$Pinduoduo Inc.(PDD)$
Meituan has already proven successful with this model, achieving an EBIT margin of 30%-40% through cross-selling from food delivery users to in-store, hotel, and travel services. This successful case has prompted e-commerce giants to restructure their business models by integrating new services into a single app.
According to QuestMobile data, between January and May 2025, the daily active users (DAU) of the Taobao app increased by 50 million, surpassing 410 million; JD’s main app also saw a 50 million DAU increase, reaching about 170 million. In contrast, the DAU trend for the Pinduoduo app remained relatively flat during the same period. This clearly demonstrates the traffic-driving effect of high-frequency services on main platforms.
JD's involvement is particularly noteworthy. With its main app having only one-third the DAUs of Taobao and Pinduoduo, two-thirds of JD's 47 billion RMB marketing expenditure in 2024 went toward customer acquisition. Through its food delivery service, JD's daily active users have increased from 1.0–1.3 million previously to 1.7 million as of May this year, with 40% of new food delivery users converting into JD e-commerce customers.
Goldman Sachs estimates that by 2030, the food delivery market will reach 2.4 trillion RMB, and the instant retail market will reach 1.5 trillion RMB. The emerging centralized delivery model and supply chain improvements will further drive penetration.
Short-Term Pain for Long-Term Gain
Goldman Sachs predicts that treating food delivery losses as a long-term marketing investment strategy will bring near-term pain for platforms from 2025 through the first half of 2026, but could improve marketing efficiency in the mid-term.
In the long run, as competition normalizes, Alibaba and JD are expected to reallocate customer acquisition marketing expenditures toward food delivery subsidies and achieve moderate profitability or break-even in 2027, thereby improving GMV profit margins.
Additionally, Goldman Sachs notes that Pinduoduo benefits relatively by not directly participating in the food delivery competition. As Meituan has withdrawn from 18 provinces, Duoduo Maicai is expected to absorb the remaining inventory, driving business expansion in the second half of the year.
Goldman Sachs maintains a Buy rating for all four companies, believing that while trading platforms may face profit declines for the remainder of 2025, losses from food delivery investments are likely to peak within 12 months, setting the stage for a turning point in stock prices in the second half of the year.
Vast information and precise analysis, all in the Sina Finance App
Disclaimer: Investing involves risk. This is not financial advice. The content above should not be regarded as an offer, recommendation, or solicitation to buy or sell any financial products. Any discussions, comments, or posts by the author or other users should not be considered financial advice either. This content is for general information purposes only and does not take into account your investment objectives, financial situation, or needs. TTM assumes no responsibility or warranty for the accuracy or completeness of the information. Investors should conduct their own research and seek professional advice before making investment decisions.
Comments