Farewell to massive subsidy flooding, food delivery subsidies enter a protracted battle.

According to our understanding, Taobao's flash purchase service has recently clarified that food delivery will enter a long-term competitive phase.

After the beginning of autumn on August 8, Taobao's flash purchase order volume exceeded Meituan's for the first time. The more significant impact may be that massive subsidies have attracted considerable user attention to Taobao. Since July, Taobao has widened the gap with PDD Holdings Inc in daily active users (DAU).

Subsidies cannot and will not continue at their current intensity. According to internal Alibaba terminology, aggressive subsidizing is called "going uphill," and now it's time to prepare for "going downhill."

In July, Taobao's flash purchase service spent over 10 billion yuan in subsidies across merchants, consumers, and delivery riders. Alibaba's decision-making level is discussing the pace of subsidy reduction, focusing on operating high-value users and adjusting subsidy categories and amounts.

According to our understanding, September 10, Alibaba's company anniversary, will be an important milestone to determine more business rhythms and strategies, continuing from the top-level strategy of "major consumer platform" to catch up with and compete against Meituan in fundamental capabilities.

**What Did Hundreds of Billions Buy?**

Data from third-party analytics company QuestMobile shows that in April this year—before Alibaba entered the food delivery war—Taobao APP's daily active users (DAU) were 374 million, declining from the same period last year and only about 5.5 million higher than PDD Holdings Inc. However, by July, Taobao's monthly average DAU led PDD Holdings Inc by nearly 50 million, creating a significant gap between the two.

During July and August, when Alibaba continuously increased food delivery subsidies, Taobao APP's DAU grew steadily while PDD Holdings Inc's daily active users continued to shrink. Looking specifically at August 7's "First Autumn Milk Tea" marketing subsidy campaign day, the gap in daily active users between the two exceeded 100 million.

Wang Puzhong, CEO of Meituan's core local commerce business and commander of Meituan's side in the food delivery war, told us in July that competitors should be careful that "the winner might not be someone currently in the game."

Additionally, since August, Taobao's daily active users have not only seen significant weekend peak increases but have also maintained high levels on weekdays.

A Luckin franchisee told us that after the "autumn tea" campaign ended, Alibaba's subsidy intensity has returned to the "first half" level of the food delivery war. However, his several stores' average daily cup sales on weekdays increased from the previous 400-500 cups to the current "700-800 cups." He believes this indicates that months of food delivery competition have increased daily coffee consumption penetration.

Besides peak orders exceeding 100 million and surpassing Meituan, Alibaba's delivery rider supply is also growing significantly. Based on QuestMobile's monitored user time data for Meituan Crowdsourcing, Meituan Riders, Fengniao Crowdsourcing, and Fengniao Knights, we calculated that before the war, Meituan's rider scale was nearly 8 times that of Alibaba's Fengniao. This number has now shrunk to 2.6 times.

On August 22, Heytea fully launched on Taobao's flash purchase service. Previously, it had not integrated with Ele.me or JD's food delivery, preferring users to order through its own mini-program. However, Heytea has a considerable proportion of franchise stores that need continuous orders. As Taobao's flash purchase service scale grows, restaurant chain brands can no longer refuse this platform.

**Subsidies Will Continue, But No More Flooding**

Multiple food delivery merchants reported to us that after the August 7-9 "First Autumn Milk Tea" subsidy peak, neither platform has had particularly obvious single-day order surges, but Taobao's flash purchase weekday subsidies have become more apparent.

"Although current subsidy intensity doesn't feel as large as during 'autumn tea,' the profit per cup has improved," said the aforementioned Luckin franchisee.

According to sources close to Alibaba, after completing predetermined order surge targets, Taobao's flash purchase service will continuously adjust subsidy models for the next phase, targeting non-peak food delivery demand periods—such as weekdays—focusing on supporting high-value customers and gradually shifting subsidy category focus from beverages to food and non-food retail.

A restaurant chain brand founder told us that most fast food, tea, and coffee brands he's communicated with see weekly order volume increases on Taobao's flash purchase platform. Compared to the subsidy peak around August 7, Alibaba's consumer subsidies per beverage have "decreased by about one to two yuan" in the recent week, with "fixed price" campaign scales narrowing.

Beyond subsidy policy changes, Ele.me's ground promotion is actively pushing "tap-and-pay" payment hardware to merchants while recruiting merchants to prepare for the upcoming "Taobao Group Buy" business.

This restaurant chain has completed group buying rate contracts and submitted many products. The founder expects Alibaba to expand subsidies for this new business going forward.

After over a decade of food delivery competition, Meituan has established best practices for cost and efficiency—such as using subsidies to drive order volume to attract merchants and riders, managing dedicated riders through stations to reduce delivery costs, or flexible subsidy adjustments by city, day, and industry.

Alibaba's food delivery methods follow these paths. Alibaba's "Super Rush" launched in December last year and the upcoming "Flash Group" respectively target Meituan's two most important food delivery discount products—"Divine Rush" and "Group Meal."

After this round of food delivery war began, Fengniao has been recruiting station franchises and hiring dedicated delivery riders on a large scale. An Ele.me insider told us that the capacity side is another major efficiency focus recently, with main actions being increasing the proportion of dedicated (full-time) riders. To maintain fulfillment experience, dedicated and express riders (skilled riders in crowdsourcing) should comprise no less than 70%.

After using high-tier cities to complete phased order surge tasks, another important task for Alibaba is further activating order volume in lower-tier markets.

Before this round of war, a secondary market investor researching a central Chinese city found that Meituan and Ele.me's market share ratio locally was 9:1, with Meituan earning five to six yuan per food delivery order. Ele.me historically only covered limited markets, competing with Meituan through subsidies in major eastern cities to maintain market share. Meituan basically covers the entire country, with virtually no competition in small and medium cities, using profits from these areas to subsidize fierce battles in major cities.

Alibaba is already opening larger markets, establishing stations and deploying ground promotion to connect with merchants in these areas, gradually cultivating user habits. This isn't a weekend blitz but long-term investment measured in months or even years.