China’s major ecommerce firms are facing mounting losses as aggressive price competition in the food delivery sector intensifies, leading analysts to lower their share price targets.

Recent earnings from JD.com and Meituan show larger-than-expected losses, with Meituan’s shares dropping after it warned of significant losses caused by “irrational competition.”

Alibaba, set to report its latest results on August 29, 2025, is expected to see its food delivery business pressured by heavy spending on subsidies and discounts, analysts said.

Bloomberg’s survey estimates Alibaba’s local services unit, which includes Ele.me and Amap, likely lost 3.3 billion yuan (US$463 million) in the June quarter, its largest loss since 2023.

Morgan Stanley projects Alibaba’s spending on instant commerce could reach 20 billion yuan next quarter, double the previous period, while JP Morgan expects the company to continue aggressive investment.

Goldman Sachs estimates Meituan and Alibaba control 47% and 43% of China’s food delivery market by volume, respectively.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ China’s food delivery price wars follow a cyclical pattern that has persisted for years

The current price war destroying profits at Alibaba, Meituan, and JD.com isn’t a new phenomenon. It’s the latest escalation in a battle that has raged since at least 2019.

Back then, Meituan and Ele.me were already offering meals for as little as 1 yuan (approximately $0.14) to attract customers, leading to what analysts called “unsustainable business practices”2.

The 2019 price war featured the same dynamics we see today: heavy subsidies, deep discounts, and companies prioritizing market share over profitability.

What’s changed is the scale of destruction. Meituan’s recent 89% profit drop and $27 billion market value loss3 dwarfs the financial pain from previous rounds, suggesting each cycle becomes more devastating as the market has grown from $37 billion in 20184 to an expected $262.86 billion by 20245.

The cyclical nature suggests this isn’t just temporary competitive pressure. It is a structural feature of how these companies compete for dominance in China’s massive food delivery market.

2️⃣ Market concentration creates destructive competitive dynamics despite regulatory intervention

The oligopolistic structure of China’s food delivery market practically guarantees these periodic price wars, as demonstrated by the current battle where just three players control nearly the entire market.

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