The next frontier in China’s instant commerce: speed, quality and synergy
The industry is gradually being reshaped, and success will no longer hinge solely on low prices
CHEAP delivery orders have flooded Chinese consumers in recent months as Alibaba, Meituan and JD.com rolled out heavy subsidies in a battle for instant-commerce market share. Instant commerce, by definition, is all about speed. Orders must be fulfilled within hours, and in China, the leading platforms promise delivery in 30 to 60 minutes.
The price war began in February this year, when JD.com formally entered the fray with a dedicated delivery unit, challenging Meituan’s long-held dominance and Alibaba’s Ele.me. To defend market share and capture new growth beyond food orders, Meituan and Alibaba extended their reach into broader retail categories.
By August, Alibaba leveraged Ele.me’s ecosystem to rapidly scale its “flash sales” service, with peak daily orders surging 300 per cent from end-2024 to a record 120 million. Meituan, while posting a smaller 53 per cent increase, maintained leadership with 150 million peak daily orders, underscoring the stickiness of its vast user base. JD.com made strong gains with orders up 150 per cent, though as a new entrant, its absolute volume of 25 million still lags far behind its rivals.
Price wars hit short-term earnings
The surge in delivery volumes has come at a steep cost to profitability. Revenues rose across all three platforms in the quarter to end-June 2025, but earnings crumbled under the weight of subsidies.
Meituan took the heaviest hit, with profits plunging nearly 90 per cent. JD.com swung to a 50 per cent loss while Alibaba’s reported 72 per cent earnings per share (EPS) jump was flattered by gains from investments and the disposal of Trendyol’s local unit. Stripping these out, adjusted non-GAAP (generally accepted accounting principles) earnings slipped 10 per cent.
The results lay bare a hard truth: None of the platforms was spared the toll of cut-throat competition.
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The sustainability of this battle hinges on cash buffers. As at June 30, 2025, Meituan held 149 billion yuan (S$27 billion) in net cash, enough to cover 6.6 quarters of its current marketing burn. JD.com was slightly better positioned at seven quarters, while Alibaba, with 593 billion yuan, could endure 11 quarters. This imbalance leaves Meituan most exposed, given its reliance on delivery as a core business.
At the unit economics level, the picture is equally sobering. For every additional one billion yuan spent on cost of revenue and marketing, Meituan generated just 240 million yuan in incremental sales. Still, it was the most efficient of the three. Alibaba produced only 150 million yuan, while JD.com delivered 130 million yuan. Across the board, returns on investment remain poor, raising doubts about the long-term wisdom of such aggressive strategies.
Short-term costs of long-term ecosystem dominance
Continuous earnings pressure looks unavoidable as China’s consumer platforms brace for a prolonged price war. Alibaba is pressing ahead with its pledge to commit 50 billion yuan in subsidies over the 12 months starting July 2025. Meituan has likewise vowed to deploy “all means” to defend its market leadership.
Although regulators have cautioned platforms against price distortions, their guidance is unlikely to bring a decisive halt to the battle. Subsidies are expected to continue, albeit at a more moderate pace and directed towards higher-margin orders. Earnings across the sector are still likely to decline in the second half of the year.
The companies are betting that long-term gains will outweigh short-term pain. Alibaba is integrating “flash sales”, delivery and travel services into Taobao, alongside its “Taobao premium membership”, to create an ecosystem that channels traffic from low-margin delivery into higher-margin categories.
It has also injected one billion yuan into Amap, China’s equivalent of Google Map, which recently launched an AI-powered ranking feature for offline restaurants, hotels and tourist attractions, offering users personalised recommendations. The move underscores Alibaba’s efforts to knit together its business units and drive growth across its e-commerce ecosystem.
JD.com and Meituan, meanwhile, are expanding into offline dining to broaden their consumer base while deepening ties with food vendors. Meituan has rolled out its “Raccoon Canteen”, a centralised kitchen model that allows vendors to fulfil delivery-only orders, with customers able to track sourcing and fulfilment transparently.
JD.com has launched “7 Fresh Kitchen”, which recruits brands and chefs to provide recipes, while JD assumes full responsibility for operations, from raw materials and rent to staffing and management, with revenue shared between both parties. The model has resulted in higher food and service quality.
While Meituan sticks to its platform model and JD.com doubles down on an operator-led strategy, the battleground is shifting. The contest is moving beyond rock-bottom prices towards higher-quality food, services and delivery experiences to retain customers.
The real battleground
The e-commerce space in China will only become increasingly competitive. While subsidies are likely to continue in the short term, the industry is gradually being reshaped. Success will no longer hinge solely on low prices. Companies are now competing on quality, not just in food delivery but also across a broader range of retail categories.
Platforms with deeper war chests will have the capacity to lead in innovation and experiment with new offerings. But long-term winners are likely to be those that can generate synergies across different business units and build a commerce ecosystem that captures every opportunity. We are already seeing a clear movement in this direction.
Among the major players, Alibaba appears to hold a potential edge, leveraging its integrated ecosystem, from Taobao and Tmall to Ele.me and Amap, to connect services, drive cross-platform consumption, and extract value from multiple revenue streams simultaneously.
Meituan and JD.com, however, are unlikely to yield ground, and we can expect more innovative business models aimed at meeting evolving consumer needs. For consumers, the instant commerce battle is ultimately a win, promising higher quality products, better delivery services, and greater convenience.
The writer is a research analyst with the research and portfolio management team of FSMOne.com, the B2C division of iFast Financial, the Singapore subsidiary of iFast Corp
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