The new year’s delicate truce in China’s food-delivery wars has been upended not by a new subsidy blitz but by a quiet reassessment of prices. Merchants on short-video platforms have reported that Taobao Flash Sale (淘宝闪购) has raised commission rates and delivery fees in several provinces, and restructured coupon contributions so stores shoulder a larger share of promotions. The move marks a visible shift from growth-at-all-costs to a phase where platforms are testing their ability to monetise orders.
The timing is revealing. Market estimates of “unit economics” (UE) for competing delivery businesses show Taobao Flash Sale lagging Meituan in per-order profitability even after months of cost optimisation. Broker models diverge — Guosen estimates Meituan at about ¥1.5 profit per order versus ¥0.8 for Taobao Flash Sale; Goldman Sachs and smaller research houses place Taobao Flash Sale’s UE losses in the low single digits of yuan — but the consensus is clear: Taobao still has work to do to catch up on capital efficiency.
That financial gap is being weighed against a larger strategic backdrop. Alibaba is pressing ahead with an ambitious AI push that mirrors the vertical integration of Google’s stack — cloud, chips and applications — and which, according to media reports, may require hundreds of billions of renminbi in capital spending over the coming years. With rivals and suppliers also signaling heavier capex plans, Alibaba has incentive to reallocate cash from lower-return consumer subsidies to higher-priority AI infrastructure.
Operationally, raising commissions and adjusting coupon rules is an effective lever. Delivery businesses carry fixed overheads and per-order subsidy costs that do not scale down as easily when order volumes fall. Improving algorithmic dispatch and route efficiency can help, but those engineering gains take time and data — areas where Meituan still enjoys advantages owing to its scale. In the near term, boosting the take rate from merchants raises revenue per transaction without depending on faster delivery algorithm improvements.
The regulatory environment is nudging platforms in the same direction. New guidance aimed at curbing wasteful competition and “involution” reduces the political appetite for endless discounting. Platforms, therefore, are more likely to rebalance the burden toward merchants, whose switching costs (premises, staffing, menu and procedures) are higher than those of mobile consumers who can easily try another app.
For merchants the effect is immediate and pragmatic. Many restaurants now derive the majority of their delivery business from platforms; faced with higher fees and locked-in promotional obligations that automatically divert part of turnover into non-withdrawable promotion wallets, some will accept margin compression rather than lose volume. That dynamic sustains platforms’ ability to preserve consumer-facing discounts while nudging monetisation onto the supply side.
The change is not a dramatic price shock today, but it is strategic. Small increments in commission rates and coupon contributions, combined with contract clauses that force promotional spend, can materially shift profitability for thousands of SMEs. For consumers the most visible consequence may be fewer aggressive coupons and a gradual normalization of delivery pricing; for couriers and backend operations the focus will shift from sheer volume growth to efficiency and routing improvements.
Longer term, this episode highlights how digital platforms manage trade-offs between growth, profitability and strategic investment. The industry is moving from subsidised expansion to an era of constrained capital and operational discipline, but competition remains unsettled. If platforms can raise take rates without triggering large merchant defections or a consumer backlash, they will improve free cash flow to fund AI and cloud investments. If not, the sector risks renewed price wars or consolidation as stronger balance sheets prevail.