The ever-lasting battle among the three food delivery platforms in China – Meituan, Alibaba and Jingdong – is likely to enter into a new stage with their operating losses expected to peak in the third quarter of 2025 and gradually narrow thereafter, according to a recent report from US investment bank Jefferies.

The high-profile entry of Jingdong in February and Alibaba in May is reshaping China’s food delivery sector, which used to be dominated by Meituan and quickly escalated into an industrial turf war that burnt through an estimated US$4 billion in operating expenses in the second quarter alone.

While Meituan continues to hold the number one position in this heightening competition, Alibaba’s rise has been the most aggressive with monthly average users to its food delivery tripling from April to reach 300 million in August. Alibaba’s average order volume is estimated by Jefferies to be 68 million in Q3 – about 90% of Meituan’s 75 million. The market share of Jingdong’s food delivery business, on the other hand, has stayed relatively flat, ranking it firmly in third place.

The neck-to-neck rivalry between Meituan and Alibaba over market share has resulted in a widening per-order loss for both between May and July. However, the per-order loss for both peaked in July and there has been improvement in August, Jefferies notes, and it expects the metric for Alibaba to further narrow significantly in September and halve over the next two months due to an optimization of its user structure, order mix and operating efficiency.

With a temporary stability achieved following the market share competition in Q2 and Q3, the food delivery sector is likely to enter a new stage in which the platforms focus more on improving the unit earnings of their orders to realize profits. Earnings per order in the food delivery competition, Jefferies estimates, is expected to be 1 yuan ( US$0.14 ) in the long term.

The business model of food delivery is replicating in other non-food delivery sectors under a general term called on-demand delivery or quick delivery. The on-demand delivery market for fresh goods and daily essentials, according China Insights Consultancy projections, will grow at an annual rate of approximately 32% between 2020 and 2025, reaching a total value of 11.8 billion yuan by 2025.