Mainland Chinese consumers have enjoyed a plethora of choices since April, with instant commerce offering subsidies and quick deliveries. Lunchbox orders cost as low as US$1 or US$2. Meituan’s campaign provided a meal for 6.9 yuan (US$0.97) with delivery in 27 minutes, compensating for delays over 15 minutes.
Instant commerce operators like Meituan, Alibaba, and JD.com now accept pre-orders for Apple’s iPhone 17, promising delivery within 30 minutes. This signals a shift towards efficient on-demand delivery beyond food, impacting the retail landscape in China.
Meituan and JD.com are constructing central kitchens for faster food delivery. Meituan plans to build 1,200 Raccoon Restaurants while JD.com will invest 1 billion yuan in 7Fresh kitchens. These strategic moves aim to enhance efficiency and lower costs for food delivery services.
Alibaba has introduced an AI-powered ranking feature on Amap, recommending restaurants, hotels, and tourist spots in over 300 cities. This follows efforts to integrate merchants from Tmall onto Taobao Shangou, consolidating resources for a comprehensive consumer platform.
The cost of China’s instant commerce battle, with daily expenses in the hundreds of millions of yuan, underscores the industry’s rapid growth. The focus on immediate consumer satisfaction could shape the future of retailing, with companies competing to provide efficient on-demand deliveries. Alibaba now delivers orders within 30 minutes, hitting a record 120 million daily orders in August, closing in on Meituan’s 150 million peak. JD.com’s active users rose over 40%, with daily active users growing 24%. A truce was announced to end the price war due to regulator pressure for rational competition.
Meituan faces potential losses in Q3 from strategic investments, while all providers’ margins may not recover for 12-24 months. Alibaba holds a larger cash reserve than Meituan, positioning it better financially. Instant commerce requires significant investments in computing, AI, and supply chain management.
Meituan CEO Wang Xing’s 2019 post resurfaced, hinting at potential e-commerce rivalries among industry leaders. Jiang Fan of Alibaba emerges as a powerful figure in China’s retail sector, despite past controversies. Alibaba’s synergy between e-commerce, cloud services, and AI gives it an edge in the market. Alibaba reinstated Jiang Fan to its core management group, the partnership committee, following a three-year absence. Jiang aims to increase Alibaba’s food delivery market share to 40% by August as Meituan currently dominates with a 65% share. Meituan is projected to maintain a 75% share in food delivery by 2030.
S&P analyst Lau predicts that instant commerce order growth will slow down after hitting a peak in July, but volumes are expected to rise by 40% this year. Consumers like Wen in Guangzhou are opting for instant delivery services like Meituan for convenience, even if it costs a bit more. 1. The latest jobs report shows that the economy added 943,000 jobs in July, exceeding expectations. The unemployment rate dropped to 5.4%, the lowest since the start of the pandemic. This growth is a positive sign for the recovery of the labor market.
2. A new study reveals that the Delta variant is causing an increase in breakthrough infections among vaccinated individuals. The research found that vaccinated people infected with Delta have similar viral loads as unvaccinated individuals, raising concerns about transmission.
3. In international news, tensions are escalating between Russia and Ukraine as Russia conducts military exercises near the border. The US has expressed support for Ukraine and warned Russia against further aggression. The situation is being closely monitored by world leaders.
4. Climate change continues to be a pressing issue as wildfires rage in Greece, forcing thousands to evacuate. The fires have destroyed homes and devastated forests, highlighting the urgent need for global action to address the impacts of climate change. The Greek government has declared a state of emergency.
Read more at Yahoo Finance: How China’s retail market is evolving amid Alibaba and Meituan’s instant commerce war