Key Takeaways:
Meituan’s share of China’s instant retail market grew to 53% in March, according to a UBS report, as regulators levied RMB 36 billion in fines across the food delivery sector.
The bank believes the industry is entering a normalization phase with an emphasis on sustainable development, following new regulations and a stated opposition to subsidy wars from regulators.
A UBS monthly tracking report using app traffic statistics showed Meituan’s two-percentage-point market share gain came at the expense of Alibaba's Taobao and JD.com, whose shares fell to 41% and 6%, respectively. The bank estimated Meituan’s average daily orders reached approximately 62 million in March, compared to 52 million for Taobao and 8 million for JD.
The regulatory fines, announced on April 17 by China’s State Administration for Market Regulation for food safety violations, and new rules effective June 1 signal a tougher operating environment. UBS noted this will likely push platforms to focus on execution and operational efficiency over aggressive subsidies.
The report highlighted a recovery in merchant activity following the Spring Festival, with combined average daily orders on the three major platforms reaching 122 million in March, up from 116 million in January and February.
In terms of stock preference, UBS favors Alibaba over JD and Meituan. However, the bank stated that Meituan may stand out among peers as platforms focus on quality, business sustainability, and cross-selling opportunities.
The shift from subsidized growth to a focus on operational efficiency could favor established players like Meituan. Investors will watch for the impact of the new food safety regulations effective June 1 on platform costs and profitability.
This article is for informational purposes only and does not constitute investment advice.
