In 2025, e-commerce players will also be "revamped" by Pang Donglai

As a benchmark for offline retail, Pang Donglai helped more than 100 stores of 13 retail companies in one year, and also attracted the attention of e-commerce giants such as Dongfang Zhenxuan. This article will explore the counterattack of offline retail, analyze why the "Pang Donglai model" can become the "savior" of the retail industry, and whether e-commerce players can learn from its successful experience.

At the end of February, Yu Minhong appeared in Pang Donglai in Xuchang, Henan, and traveled with Yu Donglai. It is reported that Dongfang Selection will consider cooperating with Pang Donglai in the future. In the past year, Pang Donglai has become a benchmark enterprise in the retail industry, and the entire retail track has set off a wave of "explosive reform" by Pang Donglai.

Data shows that, as of now, Pang Donglai has helped more than 100 stores under 13 retail companies, including Yonghui, BBK, and Jiabaile. Ye Guofu, the founder of MINISO, also went to Pang Donglai to observe and learn. Now even e-commerce players like Dongfang Zhenxuan seem to be interested in Pang Donglai's model.

In January this year, Oriental Selection announced its interim results from June 2024 to November 2024, with a net loss of 96.503 million yuan, a direct turnaround from profit to loss compared with a profit of 160 million yuan in the previous year.

Considering the entire e-commerce market, the era of online retail "crushing" offline retail seems to have become history. Last year's price war severely damaged the vitality of major e-commerce platforms. Companies such as Dongfang Zhenxuan have also fallen into temporary confusion after reaping the benefits of live streaming. Will online retailers also accept Pang Donglai's "explosive reform"?

Before Oriental Selection, Simba, the "number one" of Kuaishou, also visited Pang Donglai, and the direction of the retail industry gradually began to become magical.

Is offline retail going to “take back” everything?

In the past many years, offline retail has been suppressed by e-commerce, but since last year, the situation has finally changed in the entire consumer market. At the end of February, the retail sector rose against the trend, among which Zhongbai Group rose by the daily limit, Chongqing Department Store rose by two consecutive limits, Dongbai Group, You'a Shares, Lishang Guochao, Supply and Marketing Co., Ltd., and Youhao Group followed suit.

Some data also prove that offline retail has regained its momentum after many years: in the first three quarters of 2024, the overall offline channel sales of the retail industry increased by 1.8%, while the share of the e-commerce market showed a slight decline of 0.6%. This is the first time in the history of the e-commerce market that there has been negative growth.

The contrast is particularly evident during the 2025 Spring Festival. Data shows that during the Spring Festival, offline department store retail and convenience store sales revenues increased by 5.2% and 16.1% year-on-year respectively, while online retail sales only increased by 5.8% year-on-year. Leading retail companies such as Pangdonglai and Sam's Club have helped offline retail regain the confidence that had been lost for many years.

On February 20, Walmart released its fourth quarter and full-year financial report for fiscal year 2025. Among them, Walmart China's revenue increased by 27.7%, and nearly 70% of sales were contributed by Sam's Club, which contributed approximately RMB 100.5 billion in sales with 53 stores.

In addition to the leading enterprises, the performance of small offline formats is also remarkable. The "2024 China Shopper Report" shows that the growth rate of physical supermarkets and small supermarkets will increase from 4% in the same period of 2023 to 6%, and grocery stores will increase from 6% to 11%. Since the rise of Taobao and JD.com, online channels have once changed consumers' shopping habits. Why has the "century-long reversal" suddenly occurred today?

First of all, the establishment of a "price-performance ratio" system has always been a key factor in determining consumer flows. It is undeniable that after experiencing disorderly price wars, the price-performance ratio system of online retail, which has always had the upper hand in low prices, is gradually collapsing, and even the big anchors in the live broadcast room are not immune.

During several important promotional events last year, many consumers found that the prices in the live broadcast rooms of top anchors were not cheap, and some were even more expensive than other channels. A typical example is the 618 shopping festival in 2024, when the price of the Roborock sweeping robot in Li Jiaqi's live broadcast room was hundreds of yuan higher than that on other platforms.

On the other hand, offline sales have begun to move towards cost-effectiveness. The 2024 China Shopper Report shows that the average price reduction in offline channels in the first three quarters was 3%. The emergence of a large number of discount stores and mass merchandisers has directly contributed to the offline cost-effectiveness system. This is probably the main driving force for offline retail to surpass online sales.

Secondly, while offline retailers are vigorously promoting products, self-operated, and hot-selling items, online "products" have repeatedly encountered crises, especially the criticized return rate. Data shows that in 2024, the return rate of women's clothing on major e-commerce platforms generally increased by 10%, and the return rate of some stores was as high as 75%.

The double failure in price and product has caused online retail to start to "run aground".

