In an unprecedented food delivery war, the three giants' quarterly marketing expenditures reached hundreds of billions of yuan, with company profits eroded to varying degrees. These investments will ultimately reshape the market landscape.
The 2025 food delivery war has been dubbed "the largest-scale subsidy battle in Chinese internet history." With JD.com (JD-SW, JD) entering the fray and Alibaba (BABA-W, BABA) intensifying efforts, the food delivery market's competitive landscape has evolved from a single dominant player to a three-way battle for supremacy.
After multiple rounds of competition among the three protagonists - MEITUAN-W, Alibaba, and JD.com - who emerges victorious? The Q2 2025 financial reports released by all three companies in mid-to-late August finally provided outsiders an opportunity to examine their financial performance.
The financial reports revealed that all three companies' profits were eroded to varying degrees in this food delivery war, with MEITUAN-W experiencing the most severe profit decline.
In Q2, MEITUAN-W achieved revenue of 91.8 billion yuan, up 11.7% year-over-year, but adjusted net profit plummeted 89% year-over-year to 1.49 billion yuan, far below market expectations of 9.85 billion yuan. In contrast, JD.com's revenue grew 22.4% year-over-year during the same period, reaching its highest growth rate in nearly three years, with adjusted net profit of 7.4 billion yuan, down 49% year-over-year. Alibaba's revenue grew slightly by 2% year-over-year, with adjusted net profit declining 18% year-over-year to 33.5 billion yuan.
Rough calculations show that the resulting expenditures caused the three companies to collectively earn over 20 billion yuan less. Market expectations suggest that to subsidize food delivery and instant retail businesses, the three giants are projected to invest over 100 billion yuan in sales and marketing this year.
Private equity investor Wu Gan (pseudonym) stated that based on results, MEITUAN-W's food delivery business unit economics (UE, referring to net profit per order in food delivery) likely reached zero around May this year, with estimated losses of 1.4 yuan per order starting in June. This essentially occurred during JD.com's intensified efforts.
MEITUAN-W expects its core local commerce business to experience significant losses in Q3. UBS believes that due to intense competition, MEITUAN-W's 2025 profit forecasts may be substantially revised downward to losses. Although MEITUAN-W has superior delivery infrastructure with lower average losses per order, Q3 food delivery business losses are expected to expand to approximately 2-3 yuan per order.
Each company's substantial financial investments ultimately resulted in market restructuring: calculations by multiple institutions using different metrics show significant changes in market share among the three companies, with MEITUAN-W experiencing a notable decline in market share.
Under these circumstances, several metrics previously viewed as MEITUAN-W's moat face pressure, including user mindshare and merchant ecosystem, all experiencing impact.
Warren Buffett has long been a staunch supporter of the "moat" concept, emphasizing its importance repeatedly. At the 2000 shareholder meeting, Buffett stressed that moats need dynamic reinforcement and widening: "We judge great enterprises primarily based on their ability to widen moats and their invincibility. We tell enterprise management that we hope the company's moat widens continuously every year. This doesn't necessarily mean profits must increase year after year, as sometimes that's not achievable. If a company's 'moat' widens continuously each year, the enterprise will operate very well."
However, under the unprecedented food delivery battle, markets once worried whether MEITUAN-W's moat remains as solid as before.
How large is the food delivery market that the three giants are competing for in China? Data shows that from 2015 to 2024, China's restaurant food delivery market exhibited explosive growth. Market size rose from 125 billion yuan in 2015 to approximately 1.6 trillion yuan in 2024, with a compound annual growth rate (CAGR) of 28%. In December 2024, China's food delivery user base reached 592 million, an increase of 47.77 million from December 2023, accounting for approximately 53% of total internet users.
Facing this enormous market size and the synergistic effects brought by food delivery business, the three giants' positions remain uncompromising. How will this sustained food delivery war ultimately conclude? Who will emerge as the winner?
