July 5 might have seemed like any other summer Saturday, but for Xiao Yu, it was anything but.
Xiao, a delivery courier for Ele.me in Yuzhong, Chongqing, had received a notice days earlier: all morning shift workers were expected to report an hour early because “the order volume over the next few days will be overwhelming.”
At 9:00 a.m. that day, Xiao was pulled into a DingTalk meeting. After reviewing instructions with colleagues, she called her team members: “Get out there and make money, orders are pouring in.”
Meanwhile, in Taobao Shangou’s war room in Xixi, Hangzhou, teams across business units were already coordinating—tracking data, spotting trends, and dispatching subsidies to merchants. This marked the beginning of a coordinated campaign. July 5 was the first Saturday of the peak delivery season, and Taobao Shangou had chosen the day to escalate its challenge against Meituan, the market leader in food delivery.
Rumors had been swirling for days. According to 36Kr, internal estimates at Alibaba forecasted order volumes could hit 70 million. For comparison, Meituan processes around 90 million orders daily.
Top Ele.me merchants were alerted a week in advance to stock up and increase staffing. Meituan had also caught wind of the push. Some employees dismissed the move, questioning whether Taobao had the delivery infrastructure to support such scale. Others monitored both platforms closely from early morning, seeking signs of traction.
On June 23, Taobao Shangou had already hit 60 million daily orders, a milestone that helped it secure a RMB 50 billion (USD 7 billion) internal investment, arming it with the resources to push harder.
But the campaign was about more than food. The long-term goal was to grow quick commerce as a driver for Taobao’s broader business. As Alibaba executive Jiang Fan once said during an earnings call, “Shangou is a high-frequency scenario for Taobao. It drives user activity and scale, making the platform more dynamic.” JD.com founder Richard Liu made a similar point: “Even if we lose money on delivery, it’s still cheaper than buying traffic from Douyin or Tencent.”
“The company expects not just food orders to rise, but retail ones too,” a Taobao employee told 36Kr.
The mood was intense. On the night of July 4, many in Taobao Shangou’s retail team worked late. By 7:00 a.m. the next morning, they were back online, watching dashboards in real time. According to one staff member, Meituan had deployed employees to merchant offices in key cities to undermine Taobao’s effort.
By 9:00 a.m, Taobao was seeing momentum. Some retail merchants complained they were being told to raise their minimum order value. While subsidies helped boost volume, pricing remained sensitive as non-food purchases lacked the urgency of meals. Too high a threshold deterred users; too low could reduce transaction quality.
Around 10:00 a.m, Ele.me representatives visited merchant offices. In many places, Taobao and Meituan staff were both present. Although physical confrontation was avoided, merchants found themselves caught in a visible tug-of-war.
To understand the roots of this battle, one must look further back. Surprisingly, it was JD, not Meituan or Ele.me, that triggered this confrontation.
Meituan and Ele.me had coexisted without major disruption until JD’s entry. The latter’s strategy was fast and aggressive: zero merchant commissions, social security for couriers, subsidies for consumers, and even the founder delivering orders himself. Order volumes surged. JD reportedly hit milestones of five million, ten million, 20 million, and 25 million orders between April and June.
JD’s momentum created an opportunity for Alibaba. “We’re betting that educating users alongside JD can change user behavior,” a Taobao employee said. “The goal is to get people to use their e-commerce app to order food instead of downloading another app.”
Letting JD become the number two player was never an option for Alibaba.
Alibaba already had key assets like Ele.me and Hema (known internationally as Freshippo) laying the groundwork in quick commerce. At the February 2024 earnings call, CEO Eddie Wu emphasized quick commerce’s strategic value. That same year, Taobao launched within-hour deliveries via Ele.me’s Feiniao courier network. This allowed 30-minute delivery for a wide range of items and set the stage for the launch of Taobao Shangou.
Taobao Shangou, the upgraded version of hourly deliveries, brought deeper integration with Ele.me and better placement on the Taobao homepage. The name “Shangou,” which stands for flash purchase, was also intentional, echoing Meituan’s non-food services without competing on food-specific branding.
A launch originally slated for the 618 festival was moved up to April 30 across 50 cities. “The Taobao and Ele.me integration had just finished. The user experience hadn’t even been optimized yet,” one Taobao insider revealed. “You couldn’t even see the delivery cart inside the Taobao app at first.”
Subsidies were finalized in a late April meeting and reached RMB 100 billion (USD 14 billion). Despite May 1 being a typically slow delivery day, the launch outperformed expectations. The internal forecast was 10–15 days to reach ten million orders. It took just six.
By April 30, Taobao and Ele.me were fully coordinated.
A warranted response
Many Meituan employees didn’t return to the office until the afternoon of July 5.
