Citigroup: Alibaba's entry into the "instant e-commerce" battle intensifies competition, focusing on whether Pinduoduo will join the fray

Citi released a report stating that on the eve of the May Day Golden Week, the competitive landscape of China's e-commerce and instant retail has intensified further. Alibaba-W (09988.HK) has also joined this "already very fierce" battle by upgrading its instant delivery service and increasing promotional subsidies to compete with JD-SW (09618.HK) and Meituan-W (03690.HK). This move is very timely, as most Chinese people will be traveling, shopping, or gathering during the holiday. In addition to not wanting to fall behind JD and Meituan, the bank believes that Alibaba's action may also aim to demonstrate a "good corporate citizen image." The biggest beneficiaries will be consumers and merchants.

The bank pointed out that the platform meets the "requirements" to support consumption and enhance merchant income, but platform profits and investor interests may be adversely affected. This brings to mind the brutal scenes from a few years ago during the community group buying war. If Pinduoduo (PDD.US) also joins the fray later, the situation will become even more noteworthy. The most affected may be Meituan, followed by JD, as Alibaba has a higher gross margin, and Ele.me's contribution is relatively small.

Alibaba has upgraded Taobao's "Hourly Delivery" to "Taobao Business Purchase." According to domestic media, Taobao Tmall's instant delivery service "Hourly Delivery" has officially been upgraded to "Taobao Business Purchase," allowing users to access this feature directly from the Taobao App homepage. Reports indicate that "Taobao Business Purchase" has launched in 50 cities on its first day and plans to achieve nationwide coverage by May 6. Taobao also announced that it will provide "substantial" subsidies to consumers during the initial launch period of "Taobao Business Purchase." The upgraded "Taobao Business Purchase" will jointly carry out subsidy activities with Ele.me, including red envelopes, commission waivers, and large order discounts. In addition, Ele.me will open and integrate its product resources with "Taobao Business Purchase," while "Taobao Business Purchase" will utilize Taobao and Tmall's brand merchant network, local warehouses, and offline stores to provide a low-cost instant retail delivery experience. Overall, Taobao will integrate all instant retail resources from Ele.me, Hema, as well as Taobao and Tmall, aiming to cover 200 core brands in the future. Currently, over 3 million merchants are participating in the "Taobao Hourly Delivery" service, covering various categories such as electronics, clothing, fast-moving consumer goods, fresh food, pet supplies, and toys