**New Financial Ledger Under the Food Delivery War**
With JD.com's strong entry into food delivery in February 2025, the industry landscape began reshaping. Based on the latest Q2 2025 performance announcements, MEITUAN-W, which previously held absolute competitive advantage, not only lost market share in fierce competition but also failed to maintain its original "high profits," with profitability declining dramatically beyond expectations. Meanwhile, losses from Alibaba and JD.com's food delivery businesses also expanded.
Financial reports show that MEITUAN-W's core local commerce business, including food delivery and in-store dining and travel, achieved revenue of 65.347 billion yuan in Q2, up 7.7% year-over-year. However, due to massive subsidy investments to counter the food delivery war, core local commerce operating profit plummeted 75.6% year-over-year from last year's 15.234 billion yuan to 3.721 billion yuan, a reduction exceeding 10 billion yuan. Operating margin dropped 19.4 percentage points from last year's 25.1% to 5.7%, causing substantial impact on MEITUAN-W's core business.
In late April, Alibaba integrated Ele.me supply and launched Taobao Flash Purchase as a new food delivery entry point. In June, Ele.me, originally under Alibaba's Local Services Group, was also integrated into the e-commerce business group. In Q2, Alibaba's instant retail business, including Taobao Flash Purchase and Ele.me, achieved revenue of 14.784 billion yuan, up 12% year-over-year. However, due to large-scale subsidies, profit margins were compressed. Alibaba did not separately disclose instant retail business profitability. In Q2, Alibaba's e-commerce group, including instant retail, recorded adjusted EBITA of 38.389 billion yuan, down 21% year-over-year. Notably, Taobao Flash Purchase's large-scale subsidies began in July, so subsidy impacts have not yet been reflected in Q2 financial reports.
JD.com's new business segment, including food delivery, achieved 199% high-speed growth in Q2 revenue, jumping from 4.6 billion yuan in the same period of 2024 to 13.9 billion yuan. New business operating losses further expanded from 700 million yuan in the same period last year to 14.78 billion yuan. However, supported by improved revenue and profit margins from JD.com's core retail business segment, this offset losses from the new food delivery business.
Comparing overall performance of the "food delivery three giants," Alibaba and JD.com were relatively less affected by the food delivery war due to their existing e-commerce businesses, while MEITUAN-W experienced the largest performance decline due to impacts on its core food delivery business.
Alibaba's FY2026 Q1 report (Q2 2025) achieved revenue of 247.7 billion yuan, up 1.82% year-over-year, with adjusted net profit declining 18% year-over-year to 33.5 billion yuan. JD.com's Q2 2025 revenue reached 356.7 billion yuan, up 22.4% year-over-year, with adjusted net profit of 7.4 billion yuan, down 49% year-over-year. This profitability figure exceeded previous Morgan Stanley and Citigroup expectations of 63% and 68% declines respectively. MEITUAN-W's Q2 2025 revenue reached 91.8 billion yuan, up 11.7% year-over-year, with adjusted net profit of 1.49 billion yuan, down 89% year-over-year, significantly below Bloomberg consensus expectations of 9.85 billion yuan, a difference of 85%.
As the former "food delivery champion" that long held over 70% market share, MEITUAN-W was previously the big winner in the food delivery industry. In recent years, it leveraged monopolistic advantages and scale effects to continuously improve profitability.
According to historical financial reports, MEITUAN-W stopped separately disclosing specific food delivery business data after 2021, instead combining food delivery with in-store dining and travel under core local commerce. In 2021, MEITUAN-W's food delivery operating margin was approximately 6.4%, while the in-store dining and travel business, which didn't require fulfillment delivery, achieved an operating margin of 43.3%, with core local commerce operating margin at 13.8%. In 2022, MEITUAN-W's core local commerce operating margin improved to 18.4%. In 2023 and 2024, core local commerce operating margins further improved to 18.7% and 20.9% respectively.
