On May 19th, Meituan Waimai collaborated with singer Huang Ling to release its first Shanghainese MV. Meituan wrote on Weibo: "Waimai, Huang's more spiritual." In the video comment section, there were internet strategists offering advice, strongly recommending Ele.me to appoint Lan Yingying. Ele.me adopted the suggestion and officially announced on June 1st that Lan Yingying would become the "Sure-to-Win Official" and stated "Blue's sure to win," searching for netizens across the web to thank them.
Social media screenshot
This Internet marketing battle is a microcosm of the rapid increase in competition in China's food delivery and instant retail markets this year.
Jingdong has entered the food delivery track, while Meituan has intensified its flash purchase business. One e-commerce retail company and one life service company are directly attacking each other's core territories. Alibaba, which has clearly committed to "AI + E-commerce" in its macro strategy, is also not lagging behind: Taobao has fully upgraded same-day delivery to flash purchase, joining the fray alongside Ele.me.
Buying a cup of coffee for just a few dollars makes people feel like they've traveled back a decade: consumers are overwhelmed with subsidies, while platforms openly and covertly compete to the extreme.
The "gold content" of food delivery and the instant retail market behind it is still on the rise.
Coffee is at the forefront of this "food delivery war" platform screenshot
This is not the first major battle in China's food delivery market.
2013 was a key year for China's food delivery market. Meituan, which had just emerged victorious from the "thousand group battles," ventured into the food delivery business, taking its first step towards becoming the industry leader; Ele.me, an outstanding player in the industry, received Series B and C financing; Baidu acquired a 59% stake in Nuomi Network and launched Baidu Waimai the following year. By 2014, the "subsidy war" officially began, and the "Ele.me-Meituan Waimai-Baidu Waimai" tripartite confrontation gradually took shape.
Familiar tech giants have all participated in the "first food delivery war" in some way. For example, Tencent supported the merger of Meituan and Dianping, placing Meituan Waimai in the WeChat "nine-grid"; early financing for Ele.me often involved shadows of JD.com, Tencent, and Didi; apart from acquiring Ele.me, Alibaba's Taobao also launched "Taodian Dian" to personally enter the battlefield - until 2019, this war ended with Meituan's comprehensive counterattack, forming a dual-dominant pattern.
Ele.me has received funding from many large companies as shown in Qichacha screenshot
The temptation of the food delivery market remains in people's hearts.
Even in 2021, Douyin once tried its hand at food delivery but ultimately failed.
Now that Jingdong and Meituan have ignited the food delivery war and Alibaba has fully joined the fray, it's not surprising at all.
In our article "Jingdong vs Meituan: A War That Must Happen, The Horn Has Already Been Blown" published in September 2022, we briefly analyzed why the battle for instant retail was inevitable. Compared to three years ago, the market has undergone significant changes: the e-commerce industry has matured, accelerating its approach to the essence of retail, further breaking down the temporal and spatial boundaries of online shopping; China's supply and demand sides are rapidly evolving, making 30-minute "food delivery" or even "delivery of everything" a common occurrence, and even a rigid demand for many people.
The "food delivery war," the giants have reached a point where they must fight, and even win.
Social media screenshot of a photo of Liu Qiangdong delivering food
Why Deliver Food?
In most cases, people judge whether a business model is sufficiently attractive by at least three dimensions: whether it is on a "long slope and thick snow" track, whether it has competitive barriers, and whether it can continuously create commercial and social value. From the existing materials, in every dimension, the seemingly insignificant "food delivery" is no less than "e-commerce." In some areas, "food delivery" can even be a more perfect business model than e-commerce.
The overall size of China's food delivery and instant retail market is far smaller than that of e-commerce, but it has better growth prospects.
According to iiMedia Research's "2024-2025 China Food Delivery Market Report on下沉Consumption," China's netizen population and internet penetration rate continue to grow annually. By June 2024, China's netizen population reached 1,099,670,000, with an internet penetration rate of 78.0%. As of December 2023, the number of online food delivery users in China reached 544,540,000, an increase of 23,360,000 compared to December 2022, accounting for 49.9% of the total netizen population.
There is still considerable room for growth in food delivery market penetration iiMedia Research report screenshot
As long as the business model runs smoothly and achieves economies of scale, with stable orders and deliveries, it will be hard for "food delivery" not to make money.
Compared to e-commerce, "food delivery" has a natural advantage. People may not shop every day, but they eat every day. Compared to e-commerce, food delivery is a more frequent business and is more likely to generate repeat purchases. Food delivery itself is also a very large and active traffic pool - even if food delivery doesn't make much profit, when the business provided by food delivery feeds back to other businesses such as hotel tourism and quick delivery, it can bring huge income.
In recent times, the overall Chinese food delivery market has presented a dual-dominant pattern mainly dominated by Meituan Waimai and Ele.me, with relatively high market concentration. In contrast, China's e-commerce is more diversified, with Taobao Tmall, JD.com, Pinduoduo, Douyin Kuaishou e-commerce, multiple strong players competing; in some more specialized fields, players like Vipshop's discount e-commerce also occupy their own positions. Such a market pattern has not appeared in the food delivery industry.
