JD.com's "0 Commission" disrupts the market, and the takeout industry is once again filled with smoke

Under the temptation of the huge cake of instant retail, the takeaway market is welcoming a new round of competition.

On February 11, "JD.com Takeaway" announced the launch of the recruitment for "Quality Dine-in Restaurant Merchants." Merchants who settle in before May 1, 2025, will be exempt from commission for the entire year, and the commission for signed merchants will also be adjusted to zero commission starting from 0:00 on February 11.

In fact, JD.com began testing the waters of the takeaway business as early as October last year. At that time, JD.com's "Instant Delivery" channel launched coffee, milk tea, and fast food takeout, promoting a commission rate of 5%.

Now, by attracting merchants with a year-long commission exemption, JD.com has officially sounded the horn for its attack on the takeaway market.

For more than a decade, the takeaway market has formed a duopoly led by Meituan and Ele.me, and it is not easy for anyone to shake this up. This also means that JD.com needs a tremendous determination to enter the takeaway business. On one hand, it needs to attract more merchants, and on the other hand, it must cultivate user awareness, which undoubtedly requires more resources and time in the early stages.

Takeaway may not be JD.com's comfort zone, but stepping out of the comfort zone to seek greater growth is something JD.com must do.

Essentially, behind the move into takeaway is JD.com's recognition of the greater potential in the instant retail market.

According to the "2022 China Instant Retail Development Report" released by the China Chain Store & Franchise Association, the market scale growth rate of instant retail has reached 81% over the past five years. It is expected that by 2025, the scale of the instant retail open platform model will exceed the trillion yuan threshold, reaching approximately 1.2 trillion yuan.

Looking at the long term, JD.com, which needs traffic and growth, has been focusing on instant retail. In 2023, JD.com’s instant retail service was renamed "JD.com Hourly Delivery," making users' understanding of JD.com's instant retail clearer; in 2024, JD Retail designated instant retail as one of its three "winning battles." In May, JD.com integrated JD.com Hourly Delivery and JD.com Home Delivery to launch JD.com "Instant Delivery." During this period, "the first stock of instant retail," Dada Group, also returned to JD.com, fully integrating into JD.com's instant retail business.

It is important to note that the biggest pain point in the current instant retail industry is the severe shortage of product supply, making it difficult to meet the diverse instant shopping needs of consumers. This is a lesson that every player, including JD.com, needs to learn.

From Douyin and Kuaishou to now JD.com, the flames of instant retail are burning hotter. This is destined to be a marathon; behind the chaos, the test is the comprehensive strength of each player, and it is not easy to laugh last.

1 Commission Recruitment, JD.com Takeaway Aims to Be the Catalyzer

"Join now, zero commission for the whole year."

On February 11, JD.com officially launched the recruitment for "Quality Dine-in Restaurant Merchants," and the takeaway market has officially welcomed a "heavyweight" disruptor

Source: JD.com Blackboard News WeChat Official Account

The so-called "0 commission" is undoubtedly a boon for merchants. In recent years, the takeaway industry has seen numerous controversies, mostly revolving around platform commission rates and rider welfare issues.

Generally speaking, commissions are the technical service fees mentioned by the platform, which include costs for information display services, transaction services, business services, customer service, IT operation and maintenance services, research and development costs, and customer service costs that merchants enjoy when operating through takeaway platforms.

This time, JD.com’s "0 commission" slogan acts like a catfish, stirring up new changes in the takeaway industry. An informed source stated that "0 commission" is currently being implemented in some cities, mainly in Beijing. Merchants outside Beijing need to submit an application to join, sign a contract with the platform, and wait for the corresponding city to be launched before going online.

Of course, the focus of external attention, in addition to commissions, also involves various aspects such as brand variety, delivery fulfillment, and service experience.

As mentioned by JD.com, this round of recruitment is for "quality dine-in restaurant merchants." What does "quality" mean? How to ensure that merchants have dine-in business?

According to sources close to JD.com, the entry of these "quality dine-in restaurant merchants" is ensured through the verification of business licenses, inspection of store photos, and offline visits by sales personnel; subsequently, the comprehensive review capability will continue to be enhanced to provide consumers with quality takeaway options.

According to observations from Lianxian Insight, the merchants on JD.com’s takeaway platform mainly focus on coffee, milk tea, marinated snacks, Western fast food, Chinese fast food, and fried chicken snacks. This includes nationally renowned chain brands such as Luckin Coffee, Mixue Ice City, Juewei Duck Neck, and Haidilao Delivery.

