Meituan profit plunges as price war with Alibaba, JD.com deepens

Meituan reported a sharp drop in Q2 profit as competition with Alibaba and JD.com intensified in China’s delivery sector.

The Beijing-based company posted revenue of 91.8 billion yuan (US$12.8 billion) for the quarter ended June 30, 2025 up 11.7% year-on-year, but below analyst expectations.

Net profit fell 96.8% to 365.3 million yuan (US$51 million), while adjusted net profit dropped 89% to 1.5 billion yuan (US$209.7 million).

Operating profit for Meituan’s local commerce business declined 75.6% to 3.7 billion yuan (US$517 million), with the segment’s operating margin down to 5.7%.

The company cited a 27% rise in cost of revenue, increased delivery transactions, higher courier incentives, expanded grocery and overseas operations, a 51.8% rise in selling and marketing expenses, and a 17.2% increase in R&D spending as key factors for the profit drop.

🔗 Source: South China Morning Post

🧠 Food for thought

1️⃣ Competing business models reveal different strategies for market disruption

JD.com’s decision to hire 150,000 full-time riders represents a fundamentally different approach from Meituan’s gig economy model2.

While Meituan and Alibaba’s Ele.me rely primarily on freelance drivers, JD.com is betting that full-time employment will deliver superior service consistency and customer satisfaction, despite significantly higher operational costs2.

This strategic divergence shows how established market leaders can be challenged not just through price competition, but through entirely different operational philosophies.

JD.com has reached 25 million daily food orders using this model, compared to Meituan’s 90 million orders with gig workers2.

2️⃣ Mature market competition requires massive capital with uncertain returns

The scale of investment required to compete in China’s food delivery market demonstrates how expensive it becomes to challenge established leaders in mature industries.

JD.com announced a $1.4 billion investment in its delivery platform while Meituan saw its costs increase 27% year-over-year, primarily from higher courier incentives1 3.

Despite this massive spending, Meituan has maintained its dominant 69% market share in food delivery, suggesting that even substantial financial commitments may not guarantee meaningful market share gains4.