W35 - Meituan Q2 Report

After last week's earnings report, I've read quite a few media analyses over the past couple of days. I wanted to write down my own thoughts to form a personal judgment. First I'll 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 blitzkrieg opening. In Q2 the battle expanded, and it fell into a Verdun-like subsidy war similar to Ali. By Q3 the market began to reach a consensus that the contest had entered a tug-of-war phase—a trench warfare and war of attrition. The next 6–18 months remain critical; the contest will be decided by financial strength, organizational resilience, and strategic endurance.

Many people have overlooked JD's long-term positioning in instant retail and local services, which led them to mistakenly think JD suddenly rushed into food delivery and travel. In fact, JD acquired Dada back in 2016 and merged it with JD Daojia. Around 2018, when I worked in JD's local travel division, we handled air tickets, hotels, attraction tickets, and movie tickets—I know this team's foundation very well. Leadership yields corresponding teams; there is no impregnable camp. Even if old K leaves, it's only a change in business tactics; deeper organizational capability and culture won't be transformed simply by replacing leaders. 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 in practice that approach didn't work; a company of a million people can't be run efficiently that way. Looking back at JD's past half-year strategy purportedly 'centered on the supply chain,' you can see who the competitors are that deserve long-term attention and respect.

One thing I've never quite figured out: why is Didi still the monopoly in ride-hailing? In 2021 its app was removed for a year and a half over safety concerns, user acquisition stalled, and dozens of new platforms entered the market during that time, including Gaode. The market had ample time for full competition. Moreover, I have some insights into Didi's internal situation—the organizational culture is hard to praise and the company's quality isn't outstanding. Yet today its market share still holds above 70%.

Ride-hailing and food delivery are both multi-sided markets with very strong network effects. Ride-hailing platforms focus on matching scale and efficiency between passengers and drivers, while food delivery is more complex, requiring coordination of user scale, merchant richness, and delivery network density.

Using the mature ride-hailing market as a mirror yields some insights. In multi-sided markets, first-mover advantage is amplified by network and scale effects—an edge far larger than participants expect. Didi was first to validate the positive loop of 'more cars → faster pickups → more users → drivers earn more.' On a foundation of financial health it continuously refined operations and offered diverse services for seniors, people with disabilities, pet owners, and other specific use cases. Fast pickups, abundant supply, price bandwidth, and reinforced user mindshare mean most people lack the incentive to multi-home across platforms. Once subsidies fade, competition centers on supply richness, fulfillment efficiency, and overall experience.

What Ali has done cleverly is convince the market that investment in instant retail is essentially traffic spending for core e-commerce. That framing lets investors tolerate long-term negative unit economics in food delivery and enables Ali to keep investing heavily in a sustained campaign until it reaches a scale-economy inflection point.

In the end it still comes back to fundamentals and long-term patience. At heart, it's simply the most basic common sense.