Latest / Let's talk Marketplace / Anything, in 30 Minutes: Inside China's 30-Minute Retail Boom (China Commerce Update with Ed, Part 2) #LTM162

Transcript

Anything, in 30 Minutes: Inside China's 30-Minute Retail Boom (China Commerce Update with Ed, Part 2) #LTM162 · Let's talk Marketplace

• 0:00
  They came to the market.
• 0:01
  I said, I don't think that this, this is going to work.
• 0:05
  Why not?
• 0:06
  Because of the margin on the products and the cost structure of instant retail here in Europe.
• 0:17
  Let's Talk Marketplace.
• 0:18
  The Marketplace podcast with Ingrid Lomar and Van Vridichte.
• 0:25
  And here we are again with let's Talk Marketplace.
• 0:28
  Great, you tuned in again.
• 0:29
  I'm Ingrid, your host, as always, and I do hope you have been listening to us last week because there we were diving together with Alsander, my guest for today and for last week into what Timo is doing or
• 0:42
  Pindodo, their mother company is doing with their private label initiative, which should make a lot of people tremble a lot more in their seats than they actually are doing at the moment.
• 0:52
  If you have missed that, absolutely go there and listen to that part because we are now continuing the episode and we will continue talking about China commerce.
• 1:02
  And now today our main topic is quick commerce, what is happening in China and how fast things are happening there.
• 1:10
  And I think that is maybe Ed's most favorite topic to talk about when it comes to China commerce.
• 1:18
  So yeah, that might take longer than normally assigned.
• 1:22
  30 minutes.
• 1:23
  We'll see.
• 1:24
  In any case, it's great to have you back, Ed.
• 1:27
  It's good to have you.
• 1:28
  And we just did our first part on I learned a lot about what Timu is doing with their private label initiative and yeah, lots of food for thought and possibly you will give me a lot more.
• 1:43
  Now, when we are talking about what is happening in China, specifically because we have always been, when you are my guest, we normally look at what Timo is doing, what is doing with regards to what is happening in
• 1:56
  Europe, what they are planning for Europe, what they are doing here, how they are attacking this market and how different they are acting to the local Western European or American players.
• 2:08
  But today I'd like to look at what China itself is doing in the market because lots of things are happening there as well.
• 2:16
  And I guess we are not giving that the attention that it should.
• 2:21
  So maybe before we start out, what is quick commerce when we are talking about it in a Chinese setting?
• 2:28
  Can you give us an example?
• 2:29
  What does that quick commerce mean?
• 2:31
  Yeah, so in China they actually don't talk about quick commerce.
• 2:35
  They call it instant retail.
• 2:38
  So an instant retail is set apart from traditional retail where you buy something on a platform and it gets delivered like in two, three days.
• 2:47
  It also is set apart from same day delivery.
• 2:50
  For instance, Jingdong JD.com in China is very strong in same day delivery because they have all of these city warehouses and then you normally get it delivered maybe in four to eight hours.
• 3:05
  But instant retail is really that you place an order in an app and it gets delivered within an hour, quite often within 30 minutes.
• 3:15
  And where is it delivered from?
• 3:16
  It's either delivered from a store, that store could be part of the platform, or it's delivered from a third party store where the third party basically has joined an instant retail platform.
• 3:28
  So you might order your groceries and get them delivered within 45 minutes, but you could also have like the newest iPhone that is coming out that Moment delivered within 15 minutes at your doorstep.
• 3:39
  So it could be both food, fmcg, but all kinds of products basically.
• 3:45
  So that's instant retail.
• 3:47
  Okay, yeah.
• 3:49
  So that gives us an idea.
• 3:50
  Delivered within 30 minutes or an hour.
• 3:52
  That sounds fantastical in a way.
• 3:57
  How broad is this trend in China?
• 4:00
  Because before we started our recording you told me that you have been visiting several areas of China.
• 4:07
  And I think most people that are from western Europe that are visiting China maybe know the big cities, tier one and two cities as you often call them.