In addition, it is worth mentioning that for merchants, online business is gradually losing its previous advantages. Back then, e-commerce won the favor of many merchants with its multiple advantages that offline businesses did not have. However, nowadays, the cost of acquiring customers online is likely to surpass that of offline.

Data shows that with the disappearance of the Internet dividend, Alibaba's customer acquisition cost has soared from 298 yuan per person to 669 yuan per person in just a few years, and Pinduoduo's customer acquisition cost has also risen from 163 yuan per person to 558 yuan per person. This continuous rise in traffic costs has not only brought a strong sense of oppression to the entire online retail industry, but also made it difficult for small and medium-sized businesses to breathe.

It is reported that many online businesses have been moving offline, which is in stark contrast to the scene of a rush to open online stores more than a decade ago.

But can offline retail really "take back" everything that belongs to it in one fell swoop? In fact, online retail has dominated the entire consumer market for many years. Even if it is declining, it may not necessarily give up a lot of opportunities to offline. On the contrary, most retail giants have paid more and more attention to online in the past two years.

For example, data disclosed in Yonghui's financial report for the first three quarters of 2024 showed that online sales accounted for more than 20%; data from Gao Xin Retail's fiscal year 2024 showed that online business sales accounted for about 29% of the group's total revenue; Walmart China's fourth quarter report for fiscal year 2024 showed that the entire Walmart China e-commerce penetration rate was 48% in the fourth quarter, and Sam's Club's online sales accounted for 47% in 2023; Pang Donglai is also planning online, and the number of fans of the Douyin account "Pang Donglai Specialty Store" has reached 10.185 million.

In general, online retail is indeed cooling down nowadays, but the residual heat is still there. Offline retail can only try every means to move forward one step and strive to no longer be suppressed by online retail.

Does the “Pang Donglai thinking” of e-commerce work?

In the past year, many offline retail giants, led by Yonghui Supermarket, have accepted Pang Donglai's radical transformation, which has also laid the groundwork for Pang Donglai to become popular in the entire retail market. Specifically, some stores that have undergone transformation have indeed achieved significant breakthroughs in customer flow and sales.

Take Yonghui Supermarket as an example. On the first day of operation, the customer flow of its Zhengzhou Xinwan Plaza store increased by 5.3 times, the average daily sales increased by 13.9 times, and the total sales of the first store in Beijing increased by 6 times. During the Spring Festival, the number of customers entering these restructured stores was nearly 4 million, and the sales of baked goods increased by more than 520% ​​year-on-year, and the sales of prepared foods also soared by more than 387% year-on-year.

Perhaps it is this huge change that continues to tempt other retail players, and even Dongfang Zhenxuan was tempted in 2025. If online retail is to accept Pang Donglai's explosive changes and move from offline to online, will the much-loved "Pang Donglai thinking" still work?

It is undeniable that Pangdonglai’s core competitiveness lies in the creation of popular products and ultimate service.

The former is also one of the models of offline retail brands such as Sam's Club and Hema. It is reported that Sam's "Swiss Roll Effect" still affects the entire offline retail track. Every 1,000 customers who enter the store will take away 300 boxes of Swiss Rolls, and their sales account for 8%-10% of the monthly turnover of some Sam's stores. The annual sales have reached more than 1 billion yuan.

Coincidentally, Hema started baking in 2019 and has incubated four products with sales of over 100 million yuan so far. Among them, Hema strawberry box cake sold over 100 million yuan in five months; Pangdonglai's mooncakes have an annual revenue of 200 million yuan, and the sales of more than 100 own-brand SKUs have reached 1.1 billion, and four products have sales of over 100 million yuan.

It should be noted that Pang Donglai’s “explosive product logic” can be transplanted online.

Public data shows that in 2023, the number of new products provided by Tmall will exceed 200 million, among which the achievement rate of million-level blockbuster new products is as high as 20%; during the Double Eleven period in 2024, the number of new products on the JD platform will exceed 1 billion, and the number of blockbuster products and GMV of Douyin e-commerce will increase by 130% and 350% respectively from 2021 to 2023.

Dongfang Zhenxuan also has a clear idea in this regard. The list of "Dongfang Zhenxuan's Top Ten Self-operated Hot Products" includes self-operated grilled sausages, eggs, milk, toast, jelly oranges, chicken breast, shrimp, pasta, pizza and blueberry anthocyanin lutein ester soft candy. Among them, self-operated grilled sausages sold 11 million orders across the network, with a cumulative sales volume of over 230 million sticks.

It is reported that the current total revenue of Dongfang Zhenxuan's self-owned products is about 1.7 billion yuan, accounting for 37% of the total transaction volume. However, one thing must be mentioned: offline hot products are limited by the geographical location of stores and are naturally scarce, but the market scope of e-commerce is very wide, which to some extent weakens the durability of product popularity.

