Taobao Instant Commerce and Ele.me announced that their combined daily orders have surpassed 80 million, including over 13 million non-restaurant orders, with daily active users exceeding 200 million. The surge sparked a rally in Hong Kong-listed tea beverage stocks, even as shares of major platforms fell.
Why it matters: China’s e-commerce giants are betting heavily on on-demand retail to drive high-frequency engagement and offset slowing growth in traditional online shopping. While record order volumes and booming tea sales highlight rising consumer demand, the escalating subsidy war is putting near-term pressure on platform profitability – sending Alibaba and Meituan shares lower even as franchise brands surge.
Details: On the evening of July 5, Alibaba and Meituan both rolled out generous food delivery coupons, including offers like “spend RMB 25, get RMB 21 off,” and even “spend RMB 16, get RMB 16 off,” which effectively made some items free to order.
The flood of coupons drove a surge in orders, with large numbers of users flocking to the platforms, causing Meituan to briefly go offline. Meituan later explained that order volumes had hit a record high, triggering its server traffic protection system. According to data released by the company, as of 10:54 pm on July 5, Meituan’s on-demand retail orders for the day had exceeded 120 million, including more than 100 million food delivery orders.
- As a by July 8, bubble tea maker ChaPanda’s shares jumped by more than 12%, Good me rose over 9%, with Naixue and Auntea Jenny also climbing.
- Meanwhile, shares of platforms fueling China’s subsidy war dropped the same day. Meituan fell over 4% at one point, while Alibaba slipped more than 2.5%. Looking over a longer horizon, both companies have declined for seven consecutive trading days, down roughly 10% and 9% respectively. Analysts point to the heavy costs of the ongoing subsidy battle, which is squeezing short-term profitability. Meituan’s management previously acknowledged that in response to competitors’ aggressive incentives, it plans to ramp up spending, which is expected to slow year-on-year growth in core local services revenue.
Context: Competition in China’s on-demand market has intensified in recent months. On July 2, Taobao Instant Commerce launched a RMB 50 billion ($6.9 billion) subsidy program aimed at consumers and merchants. Just days later, on July 5, Alibaba and Meituan rolled out a wave of large targeted coupons, drawing in huge user traffic that even caused temporary outages on Meituan.
- Since officially launching on May 2, Taobao Instant Commerce has rapidly scaled up. It crossed 40 million daily orders by the end of May, 60 million by late June, and now exceeds 80 million after just two months. The platform says it plans to continue its aggressive push over the next 12 months to directly subsidize consumers and merchants, aiming to expand market size.
- A report noted that since April, platforms including Meituan, Ele.me, and JD.com have ramped up subsidies, sharply boosting orders for made-to-order tea beverages. This has driven more traffic to top tea brands, improved franchise profitability through higher delivery margins, and stabilized retail prices, with expectations that average spending per customer and per cup could continue to rise this year.
