If Grab and Foodpanda Start a Price War, Will Users Truly Benefit or Pay the Price Later?
China’s ongoing food delivery war has dominated headlines recently. According to Bloomberg's estimates, the mutual price-cutting and rivalry between $JD.com(JD)$ and $MEITUAN-W(03690)$ have wiped out around $70 billion USD in combined market value.
To compete for users, JD.com and Meituan have launched a variety of discount coupons and subsidy campaigns, leading to a noticeable drop in average food delivery prices. Promotions like 4-yuan Luckin Coffee and 8-yuan branded lunches have become increasingly common. This week, Meituan even offered a free $Luckin Coffee Inc.(LKNCY)$ campaign to its members — TC just got a free cup in Beijing today[666][666]
Despite the stock price drops, consumers are welcoming the cheap delivery meals. The last time we saw such intense subsidy wars was about a decade ago.
In 2014, the ride-hailing war erupted, and subsidies were also the main weapon. In just 2015 alone, data from $DiDi Global Inc.(DIDIY)$ and $Uber(UBER)$ indicated that their combined losses had exceeded 20 billion RMB.
These cash-burning strategies do help gain market share, but the side effects are obvious. Most importantly, every price war has historically ended with price hikes, as capital eventually demands a return.
That’s why some warn that if JD.com or Meituan wins this war, it will ultimately be consumers who foot the bill. They argue that keeping the giants in fierce competition is the best outcome for consumers.
What if a similar situation happened in Singapore?
According to a report from research firm Momentum Works, $Grab Holdings(GRAB)$ and foodpanda control about 91% of Singapore’s $2.5 billion USD food delivery market, with Grab alone holding a 63% share.
In 2024, the planned merger between Grab and foodpanda fell through, and Singapore’s competition watchdog concluded its investigation. What will happen if the two giants start a price war in Singapore?
Food delivery isn’t a good business: is it still worth investing in companies like JD.com, Meituan, or Grab?
Looking beyond this delivery war, we see that such intense business battles are rare in other markets.
For example, none of the “Magnificent Seven” U.S. tech giants have local services as their core business. Even under the previous FAANG classification, local lifestyle services were never part of the picture. The only e-commerce giant is Amazon, and it has not ventured deep into food delivery either.
Actually, $Amazon.com(AMZN)$ launched Amazon Restaurants in 2015, but repeatedly struggled against specialized competitors like Grubhub, DoorDash, and Uber Eats, ultimately choosing to exit the food delivery business entirely in 2019.
Amazon to shutter Amazon Restaurants
At the beginning of the war, JD.com stated that it aims to keep the profit margin of its food delivery business below 5%, while in fact, Meituan’s food delivery profit margin has always been around 3%.
Is burning cash to gain market share really worth it?
Competition vs. monopoly — which model better serves consumers?
Are food delivery companies like JD, Meituan, and Grab still worth investing in?
Leave your comments to win tiger coins~
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China’s ongoing food delivery war has dominated headlines recently. According to Bloomberg's estimates, the mutual price-cutting and rivalry between $JD.com(JD)$ and $MEITUAN-W(03690)$ have wiped out around $70 billion USD in combined market value.
According to a report from research firm Momentum Works, $Grab Holdings(GRAB)$ and foodpanda control about 91% of Singapore’s $2.5 billion USD food delivery market, with Grab alone holding a 63% share.
Is burning cash to gain market share really worth it?
Competition vs. monopoly — which model better serves consumers?
Are food delivery companies like JD, Meituan, and Grab still worth investing in?
Leave your comments to win tiger coins~
If a similar war happened in Singapore between Grab and foodpanda, we might enjoy discounts short-term, but risk losing competition long-term. Grab already controls 63% of the market, so dominance could lead to higher prices and less innovation if foodpanda can't keep up.
As an investor, I'm cautious about food delivery companies like JD, Meituan, or Grab. Margins are thin, losses are high, and even Amazon exited the business. Without a clear path to sustainable profit, I’d rather look for opportunities in more scalable, defensible sectors.
@Tiger_SG @Tiger_comments @TigerStars @TigerGPT
Competition between Meituan and JD.com is good for consumers as it means lower prices or food discounts . If Meituan does not have any competition, there is no incentive for them to innovate and try harder .
The same thing goes for Grab and Food Panda .
Market thrives on competition like everything else in life . It brings out the best in everything we do .
@Tiger_SG @Tiger_comments @TigerStars @CaptainTiger @TigerClub
however, it's still a stock I'd stay away from.
@JiaDeName
回头看京东和美团的经验，京东的目标利润率低于5%，美团长期稳定在3%左右，其实说明外卖这个生意并不是“暴利”，要做大不难，要赚钱却极难。如果再通过价格战压低利润率，平台只能靠更多订单去摊薄成本，或向骑手、商家压价。这就形成恶性循环——服务质量下降，用户满意度受损，平台形象受挫。
竞争本身并不是坏事，但无序竞争往往带来短期繁荣、长期混乱。相比之下，有节制的竞争和健康的市场结构反而更能为用户提供长期价值。如果某个平台最终形成垄断，短期内或许体验更流畅，但长期来看涨价几乎是必然。
投资角度来看，像Grab、Foodpanda这类平台，如果靠不断补贴维持增长，那我会很谨慎。只有能在不靠烧钱的前提下，维持用户留存和商家黏性的公司，才具备真正的长期投资价值。现在这个阶段，更像是赌谁能“烧到最后”。