On April 30, as China was heading into the 5-day May Day golden week holidays, Alibaba jumped into the Meituan, JD quick commerce flight. 

According to the announcement, all the quick commerce offerings of Alibaba are now consolidated into a single top menu item in the Taobao app called “闪购” (Instashopping). 

Instashopping, which takes the same name as the quick commerce offering of Meituan, includes categories such as food delivery (through Alibaba subsidiary ele.me), supermarkets / convenience stores, medicine, fashion and department store goods, mobile phone and digital devices:

 

According to media reports in China, Alibaba was initially intending to launch this offering during the mid year 6.18 promotions. However, the recent public attention on JD – Meituan competition (in food delivery and quick commerce) made Alibaba decide to launch earlier to catch the wave. 

It is also reported that Alibaba and ele.me have prepared more than RMB10 billion (US$1.38 billion) as subsidies for Instashopping adoption. 

A few thoughts: 

  1. Finally the quick commerce competition in China are fully in the open, with Alibaba, JD, and Meituan giving the top level attention (and traffic) to consolidated quick commerce offerings;

  2. Like other ecommerce platforms, Douyin (TikTok’s Chinese cousin) already has 1 hour on demand delivery offerings – it might consolidate these offerings further; we should not be surprised if Pinduoduo launches their own food delivery / quick commerce as well; 

  3. It seems that both Meituan and Alibaba (two food delivery incumbents) have come to the conclusion that JD’s food delivery foray will not be sustainable due to its organisational capabilities;
     
  4. However, Alibaba could be a bigger threat to Meituan. It has an existing large scale food delivery business (which targets to break even this year); it has good supplies (think about Freshippo and all the brands on Tmall); it is listing quick commerce on Taobao, a customer traffic juggernaut which has more than double the active users compared to JD;

  5. The real question, as with any Alibaba new initiative, is organisation still. I.e. whether Alibaba’s leaders can have enough focused execution to effectively bring all these internal business units and offerings together. You can read more about Alibaba’s organisational challenges in our Transforming Alibaba report;

  6. Most stakeholders we have spoken to still expect Meituan to emerge top. It has good execution capabilities – as its non-food daily order volume already surpassed 18 million. However, in the short term it would be a painful subsidy war before the market reaches equilibrium;

  7. On the supply side, brands should be much more open to fulfillment from their stores in top tier cities via Instashopping (than running discounts from ecommerce fulfilment centres); offline retailers, which have been struggling with declining footfall, should welcome more avenues to sell without drastically changing their models; 

  8. We also expect this quick commerce battle to spill over to other markets outside China. We already see attempts to build something similar in India, Middle East and Latin America, amongst other regions. Will DoorDash make the model work in the US?