Source | Bohu Finance (bohuFN)

Author | All Too Well

As financial reports from Meituan, Alibaba, and JD.com are gradually released, their investments in the takeout war are becoming more apparent. While each company touts its own achievements during financial report meetings—Alibaba reports growth, and Meituan maintains its market position—the financial data reveals that after fierce competition, all three are struggling. Over the past six months, e-commerce giants have collectively spent 80 billion yuan on takeout services, significantly eroding Alibaba's profits and even pushing Meituan into negative profit territory.

Despite this, the main combatants have only hinted at scaling back operations. Yet, the battle must go on. Wang Xing, CEO of Meituan, stated, "The takeout business will still face pressure in the fourth quarter. We will make necessary investments to maintain our leading position but will not engage in price wars."

The unanimous resolve of these companies isn't because takeout is highly lucrative. In reality, takeout is a business of "nickel-and-diming," where even minor missteps can lead to losses.

However, instant retail presents a different landscape. While Taotian and others struggle for growth, Meituan quietly entered the Double 11 shopping festival with its Flash Sale service, achieving impressive results. Moreover, leveraging the significant reshuffling opportunity in the takeout market, Alibaba has the potential to integrate its previously underperforming businesses and transform Taobao into a comprehensive consumption platform.

For Alibaba and JD.com, this represents growth and the future, making it a battle they cannot afford to lose. For Meituan, it's a stronghold that must be defended at all costs.

01. Takeout Delivery: Not as Simple as It Seems

Delivering takeout is a highly cost-inefficient endeavor. According to J.P. Morgan's 2024 Global Takeout Industry Report, the net profit margins of nine mainstream platforms generally range from 1.5% to 3.3%, averaging approximately 2.2%. Among them, Meituan Takeout has a net profit margin of 2.8%.

The takeout battle has also underscored the severity of the damage inflicted on the three companies, as evidenced by their third-quarter financial reports, which have sparked significant discussion.

In the third quarter of this year, JD.com's operating profit turned negative for the second consecutive quarter. Last year during the same period, the company reported a profit of 12 billion yuan, while net profit declined by 50% year-on-year. Alibaba is also under pressure, with its operating profit dropping from 35.2 billion yuan last year to 5.4 billion yuan, an 85% year-on-year decrease. Net profit fell from 43.5 billion yuan to 20.6 billion yuan, a 53% year-on-year decline. Meituan fared even worse, reporting a net loss of 18.6 billion yuan for the quarter, its largest loss since going public in 2018.

The key question remains: Was it worth losing so much money?

The pursuit of the takeout business isn't solely focused on this arduous endeavor; rather, Alibaba and JD.com have long been grappling with traffic acquisition. The essential and frequent nature of takeout services can drive users to open apps and boost e-commerce growth, known as the "synergistic effect."

From a data perspective, Alibaba's strategy of subsidizing takeout services has indeed yielded results.

Firstly, the scale of the takeout business has grown rapidly. J.P. Morgan data shows that in the Chinese takeout market, Meituan still holds the top position with approximately 50% market share, but Alibaba has rapidly closed the gap to 42%, while JD.com accounts for about 8%.

Secondly, the synergistic effect is beginning to manifest. Alibaba mentioned that Taobao Flash Sale drove a 20% increase in Taobao's Daily Active Users (DAUs) in August. The increased traffic further boosted advertising and commission revenue while reducing overall platform marketing expenses. The number of Taobao 88VIP members grew by double digits year-on-year in the third quarter, exceeding 56 million. These members represent Taobao's most core user group.

However, from Meituan's data, it appears that JD.com and Alibaba's sudden offensive did not yield sufficiently large gains. According to Wang Xing's disclosure during the financial report conference call, orders with an average order value (AOV) of over 15 yuan accounted for more than two-thirds of the Gross Transaction Value (GTV), while orders over 30 yuan accounted for approximately 70%. The average net AOV was higher than that of other platforms.