• 4:17
  So is that something that is happening in this very urban areas or is that also happening in more rural parts in China?
• 4:26
  Well, maybe not so much the rural parts.
• 4:29
  What you do have in rural parts is community group buying, but that's basically next day delivery at a drop off point.
• 4:36
  But that's not very fast through instant retail.
• 4:40
  Having said that, instant retail mostly follows the same sort of pattern that food delivery follows that started out in the big cities, then went from first tier cities, second tier cities, third tier cities, and now in small cities
• 4:56
  you can also go on an app and have your Chinese food delivered within an hour.
• 5:02
  So instant retail is sort of following that.
• 5:05
  So I would say that probably in all first, second and some of the third tier cities in China you will find instant retail.
• 5:17
  Now to give you an idea about what that means, the first tier cities are Beijing, Shanghai, Guangzhou and Shenzhen.
• 5:25
  Those all have like 20 million or more citizens living in the urban area.
• 5:31
  And then if you go to the second tier cities, those are mostly the capitals of the provinces.
• 5:36
  And if you go down to three third tier cities, they might still have like 5 to 10 million people living there.
• 5:43
  And it's also one of the reasons why this works so well in China, because of the population density.
• 5:49
  Now as far as your question, how common is this?
• 5:55
  We saw during COVID that there were a couple of companies in Europe that came up like flash delivery companies like Gorillas, et cetera, et cetera, that had these Dark stores Heavenly promoted by giving away €25 coupons to get
• 6:10
  your first order.
• 6:12
  And all of the students would get their beer and their potato chips on them and never come back.
• 6:19
  But in China, actually, instant retail already started in 2015, 2016, mostly by grocery delivery companies.
• 6:29
  They would also have these dark stores, but they would focus on fresh produce.
• 6:35
  Why?
• 6:36
  Because in China, culturally, people expect very fresh products.
• 6:42
  So you want your meat, you want your fish, you want your vegetables and your fruits to be as fresh as possible.
• 6:49
  So as a matter of fact, most of the fish that that is sold by instant retail companies is still alive in their warehouses.
• 6:58
  Okay.
• 6:58
  And they either get killed before they are taken to the consumer or they are taken in a box that it is still alive when it arrives at the consumer.
• 7:08
  So that's.
• 7:08
  Freshness is incredibly important in China.
• 7:11
  So now this, this whole thing so was already going on for about five years.
• 7:16
  But of course, during COVID where people got into lockdowns, they were not the lockdowns that we had here in Europe that you could go take a walk in the forest.
• 7:26
  No, people had to stay in their apartments.
• 7:29
  So then these instant retail companies became very important.
• 7:32
  And especially for instance, if you have a company like Ding Dong Mai in Shanghai, they were preferred supplier.
• 7:40
  They were appointed preferred supplier by the government.
• 7:43
  And that's one of the reasons why they are one of the survivors in this very competitive market nowadays.
• 7:48
  So it is very common and it's growing more and more now on top of this, why is it also growing so fast?
• 7:56
  Because in initially it was mostly about groceries and necessities, things that you needed quickly.
• 8:04
  It could be medicine, for instance.
• 8:05
  You need that now.
• 8:06
  You need that medicine very quickly.
• 8:09
  But it has gone beyond the urgent needs to immediate gratification.
• 8:17
  I buy something, I want it now.
• 8:19
  I want that iPhone in 15 minutes.
• 8:21
  I want whatever I buy in 15 minutes.
• 8:24
  So I.
• 8:25
  And since all of the retailers that are selling all kinds of product categories are also joining on those marketplaces, you can basically buy anything by instant retail and have it delivered within an hour.
• 8:38
  So thereby it's not just groceries and FMCG anymore.
• 8:43
  It's basically anything that you can buy.
• 8:47
  So it started out with the supermarkets and the grocery chains, I guess, but by now the big e commerce companies are running, running the game.
• 8:57
  Is that correct?
• 8:58
  Yeah, correct.
• 8:59
  Yeah.
• 8:59
  There's.
• 9:00
  There are some startups that were very active in this, this area now.
