JD Meituan Waimai Battle: The Business Storm Triggered by Coffee Milk Tea

JD Meituan Waimai Battle: The Business Storm Triggered by Coffee Milk Tea

I never expected that the protagonist of the food delivery battle between JD.com and Meituan would be a seller of coffee and milk tea. I used to think that a beverage price of 9.9 yuan was already outrageous, but now on JD.com, a cup of Kudi Sheng Coconut Latte is only sold for 3.9 yuan, Gu Ming's Passion Duo is only 4.8 yuan, Shu Yi Shao Xian Cao's Jasmine Milk Green is only 3.8 yuan, and even a beverage priced at 1 yuan has appeared in Mi Xue Bing Cheng. I'm afraid even the brand itself cannot imagine it.

Meituan is also taking action, with Luckin Coffee offering 7.9 yuan for home delivery and Bawang Tea Lady offering 23 yuan for double cups, competing with JD.com. You should know that this price is not for store pickup, but for home delivery.

These days, in the face of such terrifying low prices, beverage merchants have exploded their orders one after another. Many Kudi franchisees have stated that since the start of the food delivery war, their single store cup volume has doubled, with some reaching 1800 cups per store and some as low as four to five hundred cups. The staff responsible for making coffee are so busy that they can't stop for even a minute, and most of these new orders come from JD Waimai.

Data shows that as of April 23rd, Kudi's monthly sales on JD.com have exceeded 30 million orders, and Guming's monthly sales have also exceeded 7 million orders.

Hello everyone, I am a business observer in charge of management. In this video, let's talk about why the food delivery war between JD.com and Meituan has sparked such a scene in the fields of milk tea and coffee.

Coffee and milk tea brands represented by Kudi naturally celebrate by opening champagne. Before this food delivery war, the beverage industry had actually entered a long and boring "garbage time". Kudi failed to shake Luckin Coffee's position, with Snow King (Honey Snow Ice City) dominating the market. Guming, Tea Hundred Paths, and Overlord Tea Lady can only compete for the second tier position, and the market landscape is almost determined. Capital and franchisees' money cannot be burned anymore, 9.9 yuan is a balance point, and the number of stores is so dense that it cannot be increased any further. If we continue to roll around, no one can make money.

But JD's entry is equivalent to bringing a new variable to this beverage war, giving all players a big gulp of "Ten Complete Tonic Soup" and shouting "overtime" to the entire industry. So, those milk tea brands, especially the big players who have not yet reached the top position in the industry, began to think about using JD as a new channel to see if there is a chance to counterattack.

You should know that this time JD.com launched a charge against Meituan, with various large subsidies and commission waivers completely paid for by the platform, and merchants do not need to pay any fees for the subsidies. The original price equilibrium point of 9.9 yuan has been easily broken, and various drinks priced at 3-5 yuan per cup can be seen everywhere on JD.com. With Dongge, this' benefactor ', paying for it, merchants don't have to do anything, and the doubled order volume falls from the sky.

In the eyes of those second tier brands who are unwilling to be lonely, this is a heaven sent opportunity. The order volume has increased, and franchisees who previously lost money can now make money. The already dense number of stores can continue to grow, and Kudi can challenge Luckin again. Guming, Bawang Tea Ji, and Chabaidao can participate in the battle again. Brands can earn an extra franchise fee, management service fee, and raw material fee. This seems to be a situation where everyone benefits, only Dongge's wallet is damaged. Let's say: Thank you, Dongge.

But Dong Ge is certainly not just a kind-hearted person who "burns himself and illuminates the entire industry". JD.com also has its own considerations. JD challenges Meituan, with the primary strategic goal of increasing order volume or order density. The order density is high, and riders can bring back more orders with just one trip. JD.com can maximize the rider's capacity, reduce their work difficulty, allow them to earn more commissions, and dilute the platform's operating costs.

Meituan was able to defeat Ele.me back then thanks to a larger order volume and stronger algorithm optimization of delivery routes for riders, allowing them to deliver more orders per trip. Later on, Meituan focused on putting together a good meal, sacrificing profits to increase order volume. It can be said that order quantity is one of the most important indicators in the food delivery market. As for the unit price of each order and whether each order can reduce the loss a bit, that is secondary.

And JD Waimai has completed the task of boosting order volume very well. In the past two months, there has been explosive growth, with daily order volume reaching around 10 million and capturing 10% of the market share, equivalent to one-third of Ele.me. To achieve this goal, JD.com must shift its strategic focus to the beverage and coffee track. Why choose a beverage?

Firstly, there is high frequency, which goes without saying, as people have a frequent demand for beverages. Secondly, the unit price is low. Originally, most drinks were priced at 9.9 yuan per cup, but with a little more subsidy from the platform, it can reach three or four yuan, which is the same as taking a subway ride. There is no threshold for people to purchase, and the order volume naturally increases. Think about it, can the same subsidy be given to meal delivery, with a subsidy of 25 yuan to 18 yuan for delivery, have such a good effect? It's very difficult.

The third is consumer elasticity. Coffee milk tea doesn't take up a lot of food. Originally, people might have one cup a day, but with subsidies, they can switch to two cups a day, which is not a burden for most people. Unlike fast food, even with subsidies, three meals a day are three meals a day, and it is unlikely to change to four meals a day just for a little subsidy.

Lastly and most importantly, the rate of chain connection is high. Talking about the next Kudi can cover over 10000 stores nationwide in one go, and talking about the next Guming can also cover thousands of stores. Many local small milk tea and coffee brands may have dozens or even hundreds of chain stores in a single city. A high rate of chain operation allows JD.com to quickly and efficiently introduce a large number of merchants with the lowest business expansion costs.

Last year, JD.com began to venture into food delivery, and the first section launched on the Miaosong channel was coffee milk tea. The top 5 on the homepage list of JD Waimai are Luckin Coffee, Kudi, Guming, Chabadao, and Bawang Tea Lady, all dominated by beverage merchants. This year, JD.com launched the "Quality Tibetan Food Merchant Recruitment Program", offering commission free services to major beverage brands and attracting 200 small tea beverage brands to settle in at once. And the result of all of this is that JD Waimai has almost become a milk tea "starter".

I have made a very rough estimate based on the existing data, and the daily order volume of JD Waimai is 10 million, so the monthly order volume is at least 300 million. Just those two or three beverage brands create nearly 50 million orders per month, and I estimate that the overall beverage market can create around 100 million orders per month. One third of JD's order volume is supported by beverages, indicating that JD really has a "preference" for coffee and milk tea.

Therefore, JD's challenge to Meituan takeout has attracted comprehensive attention, not only because there has been no such large-scale business war in the Internet industry for a long time, but more importantly, the spillover benefits of this war are very intense. The catering industry directly affects the livelihoods of many practitioners and is closely related to everyone's daily life.

In the visible next few months, Meituan will not sit idly by and will definitely launch a counterattack against JD.com with greater subsidies. Ele.me will not sit idly by and watch the boss and third brother fight. The plot of the second brother benefiting from the fisherman is unfolding, and subsidies are definitely planned. As the weather continues to heat up, the true peak season for the beverage market is approaching, and this food delivery war is destined to bring more businesses, massive capital, and subsidies.

As a consumer, I just want to say: tear well, be more intense.