With ‘instant commerce’, China’s first-world infrastructure faces third-world spending

A new battle in China’s e-commerce war has erupted in the form of “instant commerce”, a combination of online shopping and extremely fast delivery, as technology giants Alibaba Group Holding, JD.com and Meituan open a new phase of competition for consumers’ wallets.

Chinese consumers are set to be spoiled by new services offering “instant satisfaction” while shopping on China’s leading e-commerce platforms. Consumers in Beijing or Shanghai can order a cup of iced tea via a smartphone app and expect it on their doorstep within an hour. Even better, the total price including delivery might be less than US$1 because of heavy company subsidies. Alibaba owns the South China Morning Post.

The service is an upgrade from the old food delivery model, as it covers a wider range of products, from fast fashion to everyday items. China could be the world’s first country to make “instant commerce” a reality across major cities, thanks to its advanced transport and warehousing infrastructure, powerful algorithms and an army of delivery workers.

China’s reliable transport network, which connects many cities throughout the country, along with the logistics hubs and central warehouses affiliated with key e-commerce players, has provided the “backbone facilities” for the quick dispatch of consumer goods. More importantly, the development of automation and artificial intelligence (AI) has made distribution and delivery systems increasingly sophisticated, enabling them to predict consumer demand and facilitate instant delivery.

China’s millions of young, hard-working delivery workers also provide the “last mile” service that allows for doorstep delivery at an affordable cost. The working conditions of China’s delivery couriers – the most visible group of the country’s 200 million gig-economy workers – have been the subject of many studies and news reports in recent years, giving rise to the general consensus that these workers have insufficient social security and toil excessively long hours.

Still, investors are not happy about the intensified competition. Since JD.com made a high-profile attempt to take on Meituan with its own delivery force this year, the stock prices of both companies have plunged. Sellers can be forgiven, though, as the competition shows there is little room for additional growth, forcing platforms into a zero-sum fight.

  

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