Three Giants Burn Nearly $100 Billion: The Food Delivery War is Also a Battle for Efficiency

August has ended, and with summer drawing to a close, one phrase has dominated this sweltering season — the “Three Kingdoms” battle of food delivery. In just a few months, the three major platforms have reignited a level of fierce competition reminiscent of the internet wars of the last decade, pulling hundreds of millions of people into a subsidy-fueled showdown.

With Meituan, Alibaba, and JD.com all releasing their Q2 financial reports, the “food delivery war” has revealed its first-phase results in a more comprehensive and tangible way.

A Common Thread: Falling Profits

The financial data share some notable similarities — particularly a decline in net profits:

• Meituan: Revenue of RMB 91.84 billion, up 11.7% year-on-year; adjusted net profit RMB 1.493 billion, down 89%.
• Alibaba: Revenue of RMB 247.652 billion, up 2%; adjusted net profit RMB 38.844 billion, down 14%.
• JD.com: Revenue of RMB 356.7 billion, up 22.4%; net profit attributable to shareholders RMB 6.2 billion, down 50.8%.

Across the board, falling profits underscore the intensity of this close-quarters battle.

Meituan is undeniably at the heart of this war. As the market leader, it has faced back-to-back offensives from JD and Alibaba. How Meituan defends its turf has become a key question for the entire market.

Efficiency vs. Scale — The Deeper Game

Long term, this isn’t just a subsidy contest — it’s a battle for efficiency and scale.

Meituan’s confidence in playing the long game comes from two primary advantages:

1. A mature and highly efficient logistics network. In this war, delivery capacity is the ultimate resource. Meituan’s stable rider base, robust supply capabilities, and well-honed incentive systems are the result of years of investment — enabling fulfillment costs significantly lower than its rivals. Over time, reducing rider costs can improve unit economics and restore profitability.
2. Organizational strength and new growth frontiers. Meituan’s overseas food delivery service, Keeta, is growing rapidly, while its “Xiaoxiang Supermarket” has emerged as a new pillar in its food-and-grocery retail strategy. The company thrives on long, grinding battles, breaking big goals into small, daily wins — a strategy rooted in dismantling competitors through relentless efficiency.

With the most intense subsidy phase now past, the competition may be moving into Meituan’s comfort zone.

Holding the Line

Short-term profit pressure is no surprise to Meituan — management saw it coming.

In the Q1 earnings call, CEO Wang Xing vowed to “go all out to win this competition.” By Q2, Meituan made its financial priorities even clearer: increase investment to counter competition and strengthen the broader industry ecosystem.

• Q2 sales costs reached RMB 61.426 billion, up 27%, largely from rising rider costs and significant subsidies.
• Meituan’s nationwide delivery network, with precise, data-driven rider management, allowed it to allocate subsidies dynamically, keeping delivery stable even under peak demand. Full-time riders far outnumber rivals, enabling high efficiency and lower per-order delivery costs.
• Sales and marketing expenses surged 51.8% year-on-year to RMB 22.519 billion, driven by higher promotions, advertising, and user incentives.

In July, Meituan’s instant retail daily orders hit a record 150 million, with average delivery times of just 34 minutes — even under extreme order volumes. When competitors like Taobao Flash Sales launched subsidies, Meituan swiftly matched them, maintaining a consistent lead in order volume while keeping costs under control.

For Meituan, preserving market share and delivery capacity outweighs short-term profits. Subsidies, widely acknowledged as unsustainable, will eventually normalize — and with that, profits are expected to return.

Measuring the Real Efficiency of Burning Cash

In past internet battles, “burning money” was the simplest way to grab share. But today’s market is different — cash flow may be healthy, but in a stock-driven market, budgets are not infinite. The key question is no longer how much you spend, but how efficiently you spend it.

This quarter:

• Alibaba increased marketing spend by RMB 20.4 billion, gaining RMB 1.588 billion in instant retail revenue.
• Meituan increased spend by RMB 7.7 billion, boosting core local revenue by RMB 4.67 billion and delivery revenue by RMB 634 million.
• JD.com spent RMB 15.1 billion more on marketing, generating RMB 9.3 billion in new business revenue.

While Meituan’s incremental revenue appears smaller, it’s defending a larger, more saturated base with higher penetration rates. Crucially, Meituan still leads in unit economics — with an estimated per-order profit advantage of RMB 4 over Alibaba in Q2.

The real battleground? The instant retail market — and for Meituan, this period of high investment is also a stress test, probing the upper limits of operational capacity.

The Long Game — and the Risks

Currently, Alibaba is on the offensive, Meituan is defending, and JD.com is watching. Taobao Flash Sales has declared a long-term war, and Meituan has signaled it is prepared for sustained engagement.

But can platforms endure the cost of a protracted fight?

So far, nearly RMB 100 billion has been burned. The upside is a market that’s grown dramatically — July’s food delivery market was up 200% year-on-year. Yet when subsidies end, volumes may drop. The challenge will be converting subsidy-driven orders into lasting consumer habits, and finding monetization paths without discounts.

For Alibaba and JD.com, the value lies in funneling high-frequency food delivery traffic into low-frequency, high-margin businesses. But subsidy-driven customers are often price-sensitive and may not remain loyal once the deals vanish.

When the subsidy tide recedes, fulfillment capability becomes the decisive factor — and here, Meituan’s multi-year investments give it a clear edge.

Beyond the Red Ocean — Meituan’s Next Moves

Wang Xing has made it clear: Meituan opposes “involution” and prefers sustainable growth. That means innovating in supply, fulfillment, and demand — while expanding into new tech, new models, and overseas markets.

Key initiatives include:

• Rider welfare: Full work injury insurance in 17 provinces, nationwide pension subsidies by year-end, and enhanced safety and healthcare programs.
• Food safety infrastructure: Expanding the “Bright Kitchen” live-stream transparency initiative, aiming for 200,000 participating merchants by 2025.
• Efficiency upgrades: Building 1,200 “Raccoon Canteens” over three years to optimize kitchen operations.
• Overseas expansion: Keeta leads Hong Kong’s delivery market, entered Saudi Arabia in 2024, and plans launches in the UAE, Kuwait, Qatar, Bahrain, and Brazil.
• Autonomous delivery: Drone operations in major cities like Shenzhen, Beijing, Shanghai, and Dubai, with 600,000 completed orders.

In Meituan’s view, competition should not be about endlessly slicing up the same market — it should be about lowering industry costs through innovation, benefiting riders, merchants, and consumers alike.