Advertisement
E-commerce
TechBig Tech

China’s on-demand services market to see ‘clash of titans’ as JD.com takes on Meituan

The new rivalry is a fresh sign of China’s hyper-competitive marketplace, where profit margins have been steadily pushed down

Reading Time:2 minutes
Why you can trust SCMP
0
Delivery drivers wait for orders in Beijing, September 14, 2024. Photo: EPA-EFE
Xinmei Shen

China’s on-demand services industry, which employs millions of gig workers and empowers a convenient urban lifestyle, is expected to see a “clash of titans” as e-commerce giant JD.com moves ahead with plans to challenge the dominance of Meituan.

JD.com, founded by billionaire Richard Liu Qiangdong, will hire 50,000 fast delivery workers as an initial step in facing off against on-demand services giant Meituan. According to a statement from JD.com, the new delivery workers will primarily be assigned to the JD Now on-demand retail business, which covers more than 100,000 self-operated stores selling goods such as clothing, home appliances and medicine.

JD said it aimed to cut average delivery times to below 30 minutes, meaning a customer can expect to receive the purchased item within half an hour of placing an online order, laying bare the company’s ambitions to win over consumers in the on-demand and food delivery segment.

A food package is delivered by drone at Tsinghua Shenzhen International Graduate School, on December 19, 2023. Photo: Xinhua
A food package is delivered by drone at Tsinghua Shenzhen International Graduate School, on December 19, 2023. Photo: Xinhua

Meituan said on Tuesday that it will transform its Shan Gou, or Instashopping service, into an “independent brand”, offering 30-minute delivery and round-the-clock service that covers nearly 3,000 cities and counties in China.

The new rivalry in fast deliveries is a fresh sign of China’s hyper-competitive marketplace, where profit margins have been steadily pushed down. According to leaked comments made by Liu last year, the profit margins for the delivery service will be capped at 5 per cent to benefit merchants and delivery workers.

JD.com did not immediately respond to a request for comment.

Meituan’s Hong Kong-listed shares lost 8.11 per cent on Wednesday, while JD.com shares declined 5.5 per cent amid broader market weakness.

Advertisement