Monitoring shows that the peak sales period of most of Dongfang Zhenxuan's self-operated products is the first month after the product is launched, and then gradually declines, and then new self-operated products make up for the vacancy left by the decline in sales of old products. To some extent, Dongfang Zhenxuan's hit products are not very durable.

But in offline retail, hit products can last forever. On Xiaohongshu, the topic of "Sam's Swiss Roll" is still highly discussed, with 150 million views. After the success of Hema's strawberry box in 2023, it was launched again in November 2024, with sales increasing by nearly 80% year-on-year.

From this point of view, it seems not so easy for e-commerce to absorb the "Pang Donglai" thinking.

The service is even more restrictive. Pangdonglai's service has always been the main reason for its popularity in the consumer market, which is difficult for online players to imitate in a short period of time. Fortunately, after the brutal price war, mainstream e-commerce platforms have shifted from blindly pursuing GMV growth to focusing on the actual needs of consumers.

Besides, can accepting Pang Donglai's radical reform really make it a success? The 2024 annual performance forecast announcement shows that Yonghui Supermarket expects to lose 1.4 billion yuan. Perhaps, whether online or offline, accepting Pang Donglai's radical reform is only the first step in self-reform. What will happen in the future depends on the company's luck.

In 2025, will consumers need a sense of security?

A very obvious trend is that despite the downgrade in consumption, the temptation of low prices is becoming less and less attractive to consumers, both online and offline. Before the end of last year, several major e-commerce platforms announced that they would abandon the cost-effective strategy, and offline, the effect of promotional means seems to be much worse than before.

Nielsen data shows that from January to October 2024, the proportion of sales of fast-moving consumer goods in supermarkets that came from effective price cuts was only 9%. So in 2025, what should the entire retail market use to stimulate consumption? This is worth thinking about for all online and offline players.

We may be able to get some answers by analyzing the reasons why offline retail growth exceeds online retail growth.

Why did consumers increase their offline shopping frequency last year? According to a survey by Zhimeng Trends, 52.1% of consumers choose offline shopping because they can experience the offline atmosphere and get the goods immediately. Some consumers even believe that the offline shopping experience cannot be replaced by online shopping.

72.8% of consumers choose to touch and feel the texture of the goods, 55.6% of consumers choose offline shopping for a relaxing experience, and 42.6% of consumers choose face-to-face communication to get professional advice from sales staff. In short, compared with the uneven quality of products online, offline shopping will give people a sense of security.

A sense of security is bound to become the main theme of the entire retail market in 2025 and even in the future. This is understandable. After all, consumers' idealistic and pragmatic psychology has become stronger in the past two years. A survey shows that compared with the previous impulse to follow the trend, 62% of consumers now read product reviews and ratings carefully.

This undoubtedly provides a great inspiration to the retail industry: if you want to stimulate consumption enthusiasm in the future, you must first cater to the psychology of consumers.

Cost-effectiveness, products, and service systems are all indispensable, and the reason why Pangdonglai has become popular is that it gives consumers a sense of security. On the other hand, online, at the beginning of 2025, Li Jiaqi was criticized by Xiaohongshu netizens because of the batch damage of cherries sold in his live broadcast room. In November 2024, there were quality problems with the Nike sneakers in his live broadcast room; on the Dongfang Selection side, Wuchang rice and Ecuadorian white shrimp exploded last year.

So, how can online retail ensure consumers’ sense of security?

Take Dongfang Zhenxuan as an example. Currently, Dongfang Zhenxuan is working hard to build a product supply chain to ensure the quality of its own products. However, this alone is not something that can be achieved overnight. It is reported that Sam's Club has been honing its supply chain in China for nearly 20 years; Hema has been doing it for 8 years; and Pangdonglai's "four-party joint procurement" can be traced back to 2001.

Of course, the service system is also very important. It is reported that 70.9% of consumers will enhance their trust in the brand due to high-quality after-sales service. Dongfang Zhenxuan is obviously moving towards Pang Donglai in terms of service model. Public data shows that in terms of after-sales service, the satisfaction rate of Dongfang Zhenxuan's Douyin customer complaints exceeds 93%, and the satisfaction rate of App customers is close to 98%.

However, there are still unresolved cases on Black Cat Complaints.

Frankly speaking, the anxiety behind Dongfang Zhenxuan's envy of Pang Donglai reflects the entire e-commerce market to some extent. According to Huxiu's estimates, the GMV rankings of domestic e-commerce platforms in 2024 will be: Taobao (7.8 trillion), Pinduoduo (4.7 trillion), Douyin (3.43 trillion), JD.com (2.89 trillion), Kuaishou (120 million), and WeChat Stores (35 million).

The gap between the platforms is clear at a glance. In 2025, online retail needs to work harder to give consumers a sense of security while also giving themselves some sense of security.

Text丨Produced by Jiang Xinbai丨Consumption Frontline