On the afternoon of February 5, Meituan stunned China’s instant‑retail market by agreeing to buy Dingdong Maicai’s domestic business for roughly 5 billion yuan. The deal abruptly ends the independent trajectory of a start‑up that began in Shanghai in 2017 and became emblematic of the front‑warehouse model that promised sub‑30‑minute delivery for fresh groceries and daily essentials.
Dingdong’s story is one of hard won operational refinement. After a bruising national expansion and a troubled public listing in New York in 2021, the company sharply retrenched to focus on the Jiangsu‑Zhejiang‑Shanghai (Jiangzhehu) region in 2022, prioritising supply‑chain depth, product selection and local efficiency over scale. That pivot paid off: Dingdong reported twelve consecutive quarters of Non‑GAAP profitability and seven quarters of GAAP profitability through the first three quarters of 2025, with more than 1,000 front warehouses and over 7 million monthly purchasing users by September 2025.
Profitability, however, has proved fragile. Dingdong’s margins are wafer‑thin: net profit rates in 2025’s first three quarters were 0.1%, 1.8% and 1.2% respectively. The company’s business relies on a dense, geographically concentrated model that succeeds by matching local tastes with tight fulfilment — a model that does not scale easily and is vulnerable when national platforms unleash subsidy‑led, traffic‑driven campaigns.
Meituan’s motives are primarily defensive. Facing a renewed instant‑retail arms race that flared in the summer of 2025 and looks set to continue into 2026, Meituan sought to prevent competitors — notably Alibaba and JD — from absorbing Dingdong’s regional strength. The acquisition gives Meituan immediate access to Dingdong’s Jiangzhehu market share, warehouse footprint and a curation engine that surfaces locally coveted products and niche imports.
There is strategic logic beyond sheer market share. Dingdong’s distinctive sourcing and product‑development capabilities — from locally popular tofu confections to hard‑to‑find imported biscuits — could help Meituan’s Xiaoxiang (Little Elephant) supermarket brand upgrade its assortment and margins. For Meituan, which has historically let acquisitions operate with a degree of autonomy at first, the challenge will be faster, deeper integration: the company needs to convert Dingdong’s capabilities into nationwide fighting strength before the next summer subsidy season.
The deal also exposes the cultural and operational tensions of consolidation. Dingdong’s ‘small and exquisite’ identity, cultivated in a single‑region, high‑touch model, risks dilution under a large‑platform owner. Dingdong employees, heavily concentrated in Shanghai and responsible for product and fulfilment roles, have been reassured about stability, but analysts warn integration could erode the very qualities that made Dingdong attractive — its curated product mix and brand of local freshness.
More broadly, the acquisition signals that China’s instant‑retail sector is moving out of the experimental phase and into consolidation. The front‑warehouse experiment — once propelled by venture capital’s chase for scale — has shown that selective regional excellence can be profitable, but only up to a point. The next chapter will be defined by which large ecosystems can stitch regional strongholds into national logistics, traffic and loyalty machines without destroying the supply‑chain nuance those strongholds embody.
For consumers, the immediate effect is mixed. Customers in Jiangzhehu may see continuity and possibly more stable inventory as Meituan levers Dingdong’s supply chain; consumers elsewhere will gain no new access. For competitors, the purchase is a warning shot: control of regional supply networks and curated assortments matters as much as fleet size or subsidy budgets when the market resets.