"High commission rates" have been a focal point of controversy. MEITUAN-W officially responded on February 9, 2025, emphasizing that its food delivery platform charges merchants only 6%-8% in technical service fees (commissions), but many merchants indicated that MEITUAN-W actually charges commission rates around 25%. Industry insiders explained that 6%-8% represents technical service fees for merchants listing on MEITUAN-W's platform, while 25% might include comprehensive merchant costs such as commissions, delivery fees, and advertising promotion fees.
It's understood that after this year's food delivery war began, especially under the billion-yuan subsidy battle in July and August, many restaurant merchants indicated that platforms require merchants to bear part of promotional coupons, and MEITUAN-W actually extracts higher rates after the subsidy war compared to before. Compared to MEITUAN-W, Taobao Flash Purchase (including Ele.me) and JD.com charge lower commission rates, averaging 5-10 percentage points less, but order volumes still lag behind MEITUAN-W. Multiple merchants stated: "We're not clear about the reasonableness of specific fees, but due to MEITUAN-W's larger order volumes, we still have to accept the higher commission rates from MEITUAN-W's platform."
However, after JD.com's entry and Alibaba's follow-up this year, food delivery industry restructuring was triggered. JD.com officially launched food delivery services on March 1, 2025. Since JD.com's food delivery order volume was still in the ramp-up phase during Q1, MEITUAN-W's Q1 2025 core local commerce still achieved operating profit of 13.49 billion yuan, with an operating margin of 20.9%. But by Q2, MEITUAN-W's core local commerce operating profit dropped dramatically by 75.6% to 3.7 billion yuan, with operating margin falling 15.2 percentage points from Q1's 20.9% to 5.7%. JD.com's entry forced MEITUAN-W's food delivery business operating profit to decline beyond expectations, unable to maintain the high profits previously earned through monopolistic advantages and scale effects.
Notably, MEITUAN-W CEO Wang Xing further stated during the earnings call that the company expects core local commerce to experience significant losses in Q3 due to strategic investments. Institutions similarly expect that considering intensified industry subsidies in Q3, MEITUAN-W's Q3 core local commerce may generate substantial losses.
"JD.com's entry into food delivery, with Alibaba following suit, actually broke the previous monopolistic situation where MEITUAN-W dominated alone, accelerating the industry's return from high monopolistic profits to reasonable profits, which is beneficial for long-term industry development," industry insiders believe.
**Competing for the "Moat"**
As the food delivery war intensifies, a major focus of external attention is whether MEITUAN-W's moat remains as solid as before.
MEITUAN-W's core competitive barriers consist of multiple moats accumulated over several years, including scale advantages, instant delivery networks, merchant ecosystems, and user mindshare.
From a scale advantage perspective, the food delivery market is evolving from single dominance to a three-way competitive landscape, with significant changes in market share among the three companies.
Over the past few years, MEITUAN-W held an almost monopolistic position in the food delivery market. Data shows that in 2018, MEITUAN-W's market share was approximately 70%. Subsequently, in competition with Ele.me, its market share fluctuated around 65%. In 2024, according to China Merchants Securities (Hong Kong) reports, MEITUAN-W's market share was approximately 65%, while Ele.me held 33%, with other platforms accounting for only 2%.
However, under the 2025 food delivery market war, its market share began being eroded.
Based on rough order volume estimates, MEITUAN-W's overall share declined from 70% at the beginning of the year to 45%-52%, Taobao Flash Purchase (including Ele.me) share rose to 30%-40%, and JD.com gained 10%-25% market share.
However, relative to effective market share in the food delivery market, MEITUAN-W executives said they focus more on GMV market share. In mid-July, MEITUAN-W's core local commerce CEO Wang Puzhong stated in an interview: "Peak market share of orders isn't key; what's most important is valuable orders or GMV market share after removing inflated numbers. Currently, I'm looking at market share for orders above 30 yuan, where we consistently maintain well over 70%, and if we look at GMV, it would be even higher."
From a user mindshare perspective, the erosion effect of subsidy wars on user mindshare is becoming apparent. Over the past few years, many users considered MEITUAN-W their first choice platform for food delivery. However, as subsidy wars continue, consumers have more choices, and MEITUAN-W's original "user mindshare" advantage is being weakened, with user platform loyalty declining as they turn to competitors offering better quality or more attractive pricing.