• 9:07
  So basically there's.
• 9:09
  There's three types of instant instant retail that I need to explain.
• 9:13
  The first model is store plus warehouse now the most, the most well known example of this is Alibaba's HMA or Fresh Hippo where they have a supermarket that consumers can go to, but also the staff in the supermarket
• 9:30
  is actually order picking and they put these goods into these baskets and they go above your head in a conveyor belt to a warehouse where they also pick the fast movers.
• 9:40
  Because you don't let the store staff do that.
• 9:42
  You have that in the back warehouse that gets combined into an order and then there's a whole army of delivery staff, couriers waiting at the back of the supermarket to bring that to the consumer.
• 9:54
  So they call that store plus warehouse.
• 9:58
  The second example is the dark stores or what they call in China, front end warehouses.
• 10:07
  Those are the ones that deliver mostly the groceries.
• 10:13
  And there's two big companies that are still active.
• 10:17
  Ding Dong Mai Tsai Ding Dong Mai Tai has been bought by Meituan, one of the biggest Internet companies in China.
• 10:24
  And you have Pupu Supermarket in.
• 10:26
  Sorry, I didn't come up with the name.
• 10:29
  So Pupu, they are active in the south of China and they are probably going to be bought by Alibaba because they are the last independent startup and Alibaba really needs that to compete with Meituan.
• 10:46
  The third category is the marketplace.
• 10:49
  This is a platforms where you as a retailer can join the platform, you join their ERP system.
• 10:56
  You basically upload all of your assortment and you will receive the orders from the platform.
• 11:03
  You go and pick and pack it yourself and the courier comes and picks it up and brings it to the consumer.
• 11:07
  Now something that on top of that has been developed is what they call lightning warehouses.
• 11:14
  Lightning warehouses is basically when you still have a dark store, but these dark stores are linked to these different marketplaces and they don't have a physical store anymore.
• 11:26
  And they also don't focus on grocery, they focus on all kind of packaged goods.
• 11:30
  But all could be swimsuits or basketballs or anything that might be popular at a certain point.
• 11:38
  And then they work together with Mateuan, with Alibaba, with all of these different platforms.
• 11:44
  JD.com also has a platform for that.
• 11:47
  And the very interesting thing is that they are normally these drugstores are always in residential areas, but especially those lightning warehouses are quite often in basements.
• 11:58
  So you go down a flight of stairs and sometimes another flight of stairs and you get into this very dark basement and there's some light at the end of a corridor and there's like a whole underground convenience store
• 12:10
  sort of.
• 12:10
  It's just smaller aisles where they are packing these things.
• 12:14
  So these different types of these three different types are where all of the main platforms jd, Alibaba and Meituan are basically competing in.
• 12:27
  So it's not that they focus on one type, they sort of have different types which also sometimes integrate.
• 12:34
  So hma, for instance, the Alibaba's Fresh Hippo supermarket, you can also order there on the marketplace of Taobao instant commerce.
• 12:44
  So the third model.
• 12:48
  So that's basically what the market looks like, but it's completely run by these three big Internet companies.
• 12:55
  And last year there was a big war between those three because they subsidized the consumers to start using their platform.
• 13:04
  And together they burned more than 150 billion renminbi divided by about 7 or 8 to get to euros just in consumer discounts windows consume.
• 13:17
  So that shows you what is happening.
• 13:19
  Now one of the reasons also why this is taking place is that especially if you have the non food stuff also available within an hour, that will start to cannibalize on your traditional e commerce.
• 13:34
  So if Alibaba doesn't have instant retail for non food, then it will cannibalize on their Taobao and on their TMALL platforms.
• 13:42
  So they have to follow this trend and also have these goods available through different business models.
• 13:49
  Are there numbers on how big the percentages of instant retail of the full Chinese commerce?
• 14:00
  I think probably around this time is about 10% already.
• 14:03
  But it's growing really, really fast.
• 14:06
  If you look at traditional e commerce in China and even live commerce, that's basically stagnating.
• 14:13
  So the big growth market for e commerce is instant retail.