From this perspective, JD.com’s approach to takeaway is somewhat similar to its approach to e-commerce. Currently, JD.com’s takeaway is limited to "quality dine-in restaurants," just as JD.com initially differentiated itself in e-commerce with self-operated and quality offerings.

However, takeaway is different from e-commerce; the former is high-frequency and a necessity, making quality important, but merchant service and fulfillment speed are equally crucial. Previously, Baidu, Didi, and Douyin have all attempted to enter the takeaway market but were largely constrained by delivery fulfillment capabilities, failing to make significant waves.

For JD.com, in terms of delivery, the platform currently offers two delivery methods: "merchant self-delivery" and "Dada Express," with delivery prices ranging from 2 yuan to 30 yuan.

This also means that, in addition to merchant self-delivery, the support for JD.com’s takeaway delivery system comes from "the first stock of instant retail," Dada, which has always been an important piece in JD.com’s layout of instant retail.

In March last year, after JD.com launched the "Express Delivery" channel, it promoted the slogan "delivered in as fast as 9 minutes"; two months later, Dada Group announced that its business would fully integrate into the JD.com ecosystem, with the original instant retail brands JD.com Hourly Delivery and JD.com Home Delivery being fully integrated and upgraded to "JD.com Express Delivery."

In the two major regions of Beijing and Shanghai, Express Delivery has been upgraded to a primary entry point on the JD.com APP homepage, with coffee, milk tea, and takeaway listed as primary entry points for Express Delivery Essentially, JD.com’s food delivery service aims to strengthen user mindset education. After all, JD.com has deeply established its e-commerce business over the years, and food delivery is a new venture.

However, JD.com’s food delivery has not yet formed a scale in terms of user mindset and merchant habits. On February 12, a tea beverage merchant told Lianxian Insight that their store received its first order from JD.com’s food delivery that afternoon.

It is foreseeable that in the short term, the number of users for JD.com’s food delivery is relatively small, and the incremental orders for store delivery are not significant, making it difficult for merchants to treat JD.com’s food delivery as a core channel in the short term.

But JD.com is determined to enter the food delivery market. With zero commission, having an additional platform competing is a deeper benefit for the industry. Merchants have greater choice in platform entry, consumers have more options, and the food delivery market will form a healthier supply-demand balance amid fierce competition.

2 Food Delivery is a Tough Business, What are JD.com’s Advantages and Disadvantages?

The food delivery business is actually not easy to operate.

This market has now matured, and Meituan and Ele.me have long dominated the industry.

Previously, other platforms with a large user base, such as Douyin and Kuaishou, have also attempted to enter the food delivery business, but they cannot be considered successful to date.

Among them, Douyin has frequently adjusted its food delivery business in 2024, including organizational restructuring of its life services department, transferring delivery operations to the Douyin Store Home delivery platform, and returning the food delivery business to local life services, etc. However, its presence in the food delivery business remains low.

As a later entrant, JD.com also faces challenges in getting started.

Beyond users, the two key layouts for the food delivery business are merchants and delivery riders. JD.com has Dada Express, and previously, JD.com’s e-commerce layout has already left users with the impression of fast delivery, giving JD.com a certain inherent advantage in delivery.

However, in terms of attracting merchants, JD.com is starting almost from scratch.

Previously, although JD.com had already laid out instant delivery services in flowers, daily necessities, medicine, and electronics, food delivery mainly targets the catering industry. In terms of accumulating catering merchants, JD.com is not as strong as Meituan or Ele.me, and even less so than Douyin and Kuaishou.

JD.com’s introduction of a year-round zero-commission policy limited to “quality dine-in restaurants” signals its intention to quickly cover large dine-in brands in the catering industry and expand its merchant team on the platform.

Moreover, providing year-round zero-commission benefits to so many “quality dine-in restaurants” and their various locations means that JD.com will lose a significant amount of commission revenue for at least a year, coupled with other investments during market expansion, JD.com will incur considerable costs.

In terms of users, JD.com has both advantages and disadvantages.

According to JD Group's Q3 2024 earnings report, the group’s quarterly active user count and shopping frequency have maintained double-digit year-on-year growth for three consecutive quarters, with revenue accelerating to 260.4 billion RMB According to data from 2022, the user base of the JD.com app had already approached 600 million, with core users concentrated in first- and second-tier cities, highly overlapping with the main consumer group for food delivery.

