Alibaba's Taobao Quick Purchase is set to introduce "Taobao Convenience Store," marking a significant step in its brand upgrade strategy. The platform, which has been operational for six months since its relaunch on April 30, is now focusing on enhancing average order values in food delivery while exploring new possibilities in instant retail across its various business segments.

The upcoming "Taobao Convenience Store" will operate 24/7, offering a wide range of products, including groceries, snacks, beverages, 3C electronics, maternal and child products, and cosmetics. With approximately 10,000 SKUs—three times the variety of a typical convenience store and comparable to half of Walmart's selection—it aims to function as an online premium grocery store. Notably, Taobao Quick Purchase will not directly operate stores or manage inventory. Instead, it will provide qualified merchants with platform endorsement through brand authorization, along with support in traffic, product selection, supply chain, and logistics. Merchants must adhere to platform standards, such as 24-hour operation, order fulfillment speed, and low issue order rates.

Currently, both Meituan and Taobao Quick Purchase host around 15,000 "lightning warehouses"—online-only supermarkets with over 5,000 SKUs, often located in low-rent areas like backstreets, basements, or residential buildings. These warehouses handle most non-food instant retail orders for both platforms. The "Taobao Convenience Store" initiative represents an upgrade to these lightning warehouses, addressing challenges like price wars, low-margin private-label products, and poor customer retention by curating high-quality merchants.

The first phase will onboard over 30 merchants, with plans to expand to 2,000 stores across 200 major Chinese cities by next year. A Taobao Quick Purchase executive highlighted that brands seeking nationwide instant retail coverage would require at least 10,000 warehouses—a hurdle platforms can help overcome by collaborating with lightning warehouses as infrastructure partners.

The move into "Taobao Convenience Store" aligns with broader industry trends. While instant retail has matured in categories like fresh produce, pharmaceuticals, alcohol, and cosmetics, newer segments such as apparel, snacks, and personal care are growing rapidly. On Taobao Quick Purchase, apparel and home goods already rank as the second-largest category after supermarket items. However, inconsistent product quality and limited brand availability have left gaps in consumer demand, which the platform aims to fill by elevating merchant standards.

To ensure quality, Taobao Convenience Store will enforce strict entry criteria and ongoing assessments, covering service metrics (e.g., fulfillment speed, 24/7 operation) and product performance (e.g., stockout rates, return rates). Non-compliant merchants may face penalties, including product delisting or license revocation. Pilot collaborations with brands are underway, allowing them to distribute samples through lightning warehouses and scale inventory based on sales performance.

According to Hu Qiugen, General Manager of Taobao Quick Purchase's instant retail division, the goal is to "reward top performers with higher earnings" while leveraging the platform's influence to elevate overall product and service quality. This mirrors Pinduoduo's trajectory from private-label dominance to branded partnerships—a path lightning warehouses must now follow.

Despite advantages like real-time inventory updates and rapid consumer feedback, lightning warehouses grapple with high delivery costs, uneven product quality, and low repeat purchases. Overcrowding in certain areas has intensified price competition, prompting merchants to focus on SKU diversification and premium offerings. Currently, 80% of lightning warehouse SKUs are private-label products, driving 20% of revenue but fueling homogenization. Industry players emphasize the need for continuous product iteration to sustain profitability.

Meituan Quick Purchase has similarly shifted focus from warehouse expansion to quality improvement, launching official brand stores and a procurement platform. Meanwhile, brands like NetEase Yanxuan and convenience store chains (e.g., Sinopec, PetroChina) are entering the space, attracted by the potential of instant retail—a market still in its early stages despite heavy investment in food delivery.

Disclaimer: This content is for informational purposes only and does not constitute investment advice. Investors should exercise caution and conduct their own research.