Meituan is busy going overseas, JD.com starts delivering food

As competition in China's e-commerce sector intensifies, two industry giants are launching new competition in their respective fields. On one hand, there are companies actively expanding overseas markets, while on the other hand, there are rivals launching innovative services in China to challenge traditional food delivery businesses.

While Wang Xing was opening up new battlefields overseas, Meituan’s domestic base welcomed a new rival.

On October 9, Meituan’s overseas platform Keeta was launched in Riyadh, Saudi Arabia. This is the third city where Keeta has landed overseas after Hong Kong in May 2023 and Al Kharj, Saudi Arabia in September 2024.

Keeta's landing in Riyadh, Saudi Arabia is not surprising. Bloomberg reported on Meituan's plan in April this year. In February this year, Meituan made a major structural adjustment to pave the way for its overseas expansion plan. In addition to handing over the in-store, home delivery and two major platforms to Wang Puchong, the drone and overseas businesses were led by Wang Xing himself.

After the disruption caused by TikTok in 2023, Meituan and TikTok have gradually determined relatively differentiated positioning in the local life sector, and Meituan's stock price has also rebounded from its low point this year. Now that Keeta has officially launched in Riyadh, Saudi Arabia, Meituan's overseas business led by Wang Xing is booming.

But at this moment, in Greater China, Meituan’s base camp and food delivery business foundation are facing new challenges again - JD.com’s instant delivery, coupled with Douyin’s hourly delivery, can Wang Puchong’s defense really allow Wang Xing to expand overseas business with confidence? This all started with a cup of coffee.

01 JD.com’s instant delivery: a qualitative change that starts with a cup of coffee

In May, JD.com renamed its "hourly delivery" service to "second delivery". However, whether it was hourly delivery or second delivery, the public opinion at the time believed that JD.com was still circling around the concept of instant retail, and at most it could be regarded as further improving timeliness.

In terms of business model, instant retail can be roughly divided into supermarket self-operated model and platform model. However, if we look at the capacity supporting these two models, compared with some supermarket self-operated models that have exclusive delivery services (such as Hema, Sam's Club, etc.), only Meituan has a strong exclusivity in its own delivery services in the platform model, and the capacity of other platform models is relatively open. For example, JD.com uses Dada delivery, Douyin uses third-party delivery Shundashan for same-city delivery, and Taobao Hourly Delivery reached in-depth cooperation with Ele.me in July. Although Taobao and Ele.me belong to Alibaba, they are still businesses of different platforms after all.

Earlier in 2022, Ele.me started cooperation with Douyin in the form of a mini program. In addition, Douyin also has Dada as its third-party delivery service provider. In other words, for Douyin, JD.com, and Taobao, the basic service capacity that they can mobilize is no longer a core competitiveness, but can only be regarded as a necessary basic service.

If JD.com continues to compete with Douyin and Tmall in the original fresh food supermarket and fast-moving consumer goods sectors, its advantage is not obvious. After all, Meituan has a large army of its own riders and a high penetration rate of merchants, occupying a high market share in both the takeaway sector and the broader instant retail sector. So even though JD.com changed its “hourly delivery” to “second delivery” in May, which seems to be more timely, the discussion at the time was all about how JD.com would change the instant retail landscape, and few people mentioned its impact on Meituan.

But all this started when JD.com began to deliver Luckin Coffee to your home for just 9.9 yuan, which marked a qualitative change.

The fact that JD.com delivers 9.9 yuan Luckin Coffee to your home in seconds can be traced back to official information in May. However, since users were not very aware of it at the time, it was not until a few months later that public opinion began to discuss the impact that JD.com would have on Meituan.

After all, even Luckin’s official app or mini program cannot offer 9.9 home delivery, and it is not just Luckin that is offering this service. Even more cost-effective is Luckin’s old rival, Kudi, which offers 8.8 home delivery, and sometimes you can add platform coupons. Obviously, JD.com is shouldering the delivery costs of these brands in order to expand the market and cultivate their mindset, but it must be said that this method is very effective. In addition, other chain restaurant brands such as Bawang Chaji, Nova, and Burger King are also using free delivery services in exchange for users’ new consumer mindset and more traffic for JD.com, which is also cost-effective.

From the category of fresh food and fast-moving consumer goods to the category of instant fast food such as coffee, milk tea and hamburgers, it can be regarded as the category of catering takeaway in the user's cognition. Meituan relies on its takeaway business to make other home delivery businesses of Meituan achieve higher conversion. Since the goods delivered by takeaway are highly ready-to-eat, the requirements for delivery capacity are higher. The capacity that can do takeaway can definitely do instant retail, but the capacity that can do instant retail may not necessarily do takeaway. Now that JD.com can also order tea and fast food takeaway, the mentality is gradually strengthening, which is indeed not a good signal for Meituan.

As to whether the 9.9 label will become a persistent problem in the future, or whether JD.com intends to use 9.9 home delivery as a long-term traffic portal, it will take time to observe further.

02 JD.com and Douyin: Different paths to instant retail

Before this, no matter what moves JD.com and Taobao made, as long as they did not engage in food delivery, no one would think that these players would threaten Meituan’s core business. It was precisely because Douyin started food delivery in a high-profile manner last year, coupled with local life services such as in-store hotels and travel, that public opinion believed that Douyin was launching an attack on Meituan’s heartland.

