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7 Sept 2025 · E-commerce

The food delivery war ignites instant retail and rewrites physical retail

Originally written in Chinese. Translated with AI, reviewed by Gary. Read the Chinese original →

For a long time, everyone kept to their own lane. Meituan did food delivery, JD did e-commerce, Alibaba ran platforms. Nobody really clashed head-on.

Then three months ago Meituan suddenly made a big move into "instant retail", putting 30-minute delivery on the table. The meaning was simple: not just food, but supermarket goods, pharmacy items, even e-commerce products. Put bluntly, it was going after e-commerce's share.

JD couldn't stand by. Richard Liu stepped in himself: "We're doing food delivery too!" Public opinion exploded. Nobody expected that this kick would wake the sleeping lion, Alibaba. Ele.me linked up with Taobao and Tmall, and a new round of war broke out.

Now in China's tier-one and tier-two cities, one-yuan coffee and milk tea are everywhere. For users, it's great. For merchants, it's painful. For platforms, it's burning cash to buy market share.

The results three months on

  • Meituan: profitability dropped clearly. Net profit in Q2 2025 fell about 89% year on year, with subsidies eating the margin of the instant retail business.
  • JD: relatively steady, supported by its own retail and supply-chain strengths, but food delivery is still at a testing stage with limited volume.
  • Alibaba: its "Shangou" quick-commerce business took off unexpectedly. Ele.me plus Taobao and Tmall drove fast growth in daily instant retail orders, with market share overtaking Meituan in some cities.

Alibaba even announced it would put in another 50 billion yuan of subsidies. The logic is clear: food delivery isn't the end point. It's a new gateway into e-commerce. A meal is just the start. Groceries, medicine, clothes, everything could flow back into Alibaba's ecosystem.

The logic of retail is being rewritten

Traditional retail has an iron rule: service range = a 2 km radius. If you want to scale, you open more stores. That's why there's a 7-Eleven at one end of the street and another at the other end.

Instant retail stretches the service radius to 10 to 20 km. What does that mean?

  • Market demand doesn't grow out of nowhere.
  • What gets eaten is the share that used to belong to physical supermarkets and convenience stores.
  • Subsidies educate users: you don't need to go out at all. E-commerce that used to take a day or two now arrives in 30 minutes.

Underneath, the whole retail map is being redistributed.

Crisis and opportunity for physical retail

The crisis is obvious: store foot traffic gets diluted further, and sales per square foot fall.

The opportunities are just as clear:

  • Forward warehouses: mini-warehouses close to housing estates that support instant fulfilment.
  • Community warehouses: combined with supermarkets, serving both online and offline.
  • Front-of-store warehouses: the store itself is the warehouse, displaying and shipping at the same time.

In other words, a shopping mall is no longer just a place to sell. It becomes an experience centre plus a forward warehouse. Customers come in more for the experience, the photos and the interaction, while fulfilment happens online.

The AI variable

AI can play two roles here:

  1. Demand forecasting: AI can predict a community's buying habits and concentrate stock on what's most likely to sell, lowering inventory costs.
  2. Fulfilment optimisation: AI routes riders in real time, predicts order peaks, and even generates marketing content, lifting the efficiency of the whole chain by an order of magnitude.

Imagine walking into a mall where your AI assistant already knows what you're running low on: order online, experience offline, and have it delivered home. The boundaries of retail blur completely.

The real retail revolution

The food delivery war is just the surface. Underneath is a real retail revolution.

Retail logic that used to work within 2 km is being rewritten to 20 km. The old path of "going to the mall to buy things" is becoming an integrated "mall plus online" experience.

The future of retail isn't about whether e-commerce or food delivery wins. It's that users' minds are being re-educated. Once users get used to delivery in 30 minutes, traditional retail can never go back.

This change is still under way.

— Gary