Jiang Fan discusses Taobao's flash sale strategy for the first time: In the next three years, one million brand stores will settle in, achieving a transaction increment of 1 trillion

During the earnings season, the battle for instant retail has prompted executives from various companies to make statements.

On the evening of August 29, during the analyst conference call for the quarterly earnings report for June 2025, Jiang Fan, CEO of Alibaba's China e-commerce business group, elaborated on the Taobao Flash Purchase strategy for the first time.

He stated that Taobao Flash Purchase has exceeded expectations in terms of order scale, user scale, merchant supply, and logistics capacity. The home delivery orders have already led the industry, and the phased goals of Taobao Flash Purchase in terms of scale and mindshare have been exceeded, with long-term industry-leading efficiency expected to be achieved.

He also introduced that Flash Purchase has significantly boosted Taobao's e-commerce business, with user scale and activity continuing to grow, which can generate significant positive economic benefits for the platform while maintaining price competitiveness in the long term. He anticipates that within the next three years, with the entry of one million brand stores, Flash Purchase and instant retail will contribute an additional trillion yuan in transactions to the platform.

From Jiang Fan's statements, it is clear that instant retail is an important growth area for the future of e-commerce and a crucial battleground for various companies, with no one willing to cede opportunities to others.

Jiang Fan mentioned that in August of this year, the daily order peak for Taobao Flash Purchase reached 120 million orders, with an average of 80 million orders on Sundays, driving the total monthly transaction buyers for Flash Purchase to 300 million, a 200% increase compared to April of this year.

To some extent, instant retail is an e-commerce battle of supply chain reform, with particularly evident challenges on the supply side.

From the merchant supply side, with the rapid growth of business scale, a large number of new merchants have joined Taobao Flash Purchase, and the quality of supply has reached an industry-leading level. In terms of logistics capacity, the daily active delivery riders have exceeded 2 million, a threefold increase compared to April. "After the development over the past few months, we have exceeded our expectations for the first phase of our goals."

Flash Purchase and e-commerce have generated a synergistic effect, driving e-commerce growth. Jiang Fan stated that Flash Purchase drove a 20% increase in daily active users (DAU) for the mobile Taobao app in August, with increased traffic leading to higher advertising and CMR, enhancing user activity, attracting new users, and reducing churn, thereby lowering related costs for the platform.

Jiang Fan believes that as Taobao Flash Purchase has reached a leading scale, the platform will quickly enhance operational efficiency. The improvement in efficiency mainly comes from three aspects: optimization of user structure, order structure, and fulfillment efficiency and cost.

In terms of optimizing user structure, Taobao Flash Purchase has excellent user retention, and with the rapid increase in the proportion of returning customers, the platform's unit economic model (UE) will optimize along with the user structure.

Regarding order structure, in the next phase, the platform will continue to promote the increase in the proportion of high-value orders, including high-priced meal orders from consumers and the proportion of retail orders.

In terms of fulfillment efficiency and cost, in July and August, the platform made additional large-scale investments in logistics capacity. As the order scale stabilizes subsequently, logistics costs will significantly decrease.

Jiang Fan stated that in the short term, through improvements in logistics and subsidy efficiency, and optimization of user order structure, it is expected that UE losses can be reduced by half while maintaining current consumer discount investments.

Currently, the industry refers to this round of clashes as the food delivery war because the main battlefield is in the restaurant sector, while instant retail aims to capture more non-food categories that are relatively low-frequency but have high average transaction values Regarding non-food categories, Jiang Fan introduced that the platform divides non-food retail into two parts: one is the near-field native model, and the other is the combination of near and far-field models.

In the near-field native model, the supply of flash warehouses has rapidly developed over the past few months, with Taobao Flash Purchase's flash warehouses exceeding 50,000, and orders increasing by over 360% year-on-year. Among them, 25% of the supply from flash warehouses comes from Alibaba's ecosystem supply chain, and it also relies on Hema's strong development of "fresh category" fulfillment capabilities. After Hema connected to Taobao Flash Purchase, the overall orders have surpassed 2 million, with a year-on-year growth of over 70%.

In terms of the combination of near and far fields, Tmall Supermarket has fully upgraded from the B2C far-field model to the near-field flash purchase model, maintaining price competitiveness in the far field while achieving a faster delivery experience. At the same time, the platform will actively introduce Tmall brand offline stores to join Taobao Flash Purchase, with an expectation of one million brand offline stores joining in the next three years. Taobao Flash Purchase and instant retail will bring an incremental transaction of 1 trillion yuan to the platform.

Jiang Fan believes: "The takeaway industry has shifted from a single dominant player to multiple platforms participating, giving merchants and consumers more choices, which will be beneficial for the industry in the long run. In this process, the platform has invested real money, creating over a million direct jobs, promoting industry transformation while also boosting consumption and the economy."

From the financial report, this round of takeaway wars has had either positive or negative impacts on various companies. However, industry forecasts suggest that fierce competition will continue, and whoever has more resource endowments and can drive industry ecological transformation is likely to become the final winner.

Below is the transcript of Alibaba's China e-commerce business group CEO Jiang Fan's speech at the financial report conference:

I will first review some phased progress we have made in the flash purchase business, and also share our expectations for the future of the flash purchase business.

