W35 - Meituan Q2 Earnings

After last week’s earnings report and reading many media analyses over the past couple of days, I feel I should write down my own thoughts and form a judgment. I’ll first summarize the facts, then share personal views based on my understanding of JD, and finally offer a comparative perspective from the ride-hailing industry.

Q1 was JD’s lightning-opening move. In Q2 the battle expanded, and it fell into a subsidy war with Ali similar to the attritional Verdun-style conflict. By Q3 the market began to coalesce around the view that the contest had entered a tug-of-war and trench warfare—a protracted struggle. The next 6–18 months remain critical; the fight will be determined by capital strength, organizational resilience, and strategic endurance.

Many people overlook JD’s long-term布局 in instant retail and local services, leading them to mistakenly think JD suddenly rushed into food delivery and travel & lodging. In fact, JD acquired Dada as early as 2016 and merged it with JD Daojia. Around 2018 when I worked in JD’s local life and travel division, I worked on air tickets, hotels, attraction tickets, and movie tickets, so I know this team’s foundation well. Leaders set the pace and staff follow—there’s no such thing as an immovable fortress. Even if Old K leaves, it only changes tactical approaches; deeper organizational capabilities and culture won’t be solved merely by Old Z’s departure. From my understanding of JD, only one person truly defines its organization and culture. I once admired him—he was charismatic and appeared people-centered—but those methods don’t scale; a company of a million people can’t run efficiently on that style of management. Looking back at JD’s past half-year focus on being “supply-chain centric,” you can see who the opponents are that deserve long-term attention and respect.

One thing I’ve never fully understood: why is Didi still the monopoly in ride-hailing? In 2021 its app was removed for a year and a half due to safety issues, halting user acquisition while dozens of new platforms entered the market, including Amap—there was ample time for vigorous competition. Moreover, I know something of Didi’s internal situation; its organizational culture is hard to praise and the company’s quality isn’t great. Yet today its market share remains steady above 70%.

Both ride-hailing and food delivery are multi-sided markets with very pronounced network effects. Ride-hailing platforms focus on matching scale and efficiency between passengers and drivers, while food delivery is more complex—requiring coordination among user base size, merchant richness, and delivery network density.

Looking at the more mature ride-hailing market offers some insights. In multi-sided markets, first-mover advantage is amplified by network and scale effects—this edge far exceeds what market participants typically expect. Didi was first to validate the positive loop of “more cars → faster pickup → more users → drivers earn more.” On a financially healthy foundation it refined operations continuously and provided diverse services for the elderly, disabled, pet owners, etc. Fast pickups, ample supply, price bandwidth, and brand recall combine so most people lack incentive to multi-home across platforms. Once subsidies recede, the competition is over supply richness, execution efficiency, and overall experience.

What Ali did cleverly this time was make the market believe that investment in instant retail is essentially customer acquisition spend for core e-commerce. That framing lets investors tolerate prolonged negative unit economics in food delivery, enabling sustained heavy investment to fight a long war until economies of scale kick in.

In the end it still comes back to fundamentals and long-term patience—at bottom, it’s the simplest common sense.