The Great Delivery War Of China

Summary

The ‘great delivery war’ in China sees three tech giants—JD, Mtoan, and Alibaba—battling for dominance in the fiercely competitive food delivery market. JD, traditionally known for electronics, enters the fight with innovative policies and aggressive discounts, while Mtoan and Alibaba fiercely defend their territories. The war escalates with massive discounts, corporate clashes, and surprising strategies, including social insurance for riders and free deliveries. Amid these fierce tactics, stock prices plunge, and rumors suggest new players like Pindoo might join the fray. The intense competition reshapes China’s food delivery landscape, promising unpredictable outcomes.

Takeaways

• 😀 The 'Great Delivery War' is a fierce competition among major Chinese tech giants—Alibaba, Mtoan, and JD—fighting for dominance in the food delivery market.
• 😀 Alibaba’s 'Are You Hungry?' (also known as the Blue Uniform People) captures about one-third of the market share in food delivery, ranking second in the industry.
• 😀 Mtoan, originally a group-buying platform, holds two-thirds of the market share and has historically had direct competition with Alibaba's food delivery service.
• 😀 JD, initially focused on electronics, entered the food delivery market by creating a nationwide logistics network but is not as dominant in the food sector.
• 😀 The battle between Alibaba and Mtoan is complicated by JD’s unique position and strategy, with JD avoiding direct competition with food delivery until recently.
• 😀 JD's entrance into the market has escalated tensions, especially after offering massive discounts, which sparked a massive social media frenzy and further competition.
• 😀 Mtoan has a significant advantage with the majority market share, meaning it can set delivery fees and dictate pricing across the industry.
• 😀 The competition grew fierce when JD began offering low fees for vendors and improved working conditions for riders, forcing Mtoan to respond with its own benefits for employees.
• 😀 Public bashing between executives of JD and Mtoan highlights the personal rivalries and tensions in the tech space, with both companies using each other's weaknesses as ammunition.
• 😀 Despite the heavy financial hits and stock price drops from these aggressive tactics, the 'Great Delivery War' continues, with rumors of other companies, like Pindoo, entering the market.

Q & A

What is the main theme of the script?

The script revolves around the intense competition in China's food delivery industry, with a particular focus on the rivalry between major tech giants JD, Alibaba (Are You Hungry?), and Mtoan. It highlights their strategies, clashes, and efforts to dominate the market.

Why does JD focus on a logistics network instead of food delivery at first?

JD initially focused on selling electronics and building a nationwide logistics network, steering clear of groceries and food delivery due to the dominance of Mtoan in the food delivery space. Mtoan held a significant market share, making it difficult for new entrants to compete.

How did Mtoan gain its market dominance in food delivery?

Mtoan emerged as a dominant player by capturing two-thirds of the food delivery market after surviving the 'Thousand Groupon War.' It successfully outlasted numerous competitors in the early years and established itself as a leader in food delivery.

What was JD's response to Mtoan's market control?

JD initially stayed out of the food delivery competition but later decided to enter the market with competitive offerings. It aimed to disrupt the status quo by introducing low fees for vendors, insurance for riders, and fair work policies, challenging the existing players.

How did Mtoan react to JD's entry into the food delivery market?

Mtoan responded aggressively to JD's entry by introducing measures to stabilize its workforce, such as canceling penalties for late deliveries and ensuring that riders received social insurance coverage. This was seen as a defensive move to maintain its dominance.

What role did discounts and promotions play in the competition?

Discounts and promotions played a crucial role in the ongoing battle. Both JD and Mtoan launched massive campaigns, offering steep discounts to attract consumers. JD, for instance, released nationwide discounts, while Mtoan responded with similar offers, leading to a price war that hurt the profitability of all involved.

What is the significance of the 'Three Kingdoms' reference in the script?

The 'Three Kingdoms' reference draws a parallel between the modern competition in China's tech industry and the historical Three Kingdoms period in ancient China, where three powerful factions competed for dominance. The phrase highlights the intense and strategic nature of the rivalry.

How did JD criticize Mtoan in their public response?

JD publicly criticized Mtoan for exploiting delivery drivers, accusing them of not paying social insurance and housing funds, while also turning a blind eye to safety issues. JD's letter emphasized that Mtoan's actions could lead to long-term consequences, invoking the saying, 'Water can carry a boat, but it can also capsize it.'

Why did JD and Mtoan both release massive stimulus campaigns?

Both JD and Mtoan launched massive stimulus campaigns to entice consumers and maintain their market share. These campaigns, involving discounts and special offers, were part of the larger strategy to secure customer loyalty and outpace competitors, despite draining profits.

How did the food delivery market in China respond to the increasing competition?

As the competition escalated, the food delivery market saw a surge in demand, leading to overloaded vendors and delivery drivers. Some shops had to close early due to stock shortages, while some riders earned a week's worth of wages in a few hours. However, the competition also led to significant losses for the companies involved, with stock prices hitting historical lows.