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China’s e-commerce giants race to dominate instant retail market

by admin May 13, 2025
May 13, 2025
China’s e-commerce giants race to dominate instant retail market

Alibaba and JD.com, major Chinese e-commerce companies, are intensifying their competition for market share by heavily investing in instant retail. 

This strategy focuses on delivery times of 30 to 60 minutes, according to a Reuters report.

China’s top online retailers, JD.com and Alibaba, face growth challenges, prompting investors to closely examine their strategies in upcoming quarterly earnings reports scheduled for Tuesday and Thursday, respectively.

Battle for speed

Already possessing significant market penetration, the companies face downward pressure on goods prices due to a consumer slowdown. 

This slowdown is fueled by anxieties surrounding employment and wages, compounded by a sustained decline in the property market.

E-commerce giants are engaged in a new turf war centered on speed, employing significant short-term discounts to attract consumers, resulting in high costs.

Both JD.com’s JD Takeaway and Alibaba’s Ele.me food delivery service have committed significant investments in subsidies. 

Last month, each platform announced a 10 billion yuan ($1.38 billion) initiative. JD Takeaway specified that its investment would be distributed over a year, whereas Ele.me did not provide a timeline for its subsidy program.

Jason Yu, general manager at CTR Market Research, was quoted in the report:

The competition is so intense, there’s not a lot of incremental growth opportunities, so everybody is moving into everybody else’s territories and instant retail is the latest example of that.

New territories

Meituan, China’s leading food delivery platform, is expanding its business through its instashopping platform, offering 30-minute delivery of non-food items. 

This comes after JD.com announced its entry into the food delivery market in February.

Yu explained that JD.com initially offered same-day mobile phone delivery.

However, the emergence of platforms like Meituan, offering delivery of new Apple iPhones within 30 minutes, presented a significant challenge. 

In response to this direct competition, JD.com expanded its services to include food delivery.

At the end of April, Alibaba expanded its instant shopping portal on its domestic e-commerce app Taobao. 

The move by Alibaba gave users access to restaurants, coffee shops and bubble tea chains available on Alibaba’s Ele.me – China’s second-largest food delivery player behind Meituan – plus many other categories including pet food and apparel.

Cost-conscious consumers are welcoming subsidised spending on instant retail from Alibaba and JD.com.

JD Takeaway users benefit from daily delivery discounts up to 20 yuan ($2.77) at restaurants like McDonald’s, Haidilao, and Burger King.

Taobao’s instant shopping portal offers a discount of 11 yuan for orders of 15 yuan or more.

Liu Qi, a 24-year-old small business owner in Tianjin, was happy to find a coconut latte on JD Takeaway for just 5.9 yuan recently.

“I asked the deliveryman and he said he makes 4 yuan per delivery, so essentially, JD.com bought me a cup of coffee and delivered it to my door,” Liu was quoted in the Reuters report.

War chests

China’s major e-commerce companies, including Alibaba, JD.com, and Meituan, possess substantial cash reserves, totaling 400 billion, 144 billion, and 110 billion yuan respectively as of December 31, according to Morningstar analysis.

This financial strength allows them to absorb the high costs associated with subsidising consumer discounts for instant retail.

Analysts suggest that JD.com and Alibaba’s renewed emphasis on instant retail is logical, even with the sector’s characteristically low profit margins.

This is partly due to both companies already possessing extensive courier networks.

Unlike potential competitors such as PDD Holdings (PDD.O), the owner of Temu, this eliminates the necessity for a costly expansion of delivery infrastructure.

Independent analyst Liu Xingliang in Beijing noted that Alibaba and JD.com are using frequent purchases like food, coffee, and bubble tea to drive demand for less frequent, higher-profit items such as clothing and electronics. 

Their strategy hinges on the idea that increased app usage will lead to greater overall consumer spending.

The post China’s e-commerce giants race to dominate instant retail market appeared first on Invezz

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