Alibaba Strikes Back with Instant Retail to Avoid Becoming “The Third”

After months of fierce competition between Meituan and JD in the instant retail market, Alibaba has finally taken action. On April 30, Taobao’s “Xiaochida” (Taobao Hourly Delivery) was upgraded to “Taobao Flash Buy,” a prominent feature displayed on the Taobao app’s homepage with first-tier traffic. The service, backed by Ele.me for delivery, offered significant subsidies to attract consumers. By 8:00 PM on May 5, Taobao Flash Buy had already surpassed 10 million orders in a single day.Instant retail is a retail model designed to meet local, immediate demands, where consumers place orders online and receive deliveries offline. Supported by an efficient logistics system, products are delivered to consumers in a short time (usually within two hours). Since the beginning of the year, the ongoing rivalry between Meituan and JD has captured the market’s attention. Alibaba’s recent involvement in the competition has yet to show clear results, but the mere action itself is significant.In the instant retail race, Meituan has long held a dominant share in the Chinese market. According to Morgan Stanley’s projections, Meituan’s market share in instant retail has reached 60%, with its lead continuing to grow. However, whether it was venturing into food delivery or introducing the instant retail concept, Alibaba has never been late to the game. In late 2013, Meituan launched its food delivery service, and almost simultaneously, Alibaba introduced “Taodiandian,” a mobile food service platform offering both food delivery and ordering services, allowing consumers to choose between delivery or dine-in.

In an attempt to transform Taodiandian into the “Taobao + Tmall” of the restaurant industry, Alibaba provided a super traffic gateway for this O2O (online-to-offline) project. However, in the following two years, Taodiandian faced fierce competition from Meituan, Ele.me (which at that time was not part of Alibaba), and Baidu’s food delivery service, which was later acquired by Ele.me. Despite significant investment, Taodiandian ultimately lost the battle and faded from the market. But Alibaba didn’t give up on the local services business.In 2018, Alibaba, in partnership with Ant Financial, acquired Ele.me for $9.5 billion. The high acquisition price reflected Alibaba’s strategic push to build its new retail ecosystem, with Ele.me becoming a key piece of that puzzle. However, despite its backing from Alibaba, Ele.me has struggled to challenge Meituan’s absolute dominance in the food delivery market. According to research by CICC Securities, Meituan’s share of the food delivery market in 2024 will be 65%, while Ele.me will hold 33%.The long-standing duopoly of Meituan and Ele.me in the food delivery market is changing with JD’s entry in 2025. A well-established pattern in the business world is that when the leaders fight, the third player often poses the greatest danger. Although JD is a newcomer, it has a long-established logistics network and a solid user base, along with the financial strength to rival both Alibaba and Meituan, preventing competitors from dismissing it as a “new player.” Moreover, because JD had not previously been involved in the food delivery business, it was able to adapt and innovate more nimbly.

When JD’s food delivery service first launched, daily order volumes were in the triple digits, but it has now surpassed 10 million orders per day. Alibaba, which previously held around 30% of the food delivery market, must now guard against the risk of becoming “the third” in this race. The action it has taken in the instant retail space is not just a response to competitors but also a move crucial for its long-term development.Food delivery may not be the entirety of instant retail, but it is the most frequently used service and the one that most effectively captures consumers’ attention. This is why both JD and Alibaba have chosen food delivery as the starting point for this competition. Alibaba’s real goal with food delivery is to ensure that its entire instant retail ecosystem, including Hema (Freshippo) and Taobao Flash Buy, can maintain market influence in a competitive environment.Alibaba’s advantage in this round lies in its ability to leverage the mature supply chain of established brands and merchants on Taobao to diversify instant retail categories. With the launch of Taobao Flash Buy, the business has already connected millions of stores across various product categories. The potential of the instant retail market is clear from the massive investments made by the giants. According to the “Instant Retail Industry Development Report (2024)” published by the Institute of International Trade and Economic Cooperation of the Ministry of Commerce, the instant retail market reached 650 billion RMB in 2023, and it is expected to exceed 2 trillion RMB by 2030, indicating substantial room for growth.

Today, Alibaba finds itself at a similar crossroads to where it was more than a decade ago, with all three players vying for market dominance. Unlike the “Taodiandian” era, Ele.me, once a competitor, is now an essential asset in Alibaba’s arsenal, and it has access to more resources. The market has shifted from an early, exploratory phase to a more mature one where consumer habits are already well established. The key challenge now is how each company systematically integrates its resources, which will be a focal point in the coming period.This competition involves three Fortune Global 500 companies, with JD and Alibaba both in the top 100. All three have similar levels of brand recognition and influence and have implemented nearly identical subsidy-driven campaigns. However, in the instant retail market, consumers often choose the cheapest platform at the moment, and the long-term loyalty gained through subsidies is limited. JD’s rapid growth in orders this year has given competitors a valuable lesson—redefining the industry is far more meaningful than simply competing for short-term gains.Earlier this year, JD introduced a series of measures to protect the rights of delivery drivers, including providing social security benefits, which forced other platforms to adapt and earned JD significant social attention. A week before Alibaba launched Taobao Flash Buy, Ele.me hosted a meeting in Shanghai to negotiate delivery algorithms and labor rules, culminating in the first national agreement on delivery algorithms and worker rights, which will further influence and regulate the food delivery market.