While Wang Xing is exploring new battlefields overseas, Meituan's domestic base has welcomed a new competitor.

On October 9, Meituan's overseas platform Keeta was launched in Riyadh, Saudi Arabia, marking its third overseas city after Hong Kong in May 2023 and Al Khobar, Saudi Arabia, in September 2024.

It's no surprise that Keeta landed in Riyadh, Saudi Arabia, as Bloomberg reported on Meituan's plan in April this year. Moreover, in February this year, Meituan made significant structural adjustments to further pave the way for its overseas expansion. Apart from entrusting Wang Puzhong to oversee the in-store, home delivery, and two major platforms, Wang Xing personally led the drone and overseas businesses.

After being disrupted by Douyin in 2023, Meituan and Douyin have gradually differentiated their positioning in the local lifestyle sector, and Meituan's share price has rebounded from its lows this year. Now that Keeta has officially launched in Riyadh, Wang Xing's overseas business is thriving.

However, at this juncture, in Greater China, Meituan's stronghold, its core business of food delivery is facing new challenges from JD.com's instant delivery service and Douyin's one-hour delivery. Can Wang Puzhong, in charge of defending Meituan's domestic turf, reassure Wang Xing to focus on overseas expansion? Let's start with a cup of coffee.

01. JD.com's Instant Delivery: A 'Qualitative Change' Starting with a Cup of Coffee

In May, JD.com renamed its "one-hour delivery" service to "instant delivery." Both names suggest that JD.com was still within the realm of instant retail, albeit with improved timeliness.

From a business model perspective, instant retail can be broadly divided into supermarket self-operated mode and platform mode. However, in terms of logistics support, compared to some supermarket self-operated modes that exclusively use their own delivery services (e.g., Hema, Sam's Club), Meituan is the only platform mode with a strong exclusive delivery service. Other platforms tend to have more open logistics capabilities, such as JD.com using Dada for delivery, Douyin using third-party ShunDa for same-city delivery, and Taobao partnering with Ele.me for one-hour delivery in July. Despite Ele.me and Taobao belonging to Alibaba, they are still separate businesses.

In 2022, Ele.me already cooperated with Douyin through mini-programs, and Douyin's third-party delivery service also included Dada. Therefore, for Douyin, JD.com, and Taobao, the basic delivery capability they can mobilize is not a core competitiveness but rather a necessary basic service.

If JD.com continues to compete with Douyin and others in the fresh food, supermarket, and FMCG sectors, its advantages are not obvious. Meituan's large army of riders and high merchant penetration rate give it a significant market share in both food delivery and broader instant retail. Therefore, even when JD.com renamed its "one-hour delivery" to the seemingly faster "instant delivery" in May, discussions mainly focused on how JD.com would change the instant retail landscape, with little mention of its impact on Meituan.

But everything changed qualitatively when JD.com started offering Luckyin coffee deliveries for just 9.9 yuan.

JD.com's 9.9 yuan Luckyin coffee delivery service was first announced in May, but it wasn't until several months later that the public began discussing its potential impact on Meituan.

After all, even Luckyin's official app or mini-program couldn't offer home delivery for 9.9 yuan, and the same applied to its competitor KUDI, which offered 8.8 yuan delivery. Sometimes, platform coupons could be stacked on top of these offers. Clearly, JD.com is subsidizing these brands' delivery costs to cultivate market awareness, and this strategy seems to be working well. Other chain restaurants like Bawang Cha, NOWWA, and Burger King are also offering free delivery through JD.com, which is a cost-effective way to attract users and drive traffic to JD.com's new consumer mindset.

Expanding from fresh food, supermarkets, and FMCG products to instant food categories like coffee, milk tea, and hamburgers has brought JD.com into the realm of food delivery as perceived by users. Meituan relies on its food delivery business to drive higher conversions for its other home delivery services. Since food delivery items are highly perishable, they require more stringent delivery capabilities. While delivery capabilities for food delivery can certainly support instant retail, the reverse is not always true. Now that JD.com is gradually establishing itself in the minds of users as a destination for ordering beverages and fast food, this is not a good sign for Meituan.

Whether the 9.9 yuan tag will become too burdensome in the future or if JD.com intends to use it as a long-term traffic entry point remains to be seen over time.

02. Different Paths to Instant Retail for JD.com and Douyin

Before this, no matter what moves JD.com or Taobao made, as long as they didn't venture into food delivery, no one would have considered them a threat to Meituan's core business. However, after Douyin aggressively entered the food delivery and local lifestyle services markets last year, public opinion began to view Douyin as launching an attack on Meituan's stronghold.

