E-commerce bids farewell to the old battlefield

The subsidy wars are over — but at what cost?

China's biggest platforms have declared the era of price-wars largely spent. Alibaba (阿里巴巴), JD.com (京东) and Meituan (美团) spent more than CNY100 billion last year fighting for instant retail and food-delivery share, a campaign that drove consumer prices to the floor and corporate profits into freefall. Meituan swung from a CNY358 billion profit in 2024 to a CNY234 billion loss in 2025; JD.com’s annual profit fell by more than 50% with new-business losses of CNY466 billion; Alibaba’s quarterly profits plunged as much as 85% and 77% in successive quarters. Merchants suffered too: a Fudan University survey of some 40,000 restaurants found average profits down 8.9% after subsidy intensification.

Why did the platforms burn cash at such scale? Because traffic growth stalled and price became the only lever left to pull. “Platforms hadn’t built sustainable moats; competition was mainly on price,” one industry practitioner told a retail watcher. The consequence: margin collapse across the sector and a strategic rethink. It has been reported that Alibaba’s core management internally urged teams to keep pushing its Taobao Flash Sales even if losses persisted for three years; reportedly Taobao plans to press harder on instant retail investment in 2026 with a two‑year push to grow that business to over CNY1 trillion.

New battlegrounds: instant retail, supply chains, AI and private brands

Platforms are pivoting. Instant retail — higher frequency, higher engagement — is the obvious growth engine: an industry report shows instant retail grew 20.15% in 2024, outpacing broader online retail by nearly 13 percentage points, and Alibaba’s instant unit posted 56% growth in a quarter while its core e‑commerce barely grew. JD.com has made instant retail a long‑term bet and aims to grow its food-delivery share from roughly 15% to 30% by 2026. Pinduoduo (拼多多), by contrast, is double‑downing on supply‑chain control and private brands: it has formed a dedicated vehicle for “New Pimmu (新拼姆)”, completed CNY15 billion of initial funding and plans to put in another CNY100 billion over three years to incubate self‑owned brands using Pinduoduo and Temu supply chains. “We will mobilize the whole company,” said Pinduoduo co‑chair Zhao Jiazhen.

There is a geopolitical undercurrent to these moves as well. Against a backdrop of US‑China trade tensions and tighter export controls, building domestic supply chains, self‑owned brands and AI capabilities reduces reliance on foreign inputs and helps platforms hedge regulatory and trade risks. But can these investments restore profitability? That is the question investors and merchants will be watching as the old battlefield of discounting gives way to a more complex fight over logistics, brands, and technology.