But as mentioned at the beginning, after 2023, Meituan and Douyin have gradually determined relatively differentiated positioning in the local life sector, and Meituan's stock price has also rebounded from its low point this year. At this time, JD quietly took over the banner of Douyin and became the next role in the public opinion to "attack Meituan's hinterland".

At present, it seems that JD.com's path to delivering tea drinks and fast food is going more smoothly than Douyin's previous attempt at delivering food.

The first and foremost thing is that JD.com’s “takeout” positioning is more in line with the minds of takeout users than Douyin’s takeout.

After all, JD.com has never publicly announced that it will do "takeout", but because of a 9.9 home delivery, users began to spontaneously order takeout on the JD.com platform. It is an imaginative business logic to use these cost-effective fast food takeout mindsets to penetrate the wider instant retail business. As we all know, Meituan's largest traffic entrance is the work meal with a low average customer price.

On the other hand, Douyin’s previous takeaways were mainly for group meals with high customer unit prices, which is in line with Douyin’s high penetration rate of in-store merchants, but it does not quite meet the original intention of most users to order takeaways: convenience, speed, one-person meals, and high cost-effectiveness. Perhaps because of this, in June last year, Douyin was rumored to have given up the 100 billion yuan GMV goal for takeaways, but did not give up the takeaway business itself.

In addition, a previous article in "New Standpoint" mentioned that Douyin's positioning as a food delivery service seemed somewhat "wavering".

In April 2024, Douyin's food delivery business was adjusted from Douyin's local life business line to Douyin's e-commerce business line. In August, there was news that Douyin's food delivery business returned to Douyin's local life business line. JD.com, on the other hand, did not have the trouble of wanting to do store group buying business at all, but seemed more determined.

At that time, "New Standpoint" speculated that this vacillation between e-commerce and local life might be because Douyin wanted to combine food delivery with in-store group buying, and also wanted to enter the supermarket business based on the logic of e-commerce. Mu Qing, vice president of Douyin's e-commerce, previously stated: "The platform service and logistics timeliness can meet the needs of some specific users, and form an effective supplement to our existing platforms and merchants."

If we click on the "Mall" section of Douyin's e-commerce business, we will find that the hourly delivery and Douyin Supermarket are both in the main menu bar of this interface; while the takeaway function belongs to the group purchase section of the local life category. The separation of takeaway and supermarket instant retail business means that Douyin's takeaway can hardly bring conversions to its supermarket hourly delivery.

Another possible factor is that JD Logistics’ brand image is also indirectly promoting JD’s instant retail business, but Douyin itself does not have this kind of logistics brand mentality.

As mentioned above, both Douyin and JD.com are actually using Dada delivery, but JD.com combines JD.com Home Delivery with Dada delivery, while Douyin relies on third-party services such as Suning Flash.

It is reported that Dada was listed on the Nasdaq IPO in 2020. It rose from food delivery and can be regarded as the first instant retail stock. Its shareholders include JD.com, Walmart, Sequoia China, etc. In September of this year, JD.com completed the acquisition of Dada shares held by Walmart, and JD.com's shareholding in Dada exceeded 60%. On the other hand, Shunfeng was also listed on the Nasdaq on October 4, but the current (October 11, Eastern Time) stock price has fallen to 3/4 of the opening price on the first day, and Dada's stock price is already about 1/10 of the initial listing price.

If JD.com or TikTok's instant retail model takes off, the share prices of these third-party delivery service companies will also benefit.

03 Wang Puchong defends the title, Wang Xing flies with peace of mind

As mentioned at the beginning, Wang Xing’s main focus is currently on overseas business and drones, while domestic in-store, home delivery and two major platforms businesses are all under the charge of Wang Puchong.

After Wang Puzhong took office, Meituan continued to focus on "Pinhaofan" and "Shen Membership". Meituan's profit margin in the second quarter of this year also increased by 6.8 percentage points compared with last year, and the peak order volume reached 98 million. In July, Meituan proposed "second payment" in an attempt to connect the two scenarios of in-store and home delivery. Meituan's own business integration is being further strengthened.

JD.com, on the other hand, is betting its same-city delivery business on both its own and Dada delivery. According to people familiar with the matter, JD.com is further recruiting Dada riders. By entering JD.com's instant delivery page, special coupons for Dada express delivery will be given away through lucky draws.

Another user who is currently intensively using JD.com's delivery said: "There is no problem with JD.com's own delivery, but one time I ordered a Dada delivery store, and it was lost, but the platform later refunded me." Although this is just an individual case and cannot be generalized, we can also see from this incident that the cooperation between JD.com and Dada is now entering a new round of running-in.

Therefore, facing the impact from JD.com, Meituan does not need to be too paranoid.

Author | XX Editor | Wang Wei This article is written by the author of Operation Party [New Standpoint], WeChat public account: [New Standpoint Pro], original/authorized to be published on Operation Party, and reproduction is prohibited without permission.

The title image is from Unsplash, based on the CC0 protocol.