• 14:17
  And like I said, that partially cannibalizes traditional next day or two, three days later.
• 14:25
  I mean, because the full of Chinese e commerce isn't growing anymore.
• 14:28
  So of course it has to take its shares from some other part.
• 14:32
  But how is this working for the merchants on the marketplaces?
• 14:37
  Do they deliver the products themselves?
• 14:40
  Do they deliver that to one of those lightning warehouses so that it can be picked there?
• 14:45
  Is it more expensive for the retailers to sell their stuff on these quick commerce or instant commerce retail platforms than the normal marketplaces?
• 14:55
  Yeah, if you talk about merchants.
• 14:57
  So basically that's the brands of the products that are being sold.
• 15:01
  There is not really a retail scene.
• 15:04
  Well, you have for instance, take for instance Decathlon.
• 15:09
  They also have stuff delivered by instant retail.
• 15:12
  And the thing that they do, and the same with Walmart for instance, they simply connect to a marketplace.
• 15:18
  A consumer places an order that arrives at the system in their store.
• 15:24
  It gets picked and packed and then the courier of the platform, because the couriers are always run by the platform, whether it's the first, second or third model that I described, the couriers are always delivered by the platform.
• 15:41
  But Decathlon or Walmart will not have its own couriers.
• 15:46
  So basically, if you look at those marketplace platforms, they deliver the app, they deliver the traffic, and they take care of pickup and delivery to the consumer.
• 15:58
  Last miles, so to speak.
• 15:59
  But still the warehouses of for example, Decadelon or Walmart have to be where this service is offered, of course, because I mean, Korea can't drive.
• 16:10
  Correct.
• 16:10
  Hundreds of miles.
• 16:11
  Yeah.
• 16:12
  And what sometimes happens is that if this is very successful, for instance with Sam's Club is a very good example.
• 16:20
  So Sam's Club is part of Walmart and they have these enormous big stores in the suburbs of the cities in China, but they have what they call cloud warehouses, which are basically front end warehouse dark stores in residential
• 16:36
  areas.
• 16:37
  And Sam's club has about 4,000 SKUs and they put about 1,000 of the most fast moving SKUs in those cloud warehouses.
• 16:47
  So as a consumer, you can either go to the big store in the suburb and just take your car and load up, or you can order from one of those dark stores and have it delivered within an hour.
• 17:01
  And if it's one of the SKUs that they don't have in the front end warehouse, they will deliver it to you from the big stores next day.
• 17:10
  So Walmart also, if you go to a Walmart store, they normally have in, in the basement they have a whole e commerce fulfillment center.
• 17:21
  And quite often they even use staff in the supermarket that does the picking.
• 17:26
  Because a Walmart store is a hypermarket, it's quite big, and instead of having their own stuff, they just rent or hire people from Jingdong that does the order picking in the store, bring the stuff downstairs in the basement
• 17:39
  to the fulfillment cent, and the couriers come and pick it up there.
• 17:42
  So a whole new type of infrastructure is being created around these different concepts.
• 17:49
  Now if you talk about lightning warehouses, then Lightning Warehouse is basically run by an independent entrepreneur, sometimes a franchisee, because these lightning warehouses, after a few years all started to become franchise organizations and, and the brands that are
• 18:08
  on the shelf there for them is basically an extra distribution channel.
• 18:13
  So they distribute to supermarkets, to lightning warehouses, to front end warehouses.
• 18:19
  So it's an extra channel.
• 18:21
  Some of these lightning warehouses, by the way, they buy their stuff on 1688, which is Alibaba's or wholesale platform in China, or they buy it on Pinduoduo.
• 18:36
  So you see that even in those areas, Pindodo is becoming like the wholesale supplier to instant retail.
• 18:43
  So there's all kinds of mixed models for that, but for merchants, it's for brands, I should say it's an extra channel.
• 18:54
  Now, if you look at the merchant being the retailer, either separate store or for instance, the person that runs a lightning warehouse, so they don't have to have their own couriers because the platform form delivers the couriers.