“We’re going in.” That afternoon, Meituan’s head of core local commerce, Wang Puzhong, gave the order to counter. Operational control was passed to Xue Bing, head of Meituan’s food delivery business, and Xiao Kun, who oversees Meituan Shangou. Both report directly to CEO Wang Xing. Dozens of staff convened at Meituan’s Hengdian headquarters accordingly.
It was clear Taobao wasn’t just posturing, but executing well. In the morning, it pushed heavy subsidies to retail, removing order minimums and waiving delivery fees. At lunch, it redirected subsidies to restaurants. By peak lunch hours, order volume had spiked sharply.
“Orders were being dispatched even when the estimated wait time for a courier was over an hour. That kind of push suggests they were seriously aiming for 80 million,” said a Meituan employee who was part of the day’s operations.
Had Taobao reached that target, it would have shaken Meituan’s lead. With Meituan averaging around 90 million orders daily, even a small dip could affect user perception and investor sentiment.
Meituan had already planned a summer campaign, with units like Pinhaofan and Shenqiangshou leading the charge. Subsidies for July 5–8 were set at double the norm.
“We were ready to compete,” said the founder of a Chinese fast-food chain. “What caught us off guard was how aggressively Taobao started boosting subsidies on the customer side that afternoon.”
“There’s no way we could afford to lose on order volume.” Within just two to three hours, Meituan compressed its subsidy rollout into a nationwide campaign. Free drink vouchers were followed by steep coupons like “RMB 18 (USD 2.5) off RMB 18,” along with aggressive cross-app notifications. Initially designed to roll out gradually by region, it was rejigged into a full-fledged nationwide release. “It was absolutely intense,” one employee said.
Couriers, too, got a big payday. A Meituan rider said his peak payout per delivery jumped that day from RMB 4.7 (USD 0.7) to at least RMB 10 (USD 1.4) per order.
With both platforms raining subsidies, tea and coffee shops in cities nationwide were overwhelmed. “Orders were stacked like books. There were a dozen couriers waiting at the pickup counter,” Xiao said.. Still, she and other riders encouraged each other. “Don’t rush them. Let them make it at their pace,” she told fellow riders.
Delivery networks were pushed to their absolute limits. Xiao recalled that an order sent in from just 700–800 meters away, which normally had a 30-minute delivery window, took a staggering 170 minutes to complete. “That’s the longest single delivery I’ve ever made,” she joked. “We said it was the biggest battle of our lives.”
At 4:00 p.m, Xiao got a notification indicating there’d be no penalty for delays over ten minutes. “Everyone was ecstatic,” she said. A Meituan rider on the Lepao program recalled a special offer between 5:00 p.m. and midnight: “Complete 40 deliveries, get RMB 180 (USD 25.2) bonus.” He managed over 30 and earned more than RMB 90 (USD 12.6) just from that.
One beverage chain’s head of online operations said order volume exceeded projections so severely that headquarters activated “emergency resupply mode.” Still, some locations couldn’t keep up and had to reroute orders to nearby branches and bring in extra hands.
Meituan had previously achieved order peaks through carefully planned campaigns with tightly controlled risk management. These were designed to prevent fake orders and prevent users from exploiting the system. But July 5 was different. No one could predict how high the numbers would go. Even risk controls took a backseat.
At 6:00 p.m, merchants began posting on Weibo that they were struggling to complete orders but couldn’t view settlement amounts. Users also said they experienced a five-minute payment failure window. Meituan quickly reassured merchants via push messages and followed up with a public statement at 8:00 p.m. “Historic order volume triggered server throttling. Settlements will be recalculated, there will be no impact to merchant payouts,” the statement read.
Taobao Shangou hoped that food delivery traffic would drive growth in non-food orders and, ultimately, in general e-commerce GMV (gross merchandise volume). But Meituan insiders had long believed that food delivery wasn’t an effective gateway to Taobao’s retail business.
That changed on July 5. If most of Taobao’s gains came from food and drinks, Meituan wasn’t worried. But when essential grocery items like rice, cooking oil, and other staples also saw spikes, alarm bells went off. “That was scary,” one insider said.
Meituan has long led the push for “on-demand retail,” aiming to use food delivery as a gateway to more diverse categories such as groceries, daily essentials, electronics, and even clothing. “We’re trying to pull in both merchants and users from across the spectrum,” said local commerce head Wang during an October 2024 summit.
At that summit, Meituan set its goal: 100,000 quick commerce warehouses and RMB 200 billion GMV for its Shangou business by 2027. At the time, few competitors were even close. Some believed Meituan’s target was too conservative.
Now, Taobao has entered that race in earnest. Alibaba is clearly determined to make Taobao a dominant entry point for on-demand retail. According to one source, “The subsidy rate through the Taobao Shangou homepage is far higher than on Ele.me or Alipay.”
Taobao is also tightening its supply chain. It’s working with brands like Nongfu Spring to consolidate warehouse and store resources, and it’s also negotiating with apparel and beauty brands to reserve in-store space for Taobao Shangou sales.