JD.com has won some users by relying on quality food delivery. According to iResearch data released in June, JD.com's food delivery daily average order volume exceeded 25 million orders, then accounting for over 31% of the national food delivery market share, with approximately 45% market share in the quality food delivery segment.
According to QuestMobile data, as of June 2025, MEITUAN-W, Taobao, and JD.com's APP daily active users (DAU) increased by 18.2%, 7.3%, and 33.2% respectively, with JD.com achieving leading growth. In terms of user scale, JD.com's DAU reached 180 million, surpassing MEITUAN-W's 171 million. Senior industry figures believe that "JD.com's previous strategy of treating food delivery as a traffic entry point has begun showing results. Future synergies with instant retail, local life services, and core e-commerce businesses will continue generating flywheel effects through 'high-frequency driving low-frequency' and 'low-price food delivery driving high-price instant retail and e-commerce businesses.'"
Industry analysts believe that these trend changes "not only affect MEITUAN-W's short-term profit performance but may also have profound long-term impacts on user stickiness and brand recognition."
User scale and mindshare are also battlegrounds that MEITUAN-W's competitor Alibaba is striving to capture. On the evening of August 29, during the Q2 2025 earnings analyst call, Alibaba China E-commerce Business Group CEO Jiang Fan stated: "Taobao Flash Purchase's first-phase goal is primarily user scale and mindshare. After several months of development, the company has exceeded expectations in achieving first-phase goals."
From a merchant ecosystem perspective, in the intensely competitive market environment, merchant cooperation logic is quietly changing. Some merchants, considering risk diversification, increasingly choose to connect with multiple platforms rather than rely on a single platform's resource support.
Industry insiders stated: "On one hand, this multi-platform deployment allows them to more flexibly respond to different platforms' subsidy policies and commission adjustments, thereby seeking higher returns in uncertain market environments. On the other hand, leading merchants can leverage their traffic advantages to negotiate with platforms for higher revenue sharing."
Relative to merchants' reported commission rates exceeding 25% on MEITUAN-W, JD.com's commission rates are clearly lower. Regarding merchant-side competition, JD Group CEO Xu Ran stated in an interview in late August: "On the merchant side, we follow Chairman Liu's (JD founder Liu Qiangdong) 'three-five theory' (if JD.com has the opportunity to gain one yuan profit, it won't keep it all, only taking seven mao, leaving three mao for partners; of the seven mao taken, three-five mao goes to the team, with the remaining three-five mao used for company sustainable development), pursuing win-win outcomes with partners. One pain point in the food delivery industry is that merchants pay high commissions but don't receive good returns, so we hope to reduce merchant commissions to some extent while ensuring platforms don't earn excessive profit margins."
Xu Ran further stated: "We believe excessive profit margins are unsustainable and unhealthy, either meaning you're exploiting partners or it might be very short-term behavior. We want to build a long-term business model."
From instant delivery networks or delivery personnel perspective, MEITUAN-W's delivery personnel network built over many years constitutes an important foundation of its local life services moat, still maintaining advantageous positioning in the industry. As of 2024, MEITUAN-W had 3.36 million monthly active delivery personnel, reducing per-order delivery costs through its large delivery personnel base. Additionally, MEITUAN-W improved overall delivery efficiency through refined operations and algorithm optimization, making delivery personnel scheduling more efficient. 2024 data shows MEITUAN-W's per-order delivery costs decreased 18% compared to 2020. However, as the food delivery war continues, some delivery personnel are beginning to transfer to other platforms.
From market share competition to user, merchant, and delivery personnel mobility, these changes are underpinned by substantial financial investments from the three platforms.
According to Goldman Sachs statistics, in this competition, MEITUAN-W, JD.com, and Alibaba might consume up to 25 billion yuan monthly at peak levels.
