Has the “Delivery War” Ceased? Don’t Be Naive—the Truth Behind This Billion-Dollar Gamble Is Even More Exciting
Hello everyone, I’m your financial observer.
Have you noticed recently that delivery services seem to have suddenly become more expensive? The milk teas that used to cost just a few yuan, and the free fried chicken offers, seem to be gone, replaced by more targeted coupons and more selective delivery areas? Many people think that with the decline in the popularity of Liu Qiangdong’s delivery services, the billion-dollar “delivery war” between Alibaba, JD.com, and Meituan has completely come to an end.
That’s a big mistake.
If we define the end of the war simply as the cessation of subsidies, then we’re only seeing the surface. This battle has evolved from open confrontation to close combat, from a race to burn money for volume to a focus on calculating profits. Today, we’ll break down the complex business logic behind it into five parts in plain language, so you can understand what these three “old foxes” are really planning.
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1. Why the Sudden “Ceasefire”? It’s Because the Math Doesn’t Add Up, but No One Dares to Retreat Really
First, we need to understand why this intense battle has suddenly quieted down.
On the surface, it seems that regulatory intervention has required the platforms to stop the endless spending. But the deeper reason is more practical: Everyone has lost a lot of money, and they’ve realized that continuing to burn money yields diminishing returns.
- Taobao Flash Shopping: They lose 4-5 yuan on each delivery. Even though they deliver 100 million orders a day, this “bulkiness” is achieved with real cash.
- JD.com: They added another 10 billion in subsidies and gained 15% of the market share, but this also means significant cash flow pressure.
- Meituan: Although they’ve maintained their base market, they had to follow suit with subsidies to compete, which has severely squeezed their profits.
At this point, the capital market (investors and stockholders) started to vote with their feet. They realized that if they continued to spend recklessly, their stock prices would drop; if they showed a bit of restraint and indicated a willingness to make profits, their stock prices would rise.
So, the so-called “ceasefire” is actually a tacit agreement among the three parties to stop the bleeding and heal their wounds first. They all know that instant retail (which includes current delivery and flash shopping) is the trillion-dollar market of the future, and no one wants to lose this territory. Since they can’t maintain their position with money, they’re shifting their strategy from extensive offense to precision defense.
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2. JD.com’s “Narrowing Circle” Strategy: I Won’t Serve Everyone—Only the Most Valuable Customers
If you’ve ordered from JD.com recently, you might have noticed a strange phenomenon: there might be riders available, but no one responds to your orders, or the delivery times are extremely long, especially in less affluent areas or cities. This isn’t a sign of a decline in service; rather, JD.com is streamlining its operations.
- Previous Strategy: They delivered to every place, aiming for maximum coverage.
- Current Strategy: Narrowing the Circle: JD.com has divided cities into “business districts” and focused their riders and delivery resources on high-order-density, high-consumption areas (like CBDs and luxury neighborhoods).
Why? Delivery is a costly business; each order incurs expenses. Delivering in low-consumption, low-density areas is unprofitable. JD.com’s new strategy is to abandon low-value customers (those with low frequency of orders, low average order value, and high delivery costs) and focus on high-value customers.
It’s like a restaurant that used to serve everyone, but now focuses on VIP customers, concentrating its staff in private rooms while allowing regular customers to sit in the lobby. By narrowing its focus, JD.com sacrifices some market share but gains higher average order profits and more efficient resource allocation.
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3. Alibaba’s “Category Upgrade”: Enough of Milk Tea—It’s Time for Phones and Daily Goods
Alibaba’s (Taobao Flash Shopping/Ele.me) situation is different from JD.com’s. Their advantage lies in their massive order volume and high market share (nearly 40%). Continuing to rely on milk tea and delivery to drive growth is difficult because there’s only so much demand—people eat three meals a day, and you can’t give them more food.
So, Alibaba’s strategy is to change the game.
- Previous Strategy: Focused on food delivery to attract users.
- Current Strategy: Expanding into Non-Food Categories: They’ve increased discounts on items like convenience stores, supermarkets, flowers, and electronics.
Why? Delivery orders are low in value, while purchases of phones and daily goods are much higher. Alibaba wants to use delivery as an entry point to guide users to other high-value categories within instant retail.
In other words, Alibaba’s goal is no longer just to get you to place more deliveries; they want you to buy more items like phone cases, laundry detergent, or even a new phone during the same order. By increasing the average order value (AOV), they can reduce delivery costs and make a profit. The rapid expansion of Taobao’s convenience stores (to 800 stores) is part of this effort to build the infrastructure for instant retail.
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4. Meituan’s “Data-Driven Approach”: I Don’t Waste Money—Only on the Right People
Meituan, being the defender and the bigger player, has the most subtle strategy.
They haven’t significantly narrowed their scope like JD.com or aggressively launched new services like Alibaba; instead, they’re using precision targeting.
- Previous Subsidies: Everyone got a coupon when they opened the app, a simple and crude approach.
- Current Subsidies: Personalized Offers: Meituan uses big data to analyze your order frequency, average order value, and preferences, even your location, to determine if you’re a high-value or low-value customer.
For example: If you often order expensive meals and aren’t sensitive to price, Meituan might send you a small coupon; if you order infrequently and are price-sensitive, they might send you a larger coupon to keep you on their platform.
This is Meituan’s “optimal solution”: They no longer waste money indiscriminately but allocate resources to the most likely and most valuable customers. By doing so, Meituan maintains its market share (around 55%) while minimizing costs.
5. The Ultimate Truth: This Isn’t the End, but a Step Towards the “Instant Retail” Future
Finally, let’s return to the original purpose of this war. Many people wonder: What exactly did they gain by spending over a billion dollars?
The answer isn’t “delivery” itself, but “instant retail.”
- Delivery is just an entry point—a high-frequency, low-profit, and labor-intensive business.
- Instant retail (delivery within 30 minutes) is the future—a high-profit, high-potential market.
Think back: Before the e-commerce boom, it was the logistics companies (like “Three Expresses and One Delivery”) that reduced delivery costs, allowing e-commerce to take off. Now, instant retail is waiting for its infrastructure to mature—when delivery networks are dense enough, costs are low enough, and user habits are established, the explosion will happen.
- JD.com and Alibaba: By engaging in this war, they’ve laid the groundwork for instant retail, improving their delivery networks and user habits. They’ve secured a position for future growth.
- Meituan: They’ve proven their resilience, showing that they can hold their ground even under pressure from the two giants. This sends a signal to the market: Meituan is not to be underestimated.
So, there are no real losers in this war.
- Meituan has maintained its market share and shed the label of monopoly.
- JD.com and Alibaba have gained the ability to counterattack and deter their competitors.
What will the future competition look like? The public subsidy wars may have ended, but the hidden competition has just begun. JD.com is optimizing its delivery areas, Alibaba is expanding its product categories, and Meituan is refining its data strategies. The winner will be the one with the lowest costs, the best services, and the widest range of products.
Advice for Consumers: Don’t expect the return to the era of free offers. The platforms have realized their goals; they’re no longer spending money to gain territory but to survive and make profits. As consumers, we’ll see that delivery services are becoming more “smart”—they’ll be affordable when needed, expensive when appropriate, and timely when necessary. When they don’t need to be free, well… you’ll have to step up and make the extra effort.
This war has shifted from fervor to rationality, from chaos to precision. This is the true face of the business world.