• 19:09
  However, they have to pay for the delivery now.
• 19:13
  And that's, that's the thing, because delivery normally tends to cost between 6 to 8 remb, which is about a euro, which is very cheap, of course, compared to the delivery here in Europe.
• 19:24
  But it does eat into their margin because the orders tend to be quite small.
• 19:29
  The average order value tends to be quite small.
• 19:32
  So order as a whole, unless the platform subsidizes part of this, it's quite often not profitable yet.
• 19:42
  However, the idea is that when things get more and more automated, because what you see starting to happen in China is that warehouses start to get automated.
• 19:52
  For instance, you already have some warehouses, some pharmacy warehouses, where a humanoid robot does the order picking, still in early stages, but they're already experimenting with that.
• 20:03
  And you also have these automated autonomous delivery carts driving around certain cities in certain parts of China delivering the goods.
• 20:11
  So that means that you have less staff in the dark store and you also don't need the courier anymore.
• 20:25
  What a fascinating discussion, isn't it?
• 20:27
  But before we continue, a very quick break because our Marketplace Universe webinar fall is about to start and we've got four free sessions lined up for you to help you sharpen your Marketplace game this autumn.
• 20:38
  So, also very, very interesting, starting on September 17th, our deep dive into TikTok Shop for Brands.
• 20:44
  Max Borianek, head of TikTok Shop Germany, and Florin Wein, co founder of Bedrob, break down how to tap into a network now reaching 200 million people across Europe every month.
• 20:56
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• 20:59
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• 21:04
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• 21:07
  Germany, Czechia, Slovakia, Poland, Austria, Italy, France, Spain and the Netherlands.
• 21:13
  Dorin Schum, head of Marketplace Sales at Kaufland, will walk us through the expansion numbers.
• 21:19
  And Etienne Sahin of FTT Distribution is.
• 21:23
  Also there to show us how that.
• 21:25
  Actually looks from a seller perspective across who is active across all of them.
• 21:30
  Next on October 13th, Marketplace Seller Trends with channel engine Valerie and Joris Steins dig into the findings of the Marketplace Shopping behavior report of 2025, where and how you can best reach your Marketplace customers according to great data.
• 21:45
  And last but not least, on October 27th we look at the CE markets together with base.
• 21:51
  That's the continuation of last year's massively successful session.
• 21:55
  And this time we go even deeper.
• 21:57
  We look at how you can expand successfully into this highly interesting but also highly competitive market markets.
• 22:05
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• 22:10
  All you have to do is register.
• 22:11
  The links are in the show notes or on marketplace universe.com webinars okay, thanks for listening.
• 22:18
  And back to the episode.
• 22:25
  You've been talking about how there's being created a whole new structure for instant commerce.
• 22:34
  There's lightning warehouses.
• 22:35
  There's warehouses that have to have their basement as a full delivery center.
• 22:40
  They have.
• 22:40
  There's couriers, of course.
• 22:42
  And yeah, of course logistics are cheaper in China as we are used to that in Europe.
• 22:49
  But still it's a big, big, big chain of people that has to be paid.
• 22:56
  And yes, automation is on the way, but not as far as it needed to be for this kind of thing to really be profitable.
• 23:05
  So I mean, how expensive is that for the consumer at the moment?
• 23:10
  Or is that being totally subsidized by the fighting Internet companies?
• 23:15
  Yeah, it's basically last year it was mostly subsidized because all of these big platforms, they wanted to get the consumer to use their platform.
• 23:26
  So that's where all of the 150 or more than 150 billion renminbi evaporated.
• 23:33
  But quite often the consumer pays at least part of the delivery fee.
• 23:38
  But just like we have here with traditional E commerce, if your order value is high enough, then maybe you don't have to pay any delivery fee.
• 23:46
  If you go below, then you might have to pay half of it.
• 23:50
  So there's different situations there.
• 23:52
  There.
• 23:52
  Yeah.
• 23:54
  So I mean you're talking about how automation is.