However, despite this, the impression that the JD.com app gives users is still that of an e-commerce platform, and users generally do not have the habit of using JD.com for food delivery. Whether such a large number of active users can effectively convert into active users for food delivery services remains an unknown.

At the same time, limiting to "quality dine-in restaurants" also makes JD.com's food delivery coverage of small and medium-sized businesses limited, resulting in a relatively small selection of products on the platform, making it difficult to meet the diverse needs of consumers.

Moreover, JD.com's food delivery, which is just getting started, offers users less substantial subsidies compared to competitors.

However, JD.com's food delivery is still in the preparation stage. From a cost control perspective, JD.com also has certain advantages.

Previously, the merchant system and warehousing and supply chain capabilities accumulated by the company may help JD.com better establish cooperation with food delivery merchants in procurement, distribution, and other aspects, accelerating the onboarding process for merchants and providing JD.com with greater flexibility in addressing the generally high cost issues in the food delivery industry.

Overall, for JD.com’s food delivery to succeed, it needs to put in more effort at every stage.

3 Seizing the Instant Retail Cake, JD.com Must Act Fast

JD.com’s entry into food delivery may be aimed at enhancing its user perception in the instant retail sector.

In recent years, the instant retail market has grown rapidly, and many platforms have recognized the potential in this area and have been increasing their investments.

JD.com is also ramping up its investment in instant retail.

Before 2023, JD.com completed the merger of Dada and JD Daojia, and the merged Dada Group successfully went public in the U.S. in 2020.

In 2023, JD.com’s instant retail service was unified under the name "JD.com Hourly Delivery"; in 2024, it was renamed "JD.com Second Delivery." In the same year, JD.com Second Delivery launched a "Coffee and Milk Tea" section and gradually covered in-store group purchases, fresh markets, medicine, flowers, and more in some cities.

On November 1, 2024, JD.com Seven Fresh launched the "Breakthrough! Not Afraid of Comparison" campaign during Double Eleven, implementing a low-price strategy for fresh products in JD.com Second Delivery.

During the campaign, some meat, eggs, milk, rice, and other products were set at a flash sale price of 0.99 yuan, with some products discounted by up to 50%. On November 15, JD.com Seven Fresh announced that "from now on, products in the JD.com Seven Fresh price breakthrough section will be 10% cheaper than the average of other retail platforms, and if competitors match the price, Seven Fresh will continue to lower prices."

The effect of the low-price strategy was immediate.

During the Double Eleven period in 2024, the order volume for JD.com Second Delivery reached a historical peak, with over 600,000 stores participating in JD.com 11.11 through JD.com Second Delivery, and the number of stores increased by over 70% year-on-year.

JD.com also understands that in the instant retail sector, the speed of layout must be fast. This recent push into food delivery is an important step for JD.com to improve its instant retail offerings In the instant retail sector, different categories of products have their own consumption scenarios and demand characteristics. Among them, the takeaway business mainly meets consumers' immediate demand for dining, while categories such as fresh produce and daily necessities cover other aspects of daily life.

JD.com incorporates takeaway services into its instant retail landscape, making it easier to achieve complementary advantages between categories.

From a delivery perspective, JD.com's delivery system can handle the delivery of fresh products while also accommodating takeaway deliveries, improving delivery efficiency and reducing delivery costs.

Moreover, if JD.com's business layout in takeaway can be successfully implemented, the shopping process for users may be further simplified, and JD.com is expected to become one of the first platforms capable of meeting consumers' one-stop shopping needs.

Furthermore, considering JD.com's investment in expanding its takeaway business, its determination cannot be underestimated.

The one-year commission-free policy is highly attractive to merchants, and most "quality dine-in restaurants" are unlikely to refuse it. Insight has also observed on social media platforms that many small and medium-sized businesses are inquiring about how to join JD.com's takeaway service.

In the future, having gathered enough merchants, JD.com may not hesitate to subsidize users, just like its low-price strategy during last year's Double Eleven shopping festival.

JD.com's entry into the takeaway market is essentially a competition for users' immediate needs, with the core logic being to leverage high-frequency consumption to drive low-frequency traffic, thereby reconstructing the retail ecosystem in instant scenarios.

With the improvement of the delivery network and the establishment of user habits, JD.com may indeed be able to carve out a new business breakthrough through takeaway services.

Author: Wang Huiying, Dou Wenxue, Source: Insight, Original Title: "JD.com’s '0 Commission' Disruption, Takeaway Market Smoke Rises Again"

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