in Harbin.
“With the outbreak of the COVID19 pandemic, customers urgently needed a shopping model where they could place an order one day and pick up the goods from nearby convenience stores the next day,” said Sun. “Community group buying could meet their needs, so I made my first pot of gold.”
“The fast-paced life returned after the pandemic and people are no longer satisfied with next-day delivery, especially young customers,” he said. “Therefore, at the end of 2022, I decided to close my community group buying business and put all my efforts into instant retail.”
In the following months, Sun and his partner visited flash-express warehouses in cities such as Beijing, Wuhan in Hubei province and Guangzhou in Guangdong province.
On March 28 of last year, they opened the first Feixiang Convenience Store in Harbin’s Songbei district.
After just three months, Sun’s business venture began to make a profit. They subsequently opened eight more stores, including seven in Harbin and one in Shenyang, Liaoning province, by the end of 2023.
“Big data from Meituan can help us determine the category of goods and the timing of stocking,” said Sun. “The variety of goods in the stores has now expanded to more than 6,000, from sewing kits and hardware accessories, to quilts, electric appliances, breakfast foods and beer.
“We are trying our best to provide customers with whatever they need. For instance, we finished an order for a printer at 10 pm one day when all the shopping malls and large supermarkets had closed. We will seize market opportunities and provide our customers with good shopping experiences.”
Sun said an online convenience store with an area of around 200 square meters has a daily average turnover of over 10,000 yuan ($1,383), which is about 10 times that of a 70-square-meter convenience store.
According to Meituan’s flash-express warehouse business department, after several years of rapid development, its flash-express warehouse has become the preferred convenient format for instant retail customers, and has developed to more than 6,000 warehouses in over 200 cities across China, with a daily order volume of over 2 million.
The surge of tourism in Harbin during the past winter season also brought Sun more sales volume, especially for stores near scenic spots and popular business districts.
“We received more orders from tourists, such as hot packs, portable power banks and data cables. The sales volume of bath towels, swimsuits and suitcases was also quite high. During the period, we introduced new items such as refrigerator magnets and local souvenirs, which were favored by tourists. The order volume during the winter tourism season doubled,” he said.
Sun had, however, expected the orders to decrease significantly after the tourist season, but the reality was different.
“Currently, the order volume keeps steadily increasing with an average of 12,000 orders per store every month and 15,000 orders per month during peak periods. I think the new model has been accepted by more customers after the busy tourist season,” he said.
Policy support
In fact, there are more market opportunities and support has been forthcoming from the government.
In May 2023, the local government released the “Implementation Plan for the Construction of Harbin’s 15-Minute Convenient Living Circle”, which encourages the establishment of new types of operating and distribution points represented by front warehouses, and the provision of convenient, rapid logistics and distribution services tailored to different customer needs.
“Meituan’s flash-express warehouse business is a good attempt to transform the digital and intelligent business service industry, which can provide consumers with more convenient and personalized products and 24-hour instant delivery services,” Ji Jingyan, deputy director of the Harbin municipal bureau of commerce, said at a city summit in November.
Sun is also confident about the prospects of his business.
“We have plans to open 22 Feixiang stores in Harbin this year, which will also create employment and entrepreneurial opportunities for more people,” he said. “So far, we have recruited 20 youngsters, who are responsible for the daily online maintenance of the convenience stores, product big data analysis, and product selection.”
“We also plan to open a central warehouse in Harbin where most of the goods will be stored, thus reducing stocking pressure on individual convenience stores,” he added.
Wang Lili, a researcher at the Heilongjiang Provincial Academy of Social Science and director of its regional economic research office, said: “Relying on Meituan’s online traffic, the business can get a stable customer base.”
“Compared to common convenience stores or small and mediumsized supermarkets, flash-express warehouses have larger coverage radius and a wider range of goods,” Wang said. “Operators should pay more attention to the selection of products to ensure quality and marketing promotion to expand the consumer market.”
“However, the current high profits partly stem from Meituan’s policy support and partly from the fact that the market supply is not yet saturated,” she said. “When a large number of competitors enter the market and platform support policies disappear, there may be a situation of market saturation and declining profits.”