How intense has the "food delivery war" become since JD.com and Taobao Flash Shopping entered aggressively?

According to a UBS research report released on August 25th, the market share of food delivery industry leader MEITUAN-W is being actively eroded by Ele.me, with its exclusive merchant advantages that have long served as a competitive moat showing signs of weakness for the first time. Meanwhile, JD.com has temporarily retreated from the intense subsidy war, shifting toward a strategy that prioritizes return on investment.

The report shows that the overall market continues to grow rapidly driven by substantial subsidies, with total order volume year-over-year growth accelerating from 7% in Q1 to 17% in Q2, further rising to 33% in July and 39% so far in August.

In late April this year, Alibaba integrated restaurant merchant resources from its Ele.me platform to launch "Taobao Flash Shopping," officially joining the food delivery war. Measured by order volume, Ele.me's market share has surged from approximately 11% pre-competition/13% in Q2 to the latest 28%, demonstrating strong growth momentum. MEITUAN-W's share has declined from its absolute dominance of 85% pre-competition/74% in Q2 to the current 65%. JD.com's market share has dropped from 13% in Q2 to 7%.

MEITUAN-W's Merchant Advantage Faces First Setback

The most noteworthy signal in the report is that MEITUAN-W's exclusive merchant advantage has shown loosening for the first time.

The report reveals that MEITUAN-W's exclusive partner merchant daily active users (DAU) experienced their first year-over-year decline in July. A specific example is the popular tea brand Heytea recently launching on the Ele.me platform.

Data shows that the overall overlap rate among merchants across the three major platforms is rising, meaning more and more businesses are choosing to operate simultaneously across multiple platforms. This trend is directly challenging the competitive barriers MEITUAN-W previously established through exclusive partnerships.

The report suggests that as merchant overlap across platforms increases, MEITUAN-W's monetization rate may face pressure, as merchants can leverage lower rates offered by JD.com and Ele.me as bargaining chips to negotiate higher rebates with MEITUAN-W.

However, in the core area of fulfillment capability, MEITUAN-W's foundation remains solid.

UBS notes that while platforms have increased subsidies to third-party delivery riders to ensure adequate capacity, leading to higher rider overlap rates and potentially increased unit fulfillment costs, both MEITUAN-W and Ele.me's proprietary delivery capacity are growing. Overall, MEITUAN-W's fulfillment capability has remained largely unchallenged to date.

Nevertheless, challengers are showing stronger traffic attraction in user growth. According to QuestMobile data, JD.com achieved the most rapid weekly DAU year-over-year growth at 31%, while Alibaba and MEITUAN-W recorded 16% and 7% respectively.

The report also notes that user activity growth may partially stem from consumers' price comparison behavior across different apps, and whether this can ultimately convert into effective GMV (Gross Merchandise Value) remains to be observed.

Alibaba Gaining Momentum, JD.com Adjusting Strategy

The report also emphasizes that Ele.me is gaining momentum in recent order volume and merchant recruitment.

UBS's channel research shows that Ele.me is working to match and slightly exceed JD.com's discount levels to cultivate consumer mindset, fully leveraging its strong net cash position.

Additionally, Alibaba Local Services plans to launch a "Flash Group Buying" service, targeting MEITUAN-W's "Pin Hao Fan" low-ticket group buying service.

JD.com has chosen to prioritize return on investment and optimize promotional efficiency under intense competitive pressure, consistent with its declining market share trend.

More Optimistic About Alibaba vs MEITUAN-W and JD.com

Based on the current competitive landscape, UBS expressed greater short-term optimism about Alibaba in its report.

The report believes Alibaba's stock price still trades at a 15% discount to its year-to-date peak, with significant long-term value yet to be unlocked. JD.com's expected 2025 P/E ratio of only 7x represents reasonable valuation, but the market may await signals of profit stability.

Regarding MEITUAN-W, UBS maintains confidence in its moat and execution capabilities for long-term market leadership, but adopts a cautious short-term stance considering high market expectations and premium valuations of 23x/16x expected P/E ratios for 2025/2026.

The report anticipates that platform subsidies for food delivery will gradually ease as the summer peak season ends. However, competition in non-restaurant categories may continue into Q4's Singles Day shopping festival, with related stocks likely to remain volatile in the foreseeable future.

When the competitive dust settles (possibly entering Q4), the focus of competition will shift toward service differentiation, ecosystem synergies, and operational efficiency.