DESPITE GOVERNMENT INTERVENTION, THE MEAL DELIVERY BATTLE CONTINUES

Last week, I shared some of my thoughts on the delivery war in China with Reuters. The article was just published (see comments).

The damage this is causing to the catering section has also begun to emerge. From an article by Yicai today:

"Sellers have expressed mounting concerns over the negative impact of the recent delivery price war in China during a merchant consultation meeting held by on-demand services giant Meituan."

"All merchants agreed that irrational subsidy competition is draining the industry, intensifying operational pressure, and severely challenging cost recovery systems and store operations at the meeting in Shanghai yesterday. Sellers are forced to participate in price wars, which have led to a drop in average order value and a 15 percent income reduction, they added."

"This ultra-low pricing has altered consumer perceptions, and once the subsidies decrease, the value and volume of orders will plummet." The operations director of a national rice noodle chain said that customer spending has dropped to around CNY10 from CNY25. "Other brands have seen a surge in orders after hefty subsidies, so if we don't participate, even loyal customers might switch."

While the volume of orders explodes, margins decrease and merchants need to hire extra staff to cope with all the orders, causing increased costs. Small merchants hurt the most because leading brands have more flexibility to cope with surging orders.

While Meituan and Alibaba continued their battle last weekend, neither company publicly released its results. According to Latepost, Meituan had 120 million orders on July 19th, and Alibaba's Taobao/Eleme had 90 million. As a result, the total number of orders more than doubled to this unsustainable level compared to Early 2025.

-Ed

Reuters article: reuters.com/sustainabil…

Yicai article: yicaiglobal.com/news/me…