Everyone loses in the rage of China's delivery wars

Companies are caught in a race to the bottom.

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Boiled beef noodles gave Mr He Wei a delectable idea. A decade ago the businessman, based in China's wealthy coastal province of Jiangsu, started a small restaurant selling them.

Now he has a chain of 100 such outlets. But life is getting less palatable for millions of small eateries and cafes across China. Not only is consumer spending sluggish, but the tech platforms that operate China's food delivery services are also battling over prices, often dropping the cost of products to next to nothing and forcing merchants such as Mr He to cover the bill. Welcome to the front line of the "delivery wars".

It all began in February when JD.com, one of China's biggest e-commerce groups, announced that it would enter the market for food delivery. This posed an immediate threat to Meituan, a super app and leader in the field, and to Alibaba, an e-commerce giant that runs its own food delivery service called Ele.me.

Since then, the three have scrapped for market share in a business that had a staggering 1.6 trillion yuan (S$288 billion) in deliveries in 2024.

By lowering prices across the country, expanding the types of deliverable items and shortening delivery times, each combatant hopes to keep customers scrolling exclusively on their apps.

Alibaba has attacked JD by offering "instant purchases" of goods such as electronics, which it promises to get to customers in under an hour. Meituan has also started selling "instant" smartphones and other electronics, while also promising it will not be late. The prices of many coffee and tea drinks have come down to one yuan, or nothing.

As pricing functions and special offers fluctuate, so do the stacks of delivery bags that pile up on counters in restaurants and cafes. Customers may place delivery orders while sitting in the very tea shop from which they want a drink. Vendors are in a bind: they must choose between slashing prices or simply being ignored for cheaper goods.