This hides a profound fact: in China, what seems unremarkable "food delivery" may be easier to build competitive barriers than e-commerce.
For example, fulfillment.
A very important national condition in China is that many commercial infrastructures, including logistics, are socialized. Some exclusive advantages of Chinese e-commerce platforms will be balanced out by overall societal progress, which is a deep-seated difference between China and the US. For instance, JD.com's self-operated logistics created unique time efficiency and experience advantages, but with increased investment in infrastructure and overall industry logistics progress, some companies may not need to invest so much to provide similar time efficiency experiences.
JD.com's self-built logistics has undeniable contributions in improving services and absorbing employment. But from a purely commercial perspective, it does not construct a tall competitive barrier for JD.com. In fact, whether it is the franchise-based express networks like "Four Comings and One Arrival" or self-operated systems like JD.com and SF Express, they will eventually become part of China's shared logistics infrastructure, becoming a public resource accessible to all e-commerce enterprises.
Logistics, payment, and other basic infrastructure tools have strong voluntary sharing characteristics in China's commercial activities, very close to "common goods" (Common Goods). In recent years, Taobao has opened up support for WeChat Pay, JD.com has opened up JD Logistics to e-commerce peers, and Taobao and SF Express have collaborated to launch "Fast Door-to-Door"... these are all examples. It is believed that with the continuous acceleration of domestic "interconnectivity," in terms of infrastructure construction, there will be fewer "walls" between China's big tech companies in the future.
However, in terms of delivery fulfillment, food delivery platforms rarely have similar concerns. Accumulation in merchant outreach, delivery teams, delivery efficiency (route algorithms), etc., are difficult to naturally offset by improvements in China's socialized infrastructure - resources such as入驻merchants, dedicated delivery teams, and algorithm scheduling capabilities are relatively unlikely to become industry "common goods." Whether you're a new player or an old player in the food delivery industry, once you come, you basically need to "reinvent the wheel."
For example, as a core force, Meituan leads in terms of rider numbers, with approximately 7.45 million active riders in 2023; DaDa (the main body of JD.com's instant delivery) has nearly 1.3 million active riders as of the second quarter of 2024; Ele.me has over 4 million active riders as of 2023. In market competition, delivery teams primarily serve their own ecosystems; the scale of delivery teams directly affects the competitiveness of the platform.
This process of building wheels and infrastructure is directly linked to platform competitiveness, completely transparent to competitors and the public, and directly affects transactions. For instance, in the e-commerce sector, after a certain threshold, the actual impact of time efficiency is not significant - there is no fundamental difference between Platform A delivering tomorrow morning and Platform B delivering tomorrow afternoon. However, in the food delivery market, both the timeliness of delivery and the richness and reliability of available dining options constantly influence consumer experience.
One of the important reasons for the diversity of China's e-commerce market is the broader supply side, with the number of SKUs (smallest inventory units) measured in tens of millions, determining that any kind of business strategy can find its own space for survival; however, food delivery itself is a market that has been "segmented," with relatively fewer SKUs - there may only be dozens of options available within 30 minutes of delivery to the consumer.
On the basis of hundreds of millions of SKUs, the more products on an e-commerce platform, the higher the screening costs and management difficulty, and the easier it is for consumers to be attracted to other platforms. Therefore, competition among e-commerce platforms inevitably shifts from diversity to concentration, and then from concentration back to diversity.
It is widely acknowledged in the market that the fastest-changing period for changes in the market share of China's e-commerce GMV (gross merchandise volume) should be from 2017 to 2021.
According to data from the research department of China International Capital Corporation, during this period, Alibaba's e-commerce GMV market share dropped from 72.1% to 49.2%, while JD.com, Pinduoduo, Douyin, and Kuaishou, among other e-commerce platforms, developed rapidly. Data disclosed by Yinma Number Research and Huachuang Securities shows that as of March 2024, Alibaba's Taotian GMV market share was 44.5%, JD.com's was 19.4%, Pinduoduo's was 20.1%, Douyin Shop and Kuaishou were 9.1% and 6.9%, respectively.
Since food delivery platforms offer similar services, they have more opportunities to continuously benefit from "economies of scale." The platform with more items, more orders, and faster delivery is more attractive, leading to relatively concentrated competition.
In recent years, the setbacks of new food delivery players like Douyin have indirectly confirmed this. Neither the availability of items, order stability, nor the economic and timely fulfillment can be achieved overnight. What seems like a simple food delivery business actually has a high threshold; the enterprise foundation, organizational capability, and resource investment required are all at the top strategic level of the company. From this perspective, this year's food delivery war is not a sudden whim of the giants.
A Battle Bound to Happen
These days, e-commerce retail and life service businesses have reached the stage of direct confrontation.
The intrinsic nature of "food delivery" determines that in the long run, it must rely on other businesses to make a profit. Both e-commerce and food delivery platforms profit by providing services. While helping to connect supply and demand sides, e-commerce can continuously release profit margins by reducing supply chain costs (such as eliminating middlemen). Every decrease in the difference between the "factory price" and the "retail price" benefits all participants.