Since the launch of Taobao Flash Purchase four months ago, I believe we have been very successful in user and merchant operations, logistics construction, and marketing, especially since July, where we have exceeded expectations in order scale, users, merchant supply, and capacity scale. Looking solely at the share of takeaway orders, we are already leading the industry. I would like to share a few specific numbers:

First, our daily order peak reached 120 million orders, and the average order volume on Sundays in August reached 80 million orders.

Second, from the user side, the overall monthly transaction buyer count for flash purchase reached 300 million, a 200% increase compared to before April.

From the merchant supply side, during this period, with the rapid growth of business scale, a large number of new merchants have joined Taobao Flash Purchase, especially with quality supply reaching industry-leading levels.

In terms of capacity scale, the daily active riders for flash purchase have exceeded 2 million, a threefold increase compared to April, which also means we have created over a million new jobs.

I mentioned last quarter that our first phase goal for flash purchase is primarily about user scale and mindset. After the development over the past few months, we have exceeded expectations in achieving our first phase goals

Next, I will talk about how flash sales drive e-commerce business.

First, from the user's perspective, Taobao's flash sales have significantly boosted the overall user scale and activity of the mobile Taobao app. Flash sales drove a 20% increase in daily active users (DAU) in August for mobile Taobao, and as a higher-frequency scenario, it significantly increased the number of active days for users on the platform.

During the process of increasing user activity, we observed a clear trend in driving e-commerce revenue, mainly reflected in:

First, the increase in traffic has led to a rise in advertising and CMR (Customer Marketing Revenue).

Second, due to the increase in user activity and the recruitment and retention of new users, we can reduce our marketing expenses.

We believe this trend will continue to expand in future operations, and we are confident that it will significantly drive e-commerce revenue in the medium to long term.

Next, I would like to share our views on the operational efficiency and user experience (UE) of flash sales, which everyone is particularly concerned about.

First, regarding operational efficiency. I believe we cannot discuss efficiency without considering scale. In the past, our order scale was one-third of our peers, and in many provinces and cities, our market share was even below 20%. In such a significant market share gap, discussing efficiency is meaningless. Currently, Taobao's flash sales have reached a leading scale, and we will quickly improve our operational efficiency.

Our peers have performed exceptionally well in the takeaway industry, especially in terms of efficiency, and we are working hard to close this gap. There is enormous room for improvement in our efficiency. Looking at the short-term and long-term, in the short term, our profit and loss convergence mainly comes from several aspects, including:

First, optimization of user structure. Over the past four months, we have invested a large amount of marketing expenses, bringing in a significant number of new users. However, acquiring new users requires higher initial investment, and our user retention is very good. As the proportion of returning customers rapidly increases, the platform's UE will optimize with the user structure.

Second, optimization of order structure. In the next phase, we will continue to promote the increase in the proportion of high-value orders, with consumers' high-priced meal orders and retail orders both on the rise. As the overall AOV (Average Order Value) of the platform increases, it will also lead to overall UE optimization.

Third, optimization of fulfillment efficiency and costs. During the initial phase when order volume surged fourfold, our platform's primary task was to ensure user experience. Due to severe short-term capacity shortages, we made additional large-scale investments in capacity in July and August. Once the platform's order volume stabilizes, our logistics costs will significantly decrease, further optimizing the platform's UE.

Therefore, in the short term, through improvements in logistics and subsidy efficiency, as well as optimization of user order structure, we expect that UE losses can be reduced by half while maintaining current consumer discount investments.

In the long term, as our order density significantly increases, there is still considerable room for optimizing our logistics costs compared to before April. Additionally, our refined offline merchant operations also have significant improvement potential. Scale is the primary factor determining efficiency, and with the new scale and market share, we are confident that we can achieve industry-leading efficiency in the long term At the same time, we will not look at the profitability of takeout alone. Considering the comprehensive revenue from e-commerce, we believe that under the premise of maintaining price competitiveness in the long term, flash purchase will generate positive economic benefits for the platform as a whole.

Later, I will talk about the development of non-food retail categories.

We divide non-food in instant retail into two parts: one is the near-field native model, and the other is the combination of near and far fields.

Under the near-field native model, on the one hand, we rely on our strong product supply and supply chain to develop the flash warehouse model. In the past few months, the supply of flash warehouses has rapidly developed, and we now have over 50,000 flash warehouses, with orders increasing by more than 360% year-on-year. Among them, 25% of the supply of flash warehouses comes from Alibaba's ecosystem supply chain. Secondly, we rely on Hema's strong fulfillment capabilities for "fresh categories" in front warehouses. After integrating with Taobao Flash Purchase, Hema's overall online orders have exceeded 2 million, with a year-on-year growth of over 70%.

In terms of combining near and far fields, Tmall Supermarket has fully upgraded from a B2C far-field model to a near-field flash purchase model, achieving a faster delivery experience while maintaining price competitiveness in the far field.

At the same time, we will actively introduce Tmall brand offline stores to join Taobao Flash Purchase, achieving integrated online and offline operations for Tmall brands. We expect that in the future, there will be millions of brand offline stores joining Taobao Flash Purchase. The combination of Tmall and Taobao Flash Purchase will bring new business growth to brand owners and provide consumers with a brand new shopping experience.

Overall, we expect that in the next three years, flash purchase and instant retail will bring 1 trillion in transaction increments to the platform. At the same time, we also believe that the takeout industry has shifted from a monopoly to multi-platform participation, giving merchants and consumers more choices, which will be beneficial to the industry in the long run. In this process, the platform has invested real money, creating over a million direct jobs, promoting industry transformation while also boosting consumption and the economy