Summary of Key Points
This article focuses on the evolution of the "three taxes" in the retail industry (space tax → traffic tax → intelligence tax) and unpacks the intricacies of the battle for instant retail in 2025: Platforms are forced to shift towards instant retail due to the competition in the existing e-commerce market, engaging in costly subsidies to gain market share. However, this strategy results in substantial losses for the platforms, overwhelming merchants, and the consumers being "decided for" by AI algorithms. The article concludes by pointing out that the profits in the instant retail ecosystem are meager, and regulatory authorities have begun to intervene. Merchants may be able to break through this situation by leveraging the personal, human elements of offline sales, such as trust and customer service.
I. The "Tax" in Retail: From Competing for Locations to Being Controlled by AI
You can think of these "taxes" as fees that businesses must pay to ensure consumers see and purchase their products:
- Space Tax: In the physical store era 20 years ago, the transfer fees or rent for prime locations were essentially taxes—for example, a 20-square-meter store in a technology mall could cost 200,000 yuan, equivalent to 10 years of an average employee's salary, representing the privilege of being visible to customers. The more expensive the location, the more businesses had to either lower their quality of products or let customers bear the extra cost, ultimately leading to the decline of many malls.
- Traffic Tax: In the online era 10 years ago, fees for direct advertising and traffic acquisition were taxes—during events like Double Eleven, businesses had to spend over 30% of their revenue on acquiring customers' attention. However, more traffic didn't necessarily equate to higher profits; exceeding the break-even point could be detrimental.
- Intelligence Tax: In the current AI era, fees for AI tools and algorithmic recommendations have become taxes—services like ChatGPT charge a 4% commission, and platform AI assistants only recommend certain products, forcing businesses to pay for API usage. Consumers' choices are now influenced by algorithms (for example, if you want a USB drive, the AI might only suggest those it deems suitable for you).
These changes reflect a shift in the power dynamics from physical locations to online attention and then to cognitive decision-making algorithms.
II. The Battle for Instant Retail: Not About Gaining New Customers, but About Self-Preservation
Why has the battle for instant retail suddenly intensified in 2025? Because platforms have run out of other options:
- Existing Market Competition: The penetration rate of e-commerce has peaked (27.6% in 2023 to 25.9% in 2026), and the growth of brick-and-mortar retail is slow (only 0.6% in July 2026), making traffic acquisition increasingly unprofitable.
- Defensive Strategy: The penetration rate of instant retail is less than 2%; even if it grows to 2 trillion by 2030, it would still represent only a 3%-5% increase, which is not considered significant. Platforms are competing for this market because they don't want to lose control of local consumer interactions—otherwise, they could face serious financial risks.
III. How Severe Is the Battle?
Is it a losing proposition for all parties? At least for platforms and merchants, the situation is dire:
- Platform Losses: Three major platforms spent a combined 173 billion yuan in 2025, with Meituan reporting a quarterly loss of 14.1 billion yuan (the first time in three years). Alibaba's Hema's profits are not publicly disclosed, and JD.com has a user churn rate of 18.64%.
- Merchants Under Pressure: In Jiangsu, a merchant's order worth 35.88 yuan results in a net income of only 14.47 yuan after deducting subsidies, commissions, and delivery fees (a 40% reduction). A small store in Nanjing loses over 10,000 yuan on 4,158 orders, and its dine-in business has declined from 40% to 10%, creating a vicious cycle where not providing delivery services leads to death, while providing them leads to further losses.
- Consumers Being Controlled: AI algorithms dictate consumer choices—when you want a USB drive, the AI might only recommend a few options; when you order dinner, it sets the budget and selects the menu based on your history, platform subsidies, and whether the merchant paid for advertising space.
IV. The Weaknesses of Instant Retail: The Combined Impact of the Three Taxes and the Profit-Closing Loop
Instant retail is a perfect example of the combined effects of these three taxes:
- Multiple Taxes: Merchants must pay rent (space tax), platform fees (traffic tax), and AI usage fees (intelligence tax). For example, a merchant like Mr. Zhang might spend 20,000 yuan on rent, 20,000 yuan on advertising, and 10,000 yuan on AI services daily.
- Profit-Closing Loop: Platforms try to control all aspects of the transaction process (information, payment, delivery), but the costs associated with delivery (e.g., Meituan's flash shopping service) are rigid, resulting in thin profits. Although the market is large (2 trillion yuan), every penny goes through the hands of delivery drivers, leaving very little profit.
V. A Way Out: Regulatory Intervention and Merchants Leveraging Human Connections
Is there a way out of this situation?
- Regulatory Action: Anti-monopoly investigations in 2026 have aimed to stop irrational price wars and prevent platforms from exploiting both suppliers and merchants.
- Merchants Breaking Through: The personal, human aspects of offline sales (trust and customer service) are beyond the reach of AI and platforms. For example, when an author goes to a local store to buy a USB drive, they can try the product, return it if it doesn't fit, and engage in a conversation—these human interactions provide a way around the platform’s control mechanisms. Platforms may lock in information and delivery, but they cannot lock out the trust between merchants and consumers.
The article concludes by emphasizing that no matter how advanced the instant retail ecosystem becomes, it cannot compete with the simple, personal experiences offered by local stores—those small businesses represent the last bastion for merchants to regain control of their customer relationships.