China's Instant Commerce Sector Witnesses Price War with $0.30 Drinks and Billions in Subsidies

China's "instant commerce" sector is experiencing a price war, with major players JD.com, Alibaba, and Meituan offering massive subsidies and incentives to attract consumers. This has led to extremely cheap offers, such as $1.50 coffee and a 13 yuan set of steamed buns. However, the intense competition has weighed heavily on investors and earnings outlook, with shares of Meituan and JD.com falling by 22% and 10%, respectively, this year.

Title: China's Instant Commerce Price War: A Battle of Subsidies and Market Share

China's "instant commerce" sector is experiencing a fierce price war, with major players JD.com, Alibaba, and Meituan vying for market dominance. The competition has led to incredibly cheap offers, such as $1.50 coffee and a 13 yuan set of steamed buns, as companies offer massive subsidies and incentives to attract consumers. However, this intense competition has had a significant impact on investor sentiment and earnings outlook.

The Price War in Instant Commerce

The "instant commerce" sector, which includes food delivery, fast fashion, and gadgets, has seen a surge in competition. JD.com, Alibaba, and Meituan have expanded their delivery networks and pledged billions in subsidies to merchants and consumers. For instance, JD.com's delivery platform offered coffee as cheap as 10.9 yuan ($1.50) including delivery fees, while Meituan offered a 13 yuan set of steamed buns and a 26.8 yuan McDonald's breakfast set [1].

Impact on Companies' Performance

While consumers have benefited from these offers, the price war has weighed heavily on investors and earnings outlook. Meituan and JD.com have seen their shares fall by about 22% and 10%, respectively, this year, according to LSEG data [1]. Alibaba, too, has been investing heavily in its instant commerce platform, Taobao Instant Commerce, which has seen daily active users top 200 million and daily orders reach 80 million [2].

Regulatory Scrutiny and Market Dynamics

The competition has also drawn regulatory scrutiny. China's top market regulator summoned JD.com, Meituan, and Alibaba's Ele.me in May, urging them to follow the law and compete fairly [1]. Retail groups have voiced concerns about JD.com's subsidy program and the knock-on effects of plummeting prices. Despite the pushback, the price war has continued, with companies announcing new subsidy programs.

Looking Ahead

The price war has led to a significant increase in user bases for all companies. However, the impact on earnings remains unclear. Meituan reported a 63% year-over-year increase in profits for the first quarter of 2025 but warned that the following quarter would likely be impacted by increased competition [1]. Similarly, JD.com's push into food delivery may have generated a loss of more than 10 billion yuan in the second quarter, according to Nomura's analysis [1].

Conclusion

China's instant commerce sector is witnessing a price war that is benefiting consumers but challenging the financial performance of major players. The competition is intense, with companies offering subsidies and incentives to attract consumers and expand market share. The future of the sector will depend on how well these companies balance the need to attract consumers with the need to maintain profitability.

References
[1] https://www.cnbc.com/2025/07/11/china-instant-commerce-price-war-billions-subsidies-jd-alibaba-meituan-ele-me.html
[2] https://www.benzinga.com/trading-ideas/movers/25/07/46292413/alibabas-delivery-ambition-sets-stage-for-chinas-epic-clash-of-giants
[3] https://www.silicon.co.uk/e-marketing/ecommerce/alibaba-instant-commerce-2-620718