Liquid Assets

“I won’t brew coffee again until the price war between JD Food Delivery, Meituan and Ele.me ends,” she told NewsChina, name dropping China’s three largest delivery platforms.　

Making it at home costs Zhou about 5 yuan (US$0.7) per cup. With the right coupon, platforms can halve that.　

Milk tea and juices are also in the mix for these aggressive discounts. Zhou bought a fruit and vegetable juice for 4.8 yuan (US$0.67) from franchise Auntea Jenny – about 80 percent off the original price.　

“Even my mother-in-law, who never used to order drinks online, has been tempted by the generous discounts on milk tea deliveries,” she added.　

Several experts note that while customers and beverage brands are clearly benefiting from the platform war, the broader online delivery ecosystem, dependent on brick-and-mortar vendors, logistics and user experience, is far harder to change. The discounts, they warn, are unsustainable and bound to be short-lived.

Launched in 2022 by Luckin’s original founders after they were ousted over a 2020 fraud scandal that saw Luckin’s delisting from the Nasdaq, Cotti slashed the price of a delivered cup down to just 3.9 yuan (US$0.54).　

This steep drop is the result of intensifying competition among delivery platforms, sparked by e-commerce giant JD.com’s February 11 entry into the takeout business with JD Food Delivery. To attract restaurants and beverage brands, JD announced it would waive commissions for vendors registering before May 1. The announcement triggered a 7 percent plunge in competitor Meituan’s stock price on the Hong Kong exchange.　

As JD and Meituan squared off, Alibaba Group’s Taobao entered the fray on April 30. The e-commerce giant has outsourced its delivery services to Ele.me – a food delivery platform in the game since 2009, promoting 30-minute drink delivery on its app as “Flash Sale” services.　

Backed by subsidies reportedly totaling tens of billions of yuan, Taobao began offering free drinks and huge discounts on coffee and milk tea deliveries. Within 24 hours, sales of Cotti Coffee on the platform jumped tenfold, according to Securities Times on May 4.　

Meanwhile, Ele.me is operating independently on its platform, promoting its own deals and incentives.　

During the Labor Day holiday (May 1-5), Ele.me reported that milk tea sales in Guangdong Province’s major cities of Guangzhou and Shenzhen surged 200 percent year-on-year.　

JD Food Delivery quickly escalated its own promotions, and the results were dramatic: During the first week of May, Cotti Coffee sales on JD surpassed 40 million orders, a tenfold year-on-year increase on average per day, Sina Finance reported.　

A Cotti Coffee employee in Inner Mongolia Autonomous Region told NewsChina that 90 percent of their store’s orders came through JD. “In April, the cheapest cup on the platform was 4.9 yuan (US$0.68). In May, it dropped to 1.9 yuan (US$0.26). Most customers are going for the heavily discounted drinks,” the employee said.

“That makes consumers more willing to place spontaneous orders when discounts are available,” he said.　

Gross Merchandise Volume (GMV), a key metric measuring total sales, is the primary benchmark in the takeout industry. Platforms are eager to partner with beverage brands, whose extensive networks of stores help boost order volume quickly.　

“If a platform wants to hit one million transactions in a short time, coffee and milk tea chains, which often have 7,000 to 8,000 stores nationwide, are the most efficient partners,” said Yan Han, deputy president of the Takeaway Professional Committee at the China Hospitality Association.　

“These partnerships also improve operational efficiency and cost control,” he added.　

Typically, April and May are considered off-season for drink deliveries. But this year, sales of chain-store beverages surged thanks to the platform war.　

According to the Cotti employee in Inner Mongolia, their store received over 500 JD orders daily, roughly 150 more than during last summer’s peak.　

Yan Han said some beverage and fast-food shops were handling up to 600 delivery orders per day.　

“With the platforms, shops can increase market reach and share,” he said. “In the fierce competition among chains, if Auntea Jenny sells on more fruit juice, rival brands like Mixue might lose that order,” Yan added, mentioning Mixue Ice Cream & Tea, China’s answer to Dairy Queen.　

Thanks to subsidies, stores can still maintain revenue even with lower prices. The trend has been especially favorable for newer brands looking to expand.　

For example, Molly Tea, founded in 2020, saw its daily sales triple after joining Taobao’s Flash Sale platform.　

“This is a valuable opportunity for us to grow,” a company insider told NewsChina on condition of anonymity. The brand is reportedly in talks with JD Food Delivery for further cooperation.　

The downside of falling prices is that the discounts will not last. But consumer expectations might.　

