Recent quarterly earnings reports from major internet platform companies reveal that food delivery price subsidies have significantly impacted platform profitability, while some platforms are actively exploring new incremental markets.
During the second quarter, three major giants - Meituan, Taobao, and JD.com - launched an aggressive food delivery subsidy war. According to their financial reports, Meituan's net profit plummeted 89% year-over-year, JD.com's net profit declined 50.8%, and Alibaba's net profit fell 18% compared to the same period last year. Based on last year's profit levels, these three companies collectively earned over 20 billion yuan less this quarter, primarily due to substantial food delivery subsidies.
China's e-commerce sector has already entered a saturated market stage. Beyond traditional e-commerce leaders like Alibaba, JD.com, and PDD, newcomers including Douyin, Kuaishou, and Meituan have entered the field, intensifying competition. Competition in saturated markets represents a zero-sum game, as demonstrated by the food delivery battle among these three companies - when one company engages in price competition to gain market share, competitors inevitably follow suit.
Such low-price competition is detrimental to long-term development, leading to sustained profit erosion and weakening companies' capacity to invest in new technology research and business expansion, ultimately undermining future growth potential. Rather than channeling massive capital into short-term zero-sum games, companies would benefit more from investing in new businesses and incremental markets, creating additional development opportunities and employment.
Earnings reports and announcements show that internet platform companies are actively exploring incremental markets in various directions. Following Alibaba's Q2 earnings release, investors significantly boosted its stock price. A key factor was the company's cloud business revenue growth of 26% year-over-year, with AI-related product revenue achieving triple-digit growth for eight consecutive quarters, becoming the core driver of expansion.
After pivoting to technology-driven development, Alibaba has gone "ALL IN AI," transforming into a comprehensive AI technology company spanning from open-source ecosystems to AI applications. The company launched eight new AI and cloud data centers globally in the first half of the year and plans to expand its cloud infrastructure to 30 regions and 95 availability zones by year-end, positioning itself as a global AI company.
On September 1st, JD.com announced a tender offer to acquire Ceconomy, the parent company of renowned German electronic retail chains MediaMarkt and Saturn. Ceconomy currently operates over 1,000 stores across 12 European countries. This represents JD.com's largest global expansion following its acquisition of PARKnSHOP in Hong Kong, demonstrating JD.com's strategy of treating international markets as new incremental sources. This expansion not only broadens JD.com's development space but also enables domestic products to reach global markets more conveniently and at greater scale through JD.com's worldwide sales network, addressing Chinese companies' shortage of global distribution channels.
According to Q2 earnings, Didi's international business now covers 14 countries and regions across Latin America, Asia-Pacific, and Africa. Its international GTV reached 27.1 billion yuan, surging 27.7% year-over-year at constant exchange rates, while international daily average orders hit 11.96 million, up 24.9% year-over-year - both reaching historical highs. Didi is experiencing substantial growth in Latin American markets, providing not only ride-hailing services but also financial and food delivery services, cultivating a local super-app ecosystem.
From revenue and profit perspectives, Chinese companies remain primarily focused on domestic markets, with overseas market revenue representing a smaller proportion compared to domestic revenue. Moving forward, companies need technology innovation as their driving force, as technological breakthroughs can unlock larger incremental businesses, while also requiring better understanding of overseas market regulations and cultural dynamics.
Companies should not limit competition to domestic saturated markets but should prioritize profitability and investment capacity while pursuing sustainable development.