• 23:59
  Yeah, is is carrying some of the cost structure here, but is that moving fast enough for this trend to become like a central part of Chinese E commerce before it is so unprofitable that you know the companies will
• 24:16
  just have to drop out again?
• 24:19
  Well, when I said it's not profitable, it really depends a bit on what model you look at.
• 24:25
  So if for instance, Alibaba's, where they have the store and they deliver from the store, but they also, on top of that now also have dark stores in residential areas, they have been profitable for two years now.
• 24:39
  Ding Dong Mai Tsai, which is a front end warehouse model where they deliver mostly groceries and also live fish.
• 24:48
  They have a small margin, might be less than 1%, but they are basically profitable and they are growing and they are expanding now.
• 24:57
  So one of the reasons why the lightning warehouses currently are struggling is because some cowboys saw, oh, this is very easy.
• 25:07
  I just ran the basement somewhere.
• 25:09
  I put all kinds of SKUs, up to 10,000 SKUs in it and I join a platform and there were so many people joining that that you get what they call in involution.
• 25:20
  H1 involution.
• 25:22
  So you try to run faster in this treadmill, but, but, but you're not moving ahead because there's too many other people doing the same thing.
• 25:32
  So there's now actually more like a situation where there's a consolidation and a lot of these front end warehouses are lightning warehouses are going bankrupt.
• 25:43
  So bit by bit these models are starting to get profitable.
• 25:48
  So it really depends on what part of the chain you're looking at and if you're looking at the platforms.
• 25:54
  But it's something that's not going to go away.
• 25:56
  So for instance, you asked me, what percentage of the market is this nowadays?
• 26:03
  And I said, well, the total market is probably 10%.
• 26:05
  But if we specifically look at Alibaba in the last quarterly results, Instant commerce Taobao, Instant commerce as they call it, which is instant retail plus meal delivery, is 30% of their domestic commerce in China.
• 26:22
  So it's already 30%.
• 26:24
  Okay, so and that, that, that's will.
• 26:27
  That will grow even even further than that.
• 26:29
  So it's not something that, that is going to go away again.
• 26:35
  That's okay.
• 26:36
  Interesting.
• 26:37
  I said in the beginning that we wanted to focus on China and China commerce for this episode.
• 26:43
  And that's fine.
• 26:44
  Before we close down, let's maybe turn around at least for once to the European side as well.
• 26:50
  Because when what we could talk about in this episode today, I said, yeah, well, Q commerce is a nice topic because after all, of course we are moving really much slower over here.
• 27:03
  But there are some signs picking up here as well that this might be having a reunification in a way because the topic of Q commerce has been popping up and down in European E commerce scene over the last
• 27:19
  years and it has never really took off.
• 27:21
  Of course.
• 27:21
  Covid, of course was also a push for that.
• 27:24
  But then people started to realize, oh, this is actually quite expensive, we better rather not do it.
• 27:30
  But things are turning around.
• 27:32
  I mean, there's Delivery Hero, there's Walt doing all Sorts of things and establishing themselves as sort of a new platform in a way.
• 27:40
  And Uber as well.
• 27:41
  For example, Uber Eats where you can sell stuff to people in an instant retail environment.
• 27:51
  And when I told you this, you were like, yeah, I don't think this is going to work in Europe.
• 27:54
  Europe.
• 27:55
  So it depends.
• 27:57
  Yeah, it depends.
• 27:58
  I mean I think I've always said that when those flash delivery companies like gorillas and ZAP, etc.
• 28:03
  Etc.
• 28:04
  They came to the market, I said I don't think that this, this is going to work.
• 28:09
  Why not?
• 28:10
  Because of the margin on the products and the cost structure of, of instant retail here in Europe.
• 28:17
  Now I quite often we spend a full day during our study tours on instant retail, including a big masterclass and during the masterclass that lots of people always say, yeah, this works in China because the labor is cheaper.
• 28:32
  But that's, that's complete nonsense because the salaries are also lower in China.
• 28:37
  So it's all relative.
• 28:38
  And if you actually look at, I've, I've made a comparison of a flash delivery company in Amsterdam versus an instant retail company in China in Beijing.
