Alibaba Bleeds Billions As Delivery Price War Erases $100 Billion In Market Value

Alibaba Group Holding BABA matched its record of 80 million on-demand deliveries on Saturday, intensifying its competition with Meituan MPNGF MPNGY and JD.com JD in China’s high-stakes quick-delivery market.

The e-commerce firm has leaned heavily on giveaways and aggressive discounts to attract users, SCMP reported on Monday.

Taobao Shangou, Alibaba’s newly launched instant commerce brand, stated that its daily active users rose 15% week-over-week, bringing the estimated total to around 230 million. The brand also confirmed achieving 80 million deliveries on July 5.

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On Saturday, platforms including Meituan, Taobao, Ele.me, and JD.com launched a wave of cash subsidies and promotions in a sweeping nationwide campaign to reshape shopping behavior.

By offering free items like milk tea, many physical stores had to halt walk-in services due to the flood of online orders, signaling a shift in retail dynamics.

Meituan distributed coupons allowing users to get milk tea for 0 Chinese yuan, while Taobao provided 188 yuan ($26) coupons redeemable for discounted goods like milk tea and breakfast. It also released flash coupons, including one for 18.80 yuan off purchases above 18.80 yuan.

JD.com announced on Friday that it would sell 100,000 servings of crayfish nightly at a fixed price of 16.18 yuan from 6 p.m. to 2 a.m. As a result, its instant retail platform hit a new peak with 150 million orders on Saturday.

Alibaba is ramping up its on-demand delivery efforts with a 50 billion yuan ($7 billion) subsidy program aimed at consumers and merchants over the next year. In June, the company merged Ele.me and Fliggy into its core e-commerce unit to boost efficiency and better compete with Meituan and JD.com.

According to Jefferies, Alibaba now focuses on unifying food delivery, instant commerce, and retail to unlock cross-platform synergies. The company credited Taobao Instant Commerce for helping double China’s daily instant delivery orders from 100 million in May to 200 million.

Price War Takes Toll

Meanwhile, China’s intensifying food delivery price war has wiped $100 billion from Alibaba’s market value, dragging its Hong Kong-listed shares down 27% since March, almost double the decline seen in its tech peers, Bloomberg reported on Friday.

Goldman Sachs told Bloomberg Alibaba could post a 41 billion yuan ($5.7 billion) loss in its food delivery operations for the 12 months ending June 2026, roughly one-third of its net income for the previous fiscal year.

Analysts from HSBC, including Charlene Liu, cut their price target for Alibaba by 15% this week, citing aggressive spending in food delivery and instant commerce as a significant drag on earnings.

Julia Pan of UOB Kay Hian Holdings told Bloomberg that regulatory intervention to curb price wars could improve margin outlook, while current valuation levels may trigger dip buying.

Still, caution remains. Nicholas Chui, portfolio manager at Franklin Templeton, warned Bloomberg that price wars sacrificing profitability for market share could make certain stocks unattractive.

The competition escalated after JD.com entered the food delivery market in February, targeting Meituan’s dominance with aggressive subsidies, as per the Monday SCMP report. According to Bocom International, Meituan held 65% of the market in 2024, while Ele.me controlled 33%, leaving just 2% for all other platforms combined.

Price Action: BABA shares are trading higher by 1.47% to $108.29 premarket at last check on Monday.

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