However, the food delivery supply chain structure is relatively simple, with limited optimization opportunities.
The room for "chain efficiency improvement" in food delivery platforms is not large. Moreover, "food delivery" is inherently a tough business; merchants deduct rent, labor, utilities, and raw material costs, leaving little profit; the delivery team also needs better protection. The proximity to livelihood determines that food delivery must give back to the ecosystem as it develops to a certain stage.
The gradual work done by Meituan and Ele.me in rider protection in recent years is precisely based on this. This is also the underlying consideration for JD.com and other new entrants to break through by focusing on merchant commissions and rider protection.
Looking over a long enough time horizon, the "food delivery" business requires platforms to continually reduce their take rate (such as commission) and increase spending on the ecosystem (such as rider protection), trading for more stable growth. For a single enterprise, food delivery in the future should play more of a role in driving traffic and cultivating consumption habits, allowing the company to monetize and profit in other businesses.
In April this year, "Meituan Flash Purchase" was upgraded to an independent brand, which also proves this point.
According to estimates by CITIC Securities, as of 2024, Meituan Flash Purchase's daily order volume exceeded 9.6 million, with a year-over-year growth rate of 38%. Flash Purchase has become an important part of Meituan's business portfolio.
We believe that China's food delivery industry must undergo two leaps. The first leap is from "not making money" to "making money," representing the successful operation of the business model, no longer relying on burning cash subsidies to operate, with supply, delivery, and orders stabilizing; the second leap is from "making money" to "almost not making money," with the platform giving back to the ecosystem in food delivery and earning profits in restaurants, flash purchases, tourism, etc. - in a sense, this is also the key behind the two food delivery wars.
By today, people's need for "30-minute delivery to home" is no longer just about food delivery, nor even fresh produce, it could be supermarket goods, clothing, shoes, hats, or even 3C electronics - the boundaries between food delivery, flash purchase, and e-commerce are actually becoming increasingly blurred, and user overlap is increasing - JD.com users are often considered price-insensitive, and we believe that part of this consumer base will also be willing to pay higher fees for "30-minute delivery to home."
Digital and household appliance products are focal points in the flash purchase market competition Meituan official account screenshot
Market competition and big company involvement are inevitable. In reality, there is no absolute "offensive" or "defensive" party.
The situations facing Jingdong and Alibaba are largely different aspects of the same problem.
Jingdong's thinking may not be so much about replacing profit-generating departments as it is about incremental business development logic.
Jingdong's core e-commerce business competitiveness is stable, and Jingdong's self-operated business will maintain its advantage for quite a long time. For Jingdong, instant retail exists more as a high-growth incremental business - especially considering that daily necessities, a key category in instant retail, have been part of Jingdong's "new growth curve" for many years. Jingdong's entry into the food delivery track can both disrupt competitors' formations and attract massive traffic for itself, achieving a "move a thousand catties with a touch" effect.
An important detail that cannot be ignored is that offline retail layout is quite crucial in Jingdong's overall business portfolio. Jingdong's supermarket resources are rich, and it has an inherent gene for instant retail; in recent years, Jingdong Mall, city electrical flagship stores, and even Jingdong Qijian supermarkets, Jingdong has been intensifying its presence in the instant retail market. It can be said that Jingdong's "e-commerce" boundaries are becoming increasingly broad, and Jingdong has always been in the competition of "30-minute delivery of everything."
This is a competition that was bound to happen and will happen sooner or later.
According to the latest data from iResearch, Jingdong's daily food delivery orders have exceeded 25 million, occupying over 31% of the national food delivery market share. This new player has already established a foothold.
For Alibaba, the importance of the instant retail market is self-evident, and it has actually been laid out for many years. "Joining the competition" is actually a good thing. Taobao has certain talents in flash purchase business, such as integrating inventory between online flagship stores and offline stores; the traffic and high repurchase rate brought by flash purchase business also provides a positive guidance for the main e-commerce site.
Taobao Flash Purchase and Ele.me's daily orders quickly exceeded 40 million, which is in some way a market's affirmation of such investments.
However, the cooperation between Taobao Flash Purchase and Ele.me may also have some "group synergy" flavor.
Meituan and Jingdong's food delivery competition is no longer a matter of a single business or a market segment; it is a strategic-level competition at the group level of big tech companies. It is probably beyond what Ele.me alone can handle in this industry transformation. Alibaba does not want to see the result of Ele.me being marginalized when Jingdong's food delivery challenger and Meituan's food delivery "big brother" engage in a fierce battle - Alibaba must ensure that it is always present at the table.
Today's food delivery market is undoubtedly entering a "three-way division of power" market pattern. We hope the platforms can get "more intense" - compared to financial figures, the competition in the food delivery market can truly fall to民生: allowing consumers, merchants, and riders to receive better respect and treatment. Such value competition should come more often.
Original source: https://www.toutiao.com/article/7516472293401297448/
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