If this strategy works, Meituan may retain the food delivery lead, but the future of on-demand retail could shift.
Maturation of on-demand retail?
At 8:45 p.m. on July 5, Meituan pushed an internal update: “On-demand retail daily order volume has surpassed 100 million.” At 10:54 p.m, another message followed: “Orders have now broken 120 million.” In the war room, Meituan’s human resource team even held a small celebration, popping paper confetti.
“These were the richest, craziest two days,” said one Meituan courier, reflecting on the weekend. Scrolling through his earnings screen, he couldn’t hide his excitement: “I made so much today, I can’t even keep track. It’s definitely over RMB 1,000 (USD 140).”
On Monday, July 7, Taobao Shangou reported over 80 million daily orders. Combined, Meituan, Taobao, and JD hit an estimated 200 million orders.
Behind those numbers was a real-time test of delivery networks, supply chains, and logistics.
Meituan, with its reputation for operational precision, leaned on its established systems. According to 36Kr, since the launch of its membership program, Meituan has refined its subsidy approach. High-value coupons are now typically reserved for “Black Diamond” members.
Taobao Shangou, too, showed tangible improvements. Courier Xiao works under Ele.me’s “preferred mode,” which restricts riders from rejecting orders. While the system previously led to inefficient routing, even in Chongqing’s steep terrain, delivery flows were noticeably smoother that day. “You could tell the system had improved,” she said.
JD.com opted out of the July 5 frenzy, but it wasn’t idle. Rather than blanket incentives, it focused spending on established chains. “If a store can earn more from one JD order than two elsewhere, they’ll stay. It’s a more cost-effective model,” said a source close to JD.
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Historically, Meituan’s peak days align with the seasons. In 2024, it set a single-day record of 98 million same-day orders on Liqiu, the first day of autumn. A former employee even returned to the headquarters just to celebrate. “Wang Puzhong gave a short speech about goals and milestones,” he said.
“Peak order volume usually comes on [Liqiu]. GMV peaks may come on Qixi Festival or other romantic holidays,” the former employee added. “But this time, it all happened on a random, uneventful Saturday. That’s what makes it so remarkable.”
According to 36Kr, Meituan and Taobao Shangou collectively lost more than RMB 1 billion (USD 140 million) that day. For context, Meituan’s average profit per order in 2024 is around RMB 1.5 (USD 0.2).
In this competitive environment, Meituan can’t afford to yield ground. But a midlevel manager acknowledged the challenge: on-demand retail can’t be sustained by subsidies alone. “Hitting a peak is great, but eventually you have to build something that works day-to-day.”
Meituan’s founder has long been known for setting ambitious goals. The 100 million daily order milestone was first mentioned in a Q1 2020 earnings call, when Meituan’s daily volume hovered around 30 million. Local commerce head Wang reassured staff: “The 100 million milestone will come, it’s just a moment in time. What matters is how we operate after we get there.”
Executives repeated that target year after year, though it faded somewhat in recent times. Even when the company reached 98 million in 2024, there was little fanfare.
“This year feels different,” a former employee said. “The competitive heat is rising. Everyone needs milestones to boost confidence.”
But the real shift lies beyond numbers. The 200 million daily orders signal a broader evolution of on-demand retail.
“Only the food category is truly non-negotiable,” one industry veteran said. “You need your meal within 30 minutes, or it’s worthless. So only companies with the strongest delivery infrastructure can win that game. But non-food? The urgency isn’t the same. That means no one will dominate it entirely, and there’s room for more players.”
As the adrenaline wore off, both sides briefly returned to routine. Taobao Shangou staff rotated days off, and Meituan teams held debriefs. Xiao didn’t return home until after 2:00 a.m, then treated herself with a milk tea order of her own.
The battle for on-demand retail is far from over. But both platforms seem revitalized.
As in past campaigns, Alibaba deployed its familiar trio: deep integration, aggressive subsidies, and top-tier traffic placement. The pace of coordination, product rollout, and spending stood out. “It was an exhilarating fight,” one Taobao Shangou staff member said.
Taobao now wants to make every Saturday into a recurring event: “Super Saturday.” According to one insider, Meituan too is aiming for an even higher peak later this summer. The next clash may be just around the corner.
Summer has always been the peak season for food delivery, but as one Meituan employee put it: “It feels like every season is peak season this year.” He and his colleagues are ready for whatever comes next.
A decade ago, Meituan founder Wang said: “There’s no peace in O2O (online-to-offline commerce).” Now, as the distinction between O2O and e-commerce blurs, that statement holds truer than ever.
There’s still no peace in the mobile internet, and that, perhaps, is what keeps it thriving.
KrASIA Connection features translated and adapted content that was originally published by 36Kr. This article was written by Ren Cairu and Peng Qian for 36Kr.