Summary of Key Points
Over the past year (2025Q2-2026Q1), Meituan, Alibaba, and JD.com spent at least 150 billion yuan in the fierce competition for food delivery services, pushing the daily order volume from around 80 to 90 million to a peak of 200 million. Now that the battle has subsided, each company's market share has stabilized, subsidies have been reduced, and profits are beginning to recover. However, the competition has not diminished. The focus has shifted from food delivery to the broader category of instant retail (such as fresh groceries and supermarket deliveries), while they also face internal coordination issues and challenges from external competitors like TikTok.
1. All Lost Money on Paper, but Each Company Achieved What They Wanted
There was no clear winner in this battle, but each company achieved its goals:
- JD.com: By spending 35 billion yuan on subsidies, it managed to increase the daily order volume to 10 million (half of what Ele.me's volume was before the competition), successfully making customers aware of JD.com as a food delivery service provider and establishing a solid foothold in the market.
- Alibaba: It increased its share of the food delivery market to nearly that of Meituan (and even surpassed it in some months). More importantly, it used food delivery to drive growth in its e-commerce business. The integration of instant retail and traditional e-commerce led to new customer acquisitions, increased activity, and higher transaction volumes, resulting in a significant increase in Alibaba's GMV (Total Merchandise Volume) in Q1.
- Meituan: Despite losing money for three consecutive quarters, it maintained its position as the market leader and still holds an advantage in higher-value segments of the market. With the reduction in subsidies, the cost per order has decreased from 2 yuan in Q3 last year to 1 yuan in Q1 this year. In April and May, Meituan no longer incurred losses on food delivery services (turning a loss into a profit).
The subsidy amounts for all three companies have been reduced: Meituan's sales expenses dropped from over 30 billion yuan to 23 billion yuan in Q1; Alibaba is no longer investing all its funds in food delivery but is shifting resources to AI; JD.com's profits have returned to pre-competition levels.
2. The Scale of Spending Exceeded Expectations, Turning from a "Pilot Project" into a "Billion-Dollar War"
No one expected the competition to be so intense:
- Initial Underestimation: When JD.com started with food delivery in 2025, Meituan was still focusing on its retail business and viewed JD.com's efforts as a pilot project, even considering adopting some of its strategies.
- Uncontrolled Escalation: After Taobao's Flash Shopping joined the competition, Alibaba announced no limit on subsidies, pushing the order volume to 120 million; Meituan was forced to follow suit, with the total order volume reaching 150 million in Q3. All three companies combined orders exceeded 200 million, but their net profits fell by more than 50%. It was unprecedented for all three profitable companies to voluntarily burn half of their profits at once.
- Forced Retreat: By the end of Q3, the financial strain became too much, and regulatory measures were introduced to stop the excessive competition, leading to a reduction in subsidies. Meituan had initially estimated an additional expenditure of 15 to 20 billion yuan for 2025 but actually spent 40 billion yuan, with a total of 150 billion yuan spent by all three companies—far exceeding expectations.
3. The Food Delivery War Has Ended, but the Battle for Instant Retail Has Just Begun
The competition has shifted from simply delivering food to delivering everything (fresh groceries, supermarket items, medicines, etc.) within 30 minutes:
- Alibaba: It has consolidated all its instant retail businesses (Taobao Flash Shopping, Hema, Tmall Supermarket) under Jiang Fan's management and is discussing the acquisition of Pupu Supermarket (a fresh grocery delivery service) to integrate platform and self-operated models.
- Meituan: It acquired Dingdong Maicai and plans to build 100,000 delivery stations by 2027. It also disclosed that its self-operated retail revenue increased by 40.7% in Q1, mainly due to Xiangxiang Supermarket.
- JD.com: Instead of focusing on scale, it is concentrating on coordinating its own Qixian Supermarket and Miaosong services to improve its supply chain.
The instant retail market is much larger than the food delivery market, and this battle is expected to be more prolonged.
4. Hidden Threats Are Even More Troublesome: Internal Coordination Issues and External Competition from TikTok
In addition to the competition in instant retail, the companies face additional challenges:
- Internal Problems: Alibaba is balancing investments in AI and large-scale consumer services, putting significant pressure on its profits. Meituan's Flash Shopping (platform-based) and Xiangxiang Supermarket (self-operated) models operate independently, with Xiangxiang offering lower commissions to riders than Meituan’s own, which affects efficiency.
- External Threats: TikTok has made inroads into both e-commerce and in-store services. For example, TikTok’s food delivery service is competing with the companies’ traditional food delivery businesses, and its local services are challenging Meituan’s in-store operations. These indirect threats are more difficult to counter than the direct competition in food delivery.
In summary, the most intense phase of the food delivery war has passed, but the giants have just moved their battlegrounds to other areas. The future competition will only become more complex.