• 28:51
  And then relatively speaking the delivery costs, so the labor costs are roughly the same as a percentage compared to the average income.
• 29:01
  So that's not the thing.
• 29:02
  But the main thing is that the population density in China is so much higher.
• 29:10
  And then I show them an aerial picture of Amsterdam and you see all these houses, very little high rise.
• 29:16
  Most of the high rise buildings are for offices.
• 29:19
  And then I show Beijing and it's all like buildings of 20 floors or more.
• 29:25
  So the density of people within 1 square kilometer is just much higher.
• 29:30
  And that makes it feasible, especially if you are an Internet company that already has the traffic and adds instant retail to their basket of services and says, well, you could buy this.
• 29:42
  And previously it took two to three days to get it, now you can get it within an hour.
• 29:47
  Of course everybody's going to use it that they might pay a bit more, but they are willing to pay maybe a bit more to have it now that instant gratification.
• 29:56
  So it could work in very densely populated areas in Europe.
• 30:02
  But as I often say in China they live vertically, we live horizontally.
• 30:08
  I live in a house with three floors and a garden.
• 30:11
  You don't see that a lot in China.
• 30:13
  That doesn't mean that it's not possible.
• 30:15
  If your average order value and the margin on your or order would be enough.
• 30:22
  And maybe then it's not groceries, but maybe then it's consumer electronics.
• 30:28
  I can very well imagine that when the New iPhone comes out just like this has been very popular in China that people don't care that they need to pay €5 extra to have it delivered within an hour instead
• 30:39
  of waiting for it the next day.
• 30:41
  So I can see that happening also.
• 30:44
  I think that we're all waiting of course for the economy deal of JD.com if that's going to happen or not.
• 30:51
  Not.
• 30:52
  But I think that what will happen if that goes through, that they will use these economy stores also as like a point from which to do instant retail because JD now also already does same day delivery.
• 31:06
  Don't know if that's profitable.
• 31:08
  I think it's hard to imagine it being profitable.
• 31:10
  But I can see them doing instant retail from media mark stores when that deal gets through.
• 31:18
  So under certain circumstances, in certain areas, for certain products or product mixes, I can see it working.
• 31:25
  But it's unlikely that it will have the same level of penetration and for the same product categories as we see it happening in China.
• 31:35
  Yeah, yeah.
• 31:36
  Especially as we have, as you said, very little areas that are densely populated even in the bigger cities.
• 31:42
  There's just some areas that are interesting for that.
• 31:46
  So if we take the same route regarding logistics as they do in China, maybe for this topic there must be, I don't know, specifically European logistics solution or something that takes.
• 32:01
  Yeah.
• 32:02
  Acknowledges that we are living horizontally.
• 32:07
  And that's very difficult.
• 32:08
  For instance, one of the things you see people talking a lot about drone delivery in China, you see all of these little videos on LinkedIn, etc.
• 32:17
  Oh, I'm in Shenzhen, I have my chicken nuggets delivered by drone.
• 32:20
  But that's only in Shenzhen basically and a few other cities where they are running small experiments and it's not profitable.
• 32:31
  And also it's really, it's convenient when you're in a park and you can get it delivered to a drop off station in that park.
• 32:39
  But if you're at home, that drone cannot deliver to your balcony.
• 32:45
  So if you would order by drone, you would still have to go downstairs and you would have to walk out to a drop off station to get your goods.
• 32:52
  Then it's far more convenient to have a courier, courier bring it to your door.
• 32:56
  Now another thing in China which I think is taking off much faster is these, these carts without a driver that are driving around autonomously.
• 33:06
  Again, it's experimental in certain parts of certain cities but in the hometown of my wife in Datong, which is a fourth tier city, they're already driving around maybe because it's not so, so, so busy on the Roads there.
• 33:20
  So I can see that happening.
• 33:21
  But.
• 33:22
  But if you think of Western markets and you sometimes also see these videos of these tiny little cars with an antenna on the four wheels driving around in.
