Food Delivery War One Year On: HKD 80 Billion Burned, Who Emerges Victorious?

One year ago in February, JD.com’s high‑profile entry into the food delivery sector triggered an industry‑wide subsidy war. JD.com’s pledge to provide riders with full social insurance and housing fund contributions intensified competition and set off a period of aggressive promotions.

During that phase, consumers were inundated with discount vouchers, red‑envelope campaigns, free milk tea and one‑yuan lunches, and social feeds filled with screenshots of bargain hauls. A year later, the competitive landscape has been reshaped. The “China Catering Brand Power White Paper 2025” published by Hongcan Industry Research Institute in September reports that Meituan Waimai accounted for 46.9% of daily order volume in Q3 2025, Alibaba’s combined Ele.me  and Taobao Flash Sale reached 42.8%, and JD.com  Waimai held roughly 10%. JPMorgan’s November survey produced comparable figures, showing Meituan at 50%, Alibaba’s ecosystem at 42% and JD.com  at 8%. Despite methodological differences, both data sets indicate the market has evolved from Meituan’s dominance into a three‑way competitive structure.

Collectively, the three major platforms invested more than HKD 80 billion across the second and third quarters of 2025. The question is what that spending achieved and who ultimately bore the cost once subsidies receded. JD.com’s market entry emphasized a quality‑oriented approach, including rider benefits, efforts to curb ghost orders and the launch of Seven Fresh Kitchen, accompanied by heavy couponing and free first‑order offers. The company’s founder personally participated in promotional activities, generating substantial publicity. Meituan responded with large‑scale discounts and waived delivery fees, leveraging its extensive user base and established logistics to defend high‑frequency consumption scenarios. Meituan’s strategy prioritized retaining users rather than engaging in indiscriminate price competition.

Alibaba’s response differed by mobilizing its broader ecosystem. The integration of Taobao Flash Sale with Ele.me  elevated instant retail to a primary entry point, and subsequent moves to onboard Tmall brands and coordinate with Hema, RT‑Mart and Cainiao created a closed‑loop supply and distribution system. Public data indicate Taobao’s daily active users rose by 20% following Flash Sale integration, weekly average daily orders reached 80 million in August, and active daily riders approached two million. The resulting traffic uplift translated into higher commission and advertising revenue, demonstrating an ecosystem synergy beyond pure order growth.

Financial statements reveal divergent impacts across platforms. Meituan’s core local commerce segment reported an operating loss of RMB 14.1 billion in Q3 2025, with sales and marketing expenses rising to RMB 34.3 billion. Management framed these losses as a deliberate trade‑off to protect high‑value user cohorts and to accelerate expansion into instant retail and international growth. Citic Securities characterized Meituan’s losses as a strategic choice rather than a collapse, aimed at preserving long‑term positioning through investments in user quality, fulfillment efficiency and AI‑driven differentiation.

Alibaba recorded the largest absolute spending increase. In the second quarter of fiscal 2026, instant retail revenue reached RMB 22.906 billion, up 60% year‑on‑year, while sales expenses rose by RMB 34 billion. Given Alibaba’s total revenue base of RMB 247.8 billion, the incremental pressure was manageable within the group’s scale, and the platform’s ecosystem approach helped offset marketing costs through increased commissions and advertising. Approximately 3,500 Tmall brands integrated offline stores into instant retail, underscoring the broader commercial value of Alibaba’s strategy.

JD.com, which entered early, appears to have been the first to moderate its approach. In Q3 2025, JD’s new businesses, including food delivery and Seven Fresh Kitchen, generated RMB 15.6 billion in revenue but recorded RMB 15.7 billion in operating losses. Penetration remained limited: only 12% of JD’s 700 million users used its food delivery service and independent app reach was under 5%. Consequently, JD.com  reduced marketing intensity and refocused on high‑certainty services such as Seven Fresh Kitchen and JD Medicine Express, leveraging its logistics and pharmaceutical supply chain to pursue higher‑value, repeatable use cases.

The subsidy war’s downstream effects were most acute for merchants and riders. A Fudan University study titled “Gained Traffic, Lost Profit” found that 63% of restaurants experienced higher order volumes without revenue growth, with average receipts falling 4% and total profits declining 8.9%; 28% of merchants were forced to close outlets. Tea and beverage brands were particularly affected: delivery costs for Luckin rose to 35% of revenue, Bawang Chaji’s net profit plunged 47%, and many smaller tea shops faced losses on each order. Riders initially benefited from higher per‑order pay during the subsidy peak, but as promotions tapered and rider supply expanded, incomes became volatile and competitive pressures intensified. Many riders reported feeling used as instruments in the platforms’ subsidy campaigns.

Regulatory intervention in July, including directives to curb excessive competition, helped restore market discipline. By the fourth quarter, the three platforms signaled strategic recalibrations. Meituan shifted toward strengthening instant retail infrastructure, closing inefficient units and concentrating on brand warehouses and a comprehensive instant fulfillment system. Alibaba continued to integrate instant retail into Taobao’s ecosystem, enabling both rapid delivery and broader category coverage. JD.com  adopted a more restrained but differentiated strategy, emphasizing quality‑oriented instant services supported by its proprietary logistics and supply chains.

The industry’s competitive logic has shifted from a pure subsidy race to a contest over ecosystem integration and fulfillment capabilities. Meituan is consolidating local life‑service dominance, Alibaba is fusing e‑commerce with instant retail, and JD.com  is doubling down on supply‑chain‑driven premium services. The battle for market share has thus become a strategic contest over who can embed food delivery as a core component of a larger commercial ecosystem.

One year on, there is no definitive victor. As subsidies wane, the next phase of competition will hinge on which platforms can establish durable advantages in fulfillment efficiency, supply‑chain integration and user experience rather than on who can spend the most. The future trajectory of the food delivery market will be determined by the platforms’ ability to convert short‑term order growth into sustainable, profitable ecosystem value.