The Meituan Food Delivery Courier rides an electric scooter on March 29, 2025 at Chongqing, China.
Chen Sing | Getty Images News | Getty Images
In China’s fiercely competitive market, the latest price war is unfolding in the growing “instant commerce” sector where businesses launch large subsidies and other incentives to spend on consumers.
The “Instant Commerce” sector is backed by a large network of scooter drivers who quickly transport everything from food and drinks to fast fashion and gadgets.
The space is occupied by three major players, including the established e-commerce heavyweight JD.com and Alibaba, as well as three major players, including the distribution platform Meituan, which has historically focused on food delivery.
Competition between these companies has escalated this year, with all three expanding their delivery networks and pledging billions of dollars in grants to merchants and consumers.
Results – Very fast and cheap offers. Perused through JD.com’s delivery platform on Friday, CNBC found coffee as cheap as 10.9 yuan, or $1.50 with shipping costs. Meituan served a 13 yuan set of steamed bread and a breakfast set of 26.8 yuan McDonald’s.
However, despite the benefits for Chinese consumers, the price war also weighs heavily on investors and revenue outlook. For example, Meituan and JD.com have confirmed that stocks have fallen by around 22% and 10%, respectively, this year, according to LSEG data.
How did you get here?
China’s e-commerce players have consistently competed in delivery times, supported by the country’s large labor force and the gig economy. By building a strong logistics network, JD has put pressure on competitors like Alibaba to set the standard in the market for next-day or next-day package delivery.
However, China’s latest “Instant Commerce” battle was followed by market leaders Meituan and Alibaba’s food delivery platform Ele.me after JD.com moved to the takeout dining market in February.
Delivery riders in JD Logistics uniforms will adjust their helmets on May 26, 2025 in Chungin, China, where several other delivery workers will sit on an electric scooter next to a nearby Mate Anne delivery box.
Chen Sing | Getty Images News | Getty Images
Then in April, Meitaun launched its own challenge to JD.com with its new 24/7 “flash shopping” platform that includes categories such as grocery, alcohol and electronics, with promised delivery within 30 minutes.
Tensions have risen as businesses engaged in direct competition. Ultimately, the companies accused each other of using anti-competitive practices to block riders from accepting orders on rival platforms. It was around that time that JD began hiring more full-time drivers. Founder Richard Liu was photographed offering food orders at Wijing in a viral advertising stunt.
That month, JD.com announced a first-round grant worth 10 billion yuan.
Subsidies and large discounts are common in China’s competitive technology sector and are the source of concern in Beijing.
China’s top market regulator summoned JD.com, Meituan and Alibaba’s Ele.me in May to urge them to follow the law and compete fairly. The retail group also expressed concerns about the knock-on effect of JD.com’s grant program and the sharp drop price. However, the pushback had little effect on the slowing down of the price war.
On Tuesday, JD.com announced an additional 10 billion investment based on the “Double Hundred Plan,” which aims to provide targeted support to merchants on the platform.
It came after Alibaba’s Taobao Instant Commerce announced on Saturday that a subsidy program worth 50 billion yuan (approximately $7 billion) will be distributed next year. It added that it quickly reached 200 million orders per day.
On the same day, discounts and coupons offered at Meituan dropped the price of coffee cups to 2 yuan ($0.28), according to local media.
As a result, the company said it received record orders of 120 million on Saturday.
All companies boast an increase in their instant commerce user base in recent months, but it remains unclear to what extent the price war will affect revenue.
Meituan reported that its first quarter of 2025 was 10.2 billion yuan, an increase of about 63% year-on-year. However, he warned that the next quarter would likely be affected by increasing competition for instant retail.
In May, JD.com reported that its operating profit rose 31.4% year-on-year to 11.7 billion yuan in the first quarter of 2025. However, economists voted by LSEG expect second quarter profits to fall year-on-year and quarterly.
According to a Nomura analysis released Thursday, JD’s push to food delivery could have resulted in more than 10 billion yuan losses in the second quarter. Analysts estimate that JD has won around 10% of the instant delivery market and garnering 20 million orders a day.
Looking ahead, “I think JD might have to reconsider its ambitions,” the analyst said. They pointed out that in light of strengthening Alibaba’s spending on subsidies, JD may have to burn all the profits generated by the core retail industry over several quarters if they want to compete with two market incumbents.