High-value orders better reflect genuine user demand, while low-value orders, aside from their promotional value, lack economic viability—orders with an actual payment of under 15 yuan are largely unprofitable. This means Meituan has managed to hold its ground.

02. Why Continue Fighting?

In July of this year, under the mediation of regulatory authorities, the three major platforms issued statements one after another to jointly boycott "disorderly competition" in the takeout market. Alibaba and JD.com also gradually conveyed messages about reducing their investments in the takeout business.

However, this does not mean the battle is over; rather, the battlefield is temporarily shrinking.

On one hand, Alibaba disclosed during its financial report conference call that since October, the loss per order for Taobao Flash Sale has been halved compared to July and August, while maintaining a stable order share. "Halving the UE (Unit Economics)" indicates that Flash Sale has achieved sufficient scale and a greater variety of orders to distribute costs, making the business itself somewhat sustainable.

More importantly, Taobao's transformation from a pure e-commerce platform to a comprehensive consumption platform hinges on Flash Sale as a core component. Recently, "Ele.me" was officially renamed "Taobao Flash Sale," completing the mental shift from food delivery to delivering everything. In the future, Taobao Flash Sale will not only be a source of core traffic but also an instant fulfillment infrastructure for all product categories.

On the other hand, the rapid growth and trillion-yuan scale of instant retail prevent the three companies from retreating.

With the resolution of last-mile logistics issues, the boundaries between online and offline are becoming increasingly blurred.

From a fulfillment perspective, instant retail is supported by local supply within a 3-5 kilometer radius, combined with 30-minute to 1-hour instant delivery, forming a highly time-sensitive online retail format. Thus, "takeout delivery" is considered a crucial step in achieving near-field fulfillment.

From a user demand perspective, instant retail is shifting from emergency needs to regular needs. Data shows that while "Generation Z" users were initially the primary consumers, the 31-45 age group has now become the main consumer force, accounting for 55% of the total. Meanwhile, the market is rapidly expanding from first- and second-tier cities to lower-tier markets, with county-level instant retail growing by 23% year-on-year, becoming a significant source of industry growth.

From a supply perspective, the range has expanded from emergency needs like fresh produce and pharmaceuticals to encompass all product categories, including mobile phones, beauty products, home appliances, and even luxury goods.

For example, from May 25 to June 18 this year, Meituan Flash Sale collaborated with over 700,000 offline stores across 360 cities in eight core categories to launch the "Super Store Shopping Festival." According to the battle report data, in terms of "year-on-year sales growth," pet supplies increased by 7,077%, digital appliances by 1,292%, clothing and footwear by 219%, maternal and child toys by 175%, daily necessities by 89%, and beauty and personal care by 77%.

According to the "Instant Retail Industry Development Report 2025" released by the Chinese Academy of International Trade and Economic Cooperation under the Ministry of Commerce, China's instant retail market reached 781 billion yuan in 2024, growing by 20.15% year-on-year. This growth rate is 12.95 percentage points higher than that of national online retail and 16.65 percentage points higher than that of total retail sales of consumer goods during the same period.

The shift from "delivering takeout" to "delivering everything" brings not only new demand and growth but also encroaches on a portion of the market share previously held by e-commerce.

03. Conclusion

In recent years, Meituan has transformed into an interactive local search engine, while Douyin has become a local lifestyle interest distribution platform. Offline merchants now operate much like e-commerce sellers did in the past: they need to craft store titles, purchase keywords, compete for search rankings, and create video content for grassroots marketing and advertising. Essentially, offline businesses are being forced to learn traffic operations, as the power of e-commerce is penetrating all offline categories.

This is a battlefield that major companies cannot afford to miss.

After all, money lying idle in accounts may be illusory; only money that can be spent is real.

Reference Sources:

1. Marketing Liu Liangliang: Where is the "endgame" for instant retail, as seen from the Q3 financial reports of Alibaba, Meituan, and JD.com?

2. Dingjiaooone: The conclusion of the takeout battle: billions burned, no winners

3. Lanxi: The takeout battle: A brutal beginning will inevitably end brutally

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