From marketing expenditure perspective, in Q2 2025, the three companies' combined sales and marketing expenses totaled 102.7 billion yuan, averaging over 30 billion yuan monthly, with Alibaba at 53.2 billion yuan, JD.com at 27 billion yuan, and MEITUAN-W at 22.5 billion yuan.
Among the three giants, Alibaba had the highest Q2 sales and marketing expenses with the most significant growth, reaching 53.178 billion yuan, accounting for 21.5% of revenue, up 8.1 percentage points year-over-year, mainly due to investments in Taobao Flash Purchase user experience and user acquisition, as well as e-commerce.
Alibaba's free cash flow was a net outflow of 18.815 billion yuan, compared to an inflow of 17.372 billion yuan in the same period of 2024, a difference of 36.187 billion yuan in free cash flow. According to financial report explanations, these funds were used not only for Taobao Flash Purchase investments but also for cloud business infrastructure investments.
JD.com's sales and marketing expenses climbed from 11.9 billion yuan in Q2 2024 to 27 billion yuan in Q2 2025, a year-over-year increase of 127.6%. JD.com's financial reports explained that this increase was mainly due to increased expenditure on new business promotional activities. JD.com's new business segment includes JD.com food delivery business, as well as JD Property Development, Jingxi, and overseas businesses.
MEITUAN-W's Q2 sales costs rose 27% year-over-year to 61.4 billion yuan, mainly due to intensified market competition, especially price competition among food delivery platforms. Meanwhile, to maintain market share, MEITUAN-W's sales and marketing expenses surged 52% year-over-year to 22.5 billion yuan.
The over 100 billion yuan in sales and marketing expenditure represents only Q2 figures, and based on performance since July, this food delivery war is far from over.
Industry insiders believe that in the future, MEITUAN-W needs to explore more sustainable profitability models while maintaining market share, otherwise its moat foundation will be difficult to stabilize.
**Whose Ammunition is More Sufficient?**
If calculated from JD.com's formal announcement of entering the food delivery market in March, the food delivery war has lasted over six months. How will this battle among giants ultimately conclude? In competing for this market worth over one trillion yuan, do each company's resources suffice?
Based on current statements from each company, their competition for the food delivery market shows no signs of backing down.
Xu Ran stated in an interview: "Instant retail has always been our 'must-win battle,' with very clear strategic consensus from top to bottom, because it's an important complement to our core e-commerce business."
However, since July, while Alibaba and MEITUAN-W have prominently launched large promotional coupons to attract users, JD.com's food delivery response has become relatively low-key. Xu Ran stated that since July, the food delivery market contains bubbles, and "malicious subsidies" neither create model innovation nor generate incremental value, while also causing significant distress for merchants and disrupting industry pricing systems, ultimately resulting in a lose-lose situation. "So we won't participate."
Relative to JD.com, Alibaba is more aggressive in capturing market share. In early July, Alibaba officially announced it would invest 50 billion yuan in subsidies over the next 12 months. It's understood that in July alone, Taobao Flash Purchase subsidies exceeded 10 billion yuan.
HSBC estimates that Alibaba's food delivery business in FY2026 will lose 2.7 yuan per order, with instant shopping losing 3.7 yuan per order. Overall local life services business will lose 55 billion yuan. Investment peaks are expected in Q3 this year, then gradually normalizing in the second half of FY2026.
Jiang Fan stated during the earnings call that after scale improvement, future focus will be on improving food delivery business operational efficiency. He simultaneously conveyed that Alibaba's core goal isn't to win food delivery itself, but to use food delivery as a high-frequency scenario to drive traffic for Taobao APP, which has over 400 million daily active users but slowing growth.
As the defending party, Wang Xing stated during the earnings call: "First, we want to convey a very clear message: we firmly oppose the current competitive situation. But when competition continues intensifying and becomes more fierce, we will go all out to defend our market position."