“After Luckin’s coffee dropped from 9.9 yuan (US$1.38) to 7.9 yuan (US$1.1), I find myself reluctant to buy it again if the price goes back up,” Zhou said.

Retail sales in China reached 48.8 trillion yuan (US$6.78t) last year, with catering accounting for just 11.5 percent (US$780b), according to the National Bureau of Statistics.　

“Clearly, the real play is about converting catering traffic into broader e-commerce users,” an industry insider told NewsChina.　

Meanwhile, the food delivery market has flourished for more than 15 years and remains dominated by Meituan and Ele.me.　

Ele.me was launched in 2009, followed by Meituan in 2013 and Baidu Takeaway a year later. Through years of discounts and aggressive growth, online food delivery became a consumer habit. Even after Ele.me acquired Baidu Takeaway in 2017, Meituan surged ahead to become China’s top platform.　

As of 2025, China has the world’s largest food delivery market, with 545 million users, Xinhua News Agency reported in January.　

A newcomer like JD faces steep odds. Meituan held a 65 percent market share in 2024, far too large to unseat with a temporary price war.　

According to Yan, JD Food Delivery does not charge a platform commission from beverage shops that sign on, but only for the first year. And the shops still have to pay for delivery fees and joint promotional costs.　

Beyond commissions, JD’s service model remains immature.　

According to the interviewed Cotti Coffee employee in Inner Mongolia, the store often receives floods of orders from JD during fixed time windows in the platform’s bid to save labor costs and keep the deliveries arriving on time.　

Due to JD’s single-item discounts, consumers often place multiple drink orders individually to make sure that each gets a discount. This leads to several delivery drivers arriving for the same person’s order, resulting in wasted labor, the employee said.　

To solve this, JD Food Delivery began sending orders to couriers only once all the beverages were made, allowing for batch deliveries. However, this caused delays, as drivers had to wait for all the drinks to be prepared.　

In response, the platform implemented fixed order times, aiming to streamline delivery and allow drivers to better plan their routes. Unfortunately, the high volume during these time slots overwhelmed both the shops and delivery services, leading to canceled orders, the Cotti employee added.　

“Sustainable delivery depends on better algorithms and coordinated systems between stores, couriers and platforms,” Yan said.

On March 1, it became the first delivery platform to offer its couriers China’s five types of mandatory social insurance: pension, medical, unemployment, work injury and maternity.　

Within 20 days, more than 10,000 couriers signed formal labor contracts. The company aims to employ 100,000 delivery workers in three months.　

By contrast, platforms like Meituan and Ele.me have long outsourced their management of delivery riders to smaller, third-party human resource companies in a bid to maintain an “asset-light” model and please investors, according to Overwork: Takeaway Drivers Under the Platform Economy, a book by Sun Ping, associate research fellow at the Chinese Academy of Social Sciences.　

Under this model, couriers are under intense pressure to meet quotas. Many race through traffic, and in 2023 alone, 12,000 accidents involved delivery drivers, Guangming Daily reported last July. This has sparked public debate over who should be held liable for compensation.　

While the triangular relationship between platform, outsourced management and drivers is not currently covered by China’s labor laws, recent court cases have been setting legal precedent.　

In 2021, a Shanghai district court ruled that a third-party human resource firm had to compensate a delivery driver who was injured on the job in 2019. The firm’s appeal was rejected in 2022, the Southern Metropolis Daily reported in July 2024.　

“Providing social insurance is essential to regulating platform labor,” said Chen Long, a sociology researcher at China Agricultural University, worked as a courier for six months in 2018 while writing his PhD thesis at Peking University. “The issue has been discussed for years, but JD Food Delivery was the first to act,” he told NewsChina.　

Still, JD’s impact remains limited. Compared with Meituan’s 7.45 million and Ele.me’s 4 million couriers, JD’s direct hires are a drop in the ocean. Meanwhile, JD.com still relies on nearly 1.3 million outsourced couriers through retailing and logistics platform Dada Now, none of whom receive social benefits.　

Meituan is now piloting pension programs and social insurance for deliverers, beginning in Nantong, Jiangsu Province in May.　

But high worker turnover remains the biggest hurdle.　

“Only those over 45 care about social security, not me,” said a 34-year-old deliveryman, speaking anonymously. “I don’t expect to do this job for another 30 years.”　

To address this, Chen proposes a new model of social governance, one that extends benefits to workers without fixed employment relationships. “This is essential to meet the challenges of our changing labor market,” he said.