• 33:33
  I think it's in America, or maybe I think I've seen them even in parts of Europe in videos.
• 33:39
  Something that really worries me is there's a lot more vandalism in Europe.
• 33:45
  That's actually what I just wanted to ask.
• 33:47
  I mean, what is really happening, especially in Europe?
• 33:50
  I don't know about us, but in Europe it does happen.
• 33:54
  People just vandalize these carts because.
• 33:56
  Just for the fun of it.
• 33:57
  Or shoot down drones because they don't like them.
• 34:01
  Is that not happening in China?
• 34:02
  No, no.
• 34:03
  And it's the same.
• 34:04
  Same thing as with.
• 34:05
  With shared bikes, which is very big in China.
• 34:09
  When they tried that in some European cities, I think they even tried it in Amsterdam.
• 34:13
  Everybody threw them in.
• 34:13
  In the canal.
• 34:14
  Yeah.
• 34:14
  The next river.
• 34:16
  So the thing is that for the same reason why people are saying it feels very sexy, safe to walk around the Chinese, if you're a woman, you can walk around in the middle of the night in a Chinese
• 34:28
  city without being worried.
• 34:30
  That's partially cultural, but it's also because there's cameras everywhere.
• 34:35
  People say, like, I can leave my scooter outside and it doesn't get stolen.
• 34:39
  No, of course not.
• 34:39
  Because to give you an example, we once had a tour when one of the participants called me up from the airport on the way home, and she said, I've lost my watch.
• 34:52
  Wallet.
• 34:53
  I've lost my wallet.
• 34:54
  And I might have left it at the reception desk.
• 34:56
  So I went to the hotel management and they, they.
• 34:59
  They brought up the.
• 35:00
  The video footage of her checking out, and they saw that she's putting it back in the bag.
• 35:06
  And then I said, well, maybe she lost it on the way to the cab.
• 35:09
  And they had all of the video footage.
• 35:11
  They could have all of the footage of her walking out into the cab and it didn't drop out.
• 35:16
  So she must have had it in the cab then.
• 35:18
  It was very easy to check with the cab driver.
• 35:20
  Eventually it had fallen out in the X ray at the airport.
• 35:25
  So.
• 35:25
  But.
• 35:26
  But everything is being filmed.
• 35:28
  And that's.
• 35:29
  On the one hand, it's a very creepy idea, but it also has its advantages in.
• 35:32
  In these kinds of cases.
• 35:35
  Yeah, okay.
• 35:35
  No one's shooting down a drone there without getting noticed.
• 35:38
  I get it.
• 35:38
  Correct.
• 35:39
  Yeah.
• 35:40
  Okay.
• 35:40
  Yeah.
• 35:41
  Interesting.
• 35:41
  Yeah.
• 35:42
  That is really something that I think Internet companies just underestimate.
• 35:47
  The.
• 35:48
  The real, real push of some people to go like, oh, I don't like this drone.
• 35:53
  Let's see what I can do about it.
• 35:56
  Okay.
• 35:57
  Yeah.
• 35:58
  And I guess that brings us to the end of our conversation today.
• 36:02
  Thank you very much for doing this double episode with me first diving into Temu and everything that has happened with what I, in a very simplifying way called Amazon Basics in China.
• 36:17
  And also today to have a look at what instant retail really means in China and if or not it might.
• 36:26
  Yeah.
• 36:27
  Come over here as well in that way.
• 36:29
  Possibly not in the same way, but still it was, again, absolutely a pleasure.
• 36:34
  Yeah.
• 36:34
  And thanks for having me.
• 36:36
  Right.
• 36:37
  And if you enjoyed us today and enjoyed listening to what we specifically added to say do check out our other episodes.
• 36:45
  I will just link the other China Commerce episodes in the show notes if you want to keep on listening.
• 36:51
  And if you'd like, just tune in next week.
• 36:54
  Again, thank you very much and bye bye.
• 36:56
  Bye bye.
• 37:01
  You listen to let's Talk Marketplace, the Marketplace podcast with Ingrid Lommer and Valerie Dichtel.