So in this future commercial war, are each company's resources sufficient? Currently, markets generally believe that among the three, Alibaba has the most sufficient cash reserves, followed by JD.com, with MEITUAN-W being weakest. From capital reserves perspective, according to Wind data statistics, as of Q2 end this year, measured by cash and cash equivalents, short-term investments, etc., Alibaba's capital reserves reached 585.7 billion yuan, JD.com totaled 223.4 billion yuan, and MEITUAN-W had 171 billion yuan.
Market analysis suggests that MEITUAN-W is now using its core businesses (food delivery and in-store dining/travel, etc.) to compete with rivals, while its new businesses remain loss-making, and MEITUAN-W expects core local commerce to experience significant losses in Q3. In comparison, the other two major competitors, Alibaba and JD.com, both have core businesses providing support and sufficient funding for food delivery war competition. In other words, JD.com and Alibaba both have core businesses supporting them in the food delivery war, while MEITUAN-W uses its core business to battle two giants - can subsequent financial support sustain this?
As one of MEITUAN-W's core businesses, MEITUAN-W food delivery revenue continues facing pressure. According to MEITUAN-W's Q2 2025 financial report data, its core local commerce segment's operating profit declined 75.6% year-over-year to 3.7 billion yuan, with operating margin dropping 19.4 percentage points to 5.7%. In Q2 2025, MEITUAN-W's unit economics (UE) turned negative, reflecting significant challenges to profitability from intensified food delivery market competition. UE, as a key metric measuring actual revenue per order in food delivery business, encompasses multiple core variables including delivery personnel incentives and fulfillment costs, directly affecting overall operational performance.
Multiple institutions including Nomura Securities and China Renaissance Securities (Hong Kong) analyze that in Q2, due to increased subsidy intensity and declining net commission factors, MEITUAN-W's unit profit turned negative. Q3 is expected to see further deterioration in MEITUAN-W's food delivery business UE.
MEITUAN-W's most profitable business should be in-store dining and travel, but this business also faces impact under the food delivery war. Currently, the hotel and travel market's competitive landscape grows increasingly complex, with emerging platforms like Douyin capturing market share through "content + low price" models, forcing MEITUAN-W to increase marketing investments to maintain position. Meanwhile, JD.com's strong entry further intensifies competitive pressure, with its proposed "up to three years zero commission" policy attracting significant attention from hotel merchants, eroding MEITUAN-W's original high-profit advantages.
In Q2 2025, MEITUAN-W's new business segment continued losses. According to financial report disclosures, this segment's Q2 operating losses reached 1.9 billion yuan, up 43.1% from the same period in 2024, indicating continued resource consumption. MEITUAN-W's new businesses mainly include Xiaoxiang Supermarket and B2B restaurant supply chain "Kuailu," which require substantial capital support during expansion phases.
In contrast, Alibaba and JD.com have e-commerce businesses providing support. Financial reports show that in Q2 2025, Alibaba's total revenue was 247.65 billion yuan, with group adjusted EBITA at 38.84 billion yuan. E-commerce and AI businesses contributed almost all profits. Among these, Alibaba Cloud business forms a feedback mechanism for food delivery systems through technology output and resource allocation.
HSBC's latest research report shows Alibaba will continue increasing instant retail and food delivery business investments over the next few quarters.
JD.com's core business is retail, with Q2 financial reports showing this business remains the foundation for company steady growth. In Q2, JD.com retail revenue reached 310.1 billion yuan, up 20.6% year-over-year; operating profit was 13.9 billion yuan, with operating margin climbing to 4.5%, setting a new profit margin record for JD.com during major promotional quarters. Xu Ran commented on core retail business performance, stating it "not only contributed solid revenue growth but also achieved new heights in operational efficiency."
Additionally, JD.com's logistics and supply chain system built over many years provides advantages in food delivery market and instant retail competition. Over the years, JD.com has formed market competitive barriers through proprietary warehousing networks, intelligent scheduling systems, and efficient fulfillment capabilities. Meanwhile, JD.com's supply chain advantages will play important roles in supporting its food delivery business and instant retail in product diversity and pricing advantages.
Currently, the food delivery war continues, with final results still unknown. But certainly, the food delivery market can hardly return to its previous starting point.