As mentioned earlier, after 2023, Meituan and Douyin have gradually differentiated their positioning in the local lifestyle sector, and Meituan's share price has rebounded from its lows. Meanwhile, JD.com has quietly taken up the mantle from Douyin as the next perceived attacker on Meituan's turf.

Currently, JD.com's approach to offering tea, coffee, fast food, and delivery seems smoother than Douyin's previous attempts.

Firstly, JD.com's "delivery" positioning aligns better with users' expectations of food delivery than Douyin's.

Although JD.com has never publicly declared its intention to enter food delivery, users have spontaneously started ordering food on JD.com's platform due to the 9.9 yuan delivery offer. This cost-effective mindset for fast food delivery then permeates into broader instant retail services, creating an imaginative business logic. As we know, Meituan's largest traffic source is low-priced working lunches.

In contrast, Douyin's previous food delivery service mainly targeted high-value group meals, which aligned with Douyin's high penetration rate among in-store merchants but didn't quite meet most users' expectations for food delivery—convenience, speed, single-person servings, and cost-effectiveness. Perhaps that's why, in June last year, rumors circulated that Douyin had abandoned its 100 billion yuan GMV target for food delivery but hadn't given up on the business itself.

Additionally, as previously mentioned in a New Position article, Douyin seemed somewhat "wavering" in its positioning for food delivery.

In April 2024, Douyin moved its food delivery business from its local lifestyle division to its e-commerce division. Then, in August, it was rumored that the food delivery business was returning to the local lifestyle division. In contrast, JD.com has no such distractions with in-store group-buying services and appears more determined.

At the time, New Position speculated that the swing between e-commerce and local lifestyle might indicate that Douyin wanted to combine food delivery with in-store group-buying while also tapping into the supermarket business from an e-commerce perspective. As Douyin's VP of e-commerce, Mu Qing, previously stated, "Meeting the needs of specific users through platform services and timely logistics can effectively complement our existing platforms and merchants."

If we look at the "Mall" section of Douyin's e-commerce business, we'll find that both one-hour delivery and Douyin Supermarket are featured in the main menu. However, the food delivery function falls under the local lifestyle category's group-buying section. This separation means that Douyin's food delivery service rarely converts users to its one-hour supermarket delivery service.

Another possible factor is that JD.com's logistics brand image indirectly promotes its instant retail business, whereas Douyin lacks such a logistics brand perception.

As mentioned earlier, both Douyin and JD.com use Dada for delivery, but JD.com integrates Dada with JD Daojia, while Douyin relies on third-party services like ShunDa for same-city delivery.

Dada, which went public on Nasdaq in 2020 and is considered the first stock in instant retail, has shareholders including JD.com, Walmart, and Sequoia China. In September this year, JD.com completed its acquisition of Walmart's stake in Dada, increasing its ownership to over 60%. Meanwhile, Shunfeng Express, which went public on Nasdaq on October 4, has seen its share price drop to about three-quarters of its opening price on the first day of trading (as of EDT October 11), while Dada's share price is now about one-tenth of its IPO price.

If JD.com or Douyin's instant retail models succeed, these third-party delivery service companies' share prices will also benefit.

03. Wang Puzhong Defends the Base While Wang Xing Takes Flight

As mentioned at the beginning, Wang Xing's primary focus is currently on overseas business and drones, while Wang Puzhong oversees domestic in-store, home delivery, and the two major platforms.

Under Wang Puzhong's leadership, Meituan has continued to strengthen its "Pinhaofan" and "God Member" initiatives. In the second quarter of this year, Meituan's profit margin increased by 6.8 percentage points year-on-year, with peak order volume reaching 98 million. In July, Meituan introduced "Second Delivery," aiming to bridge the gap between in-store and home delivery scenarios, further enhancing its business integration.

On the other hand, JD.com is betting on both its own and Dada's same-city delivery services. According to insiders, JD.com is recruiting more Dada riders, and users who enter JD.com's instant delivery page may receive Dada express delivery coupons through lucky draws.

One user who frequently uses JD.com's instant delivery service shared, "JD.com's own delivery service is flawless, but once I ordered from a store that used Dada for delivery through instant delivery, my order got lost. However, the platform refunded me promptly." While this is an isolated incident, it hints at the ongoing integration between JD.com and Dada.

Therefore, Meituan needn't be overly alarmed by JD.com's challenge.

*The lead image and images in the article are sourced from the internet.