Source | Juchao WAVE

It may be that major e-commerce giants more or less agree with this, so to maintain sustained performance growth, they generally choose to continuously expand new businesses—stories about food delivery and AI-empowered e-commerce have thus unfolded.

But the true value of the retail industry seems, under the rendering of such pessimistic rhetoric, to be somewhat forgotten. From financial data, retail has always been the most important foundation for these giants—whether it's Alibaba investing heavily in AI or JD.com sacrificing profits for food delivery.

On the contrary, content platforms like Xiaohongshu, ByteDance, and Kuaishou, which have entered the scene not long ago, continue to invest in e-commerce businesses, and even emerging AI platforms covet mature e-commerce businesses.

Only Pinduoduo's choice is somewhat unconventional, quietly retaining its profits.

To some extent, the relationship between e-commerce platforms and e-commerce businesses is like a besieged city: business penetration has hit a physical ceiling, making those inside want to venture out for new horizons—typical examples being traditional e-commerce's investment in AI—but because the overall market is too large, those outside are eager to squeeze in, especially content platforms and AI companies, which show strong interest in e-commerce and see it as a necessary path.

But the problem is that the fundamental competitiveness of retail has always been price. No matter how e-commerce platforms plan for the future and seek transformation, their customers care most about price, always about whether they can conveniently buy quality goods at low prices on the platform. If they fail to do this, they may be abandoned by consumers before being eliminated by AI.

Even if they are already players with hundreds of billions or trillions in scale, surviving the new round of e-commerce industry shakeout remains extremely difficult, like walking on thin ice. Maximizing long-term value is not easy, just as Suning and Gome were once at their peak, but ultimately those billions or tens of billions in profits turned into short-term gains.

Burning Money

To understand the various moves of e-commerce platforms this year, we must first clarify a question:

Is there a ceiling to the total scale of China's e-commerce market?

Data from the National Bureau of Statistics shows that from January to October, online retail sales of physical goods in China grew by 6.3%, a significant slowdown compared to previous years, accounting for 25.2% of total retail sales of consumer goods. Internationally, China's overall e-commerce penetration rate has reached 25%, significantly higher than developed countries like the United States and Japan.

The advantage of e-commerce lies in the large-scale transaction of standardized goods. However, the more developed an economy is, the larger the proportion of service expenditures (such as education, healthcare, tourism, entertainment) in residents' consumption.

These service expenditures are difficult to "move online" and can only be consumed offline, reflected in the internet economy as the so-called local life services. Therefore, the future competitive strategy of internet companies cannot be a zero-sum game between online and offline, but rather promote deep integration of online and offline.

The essence of instant retail is e-commerce. With the resolution of last-mile logistics issues, the boundary between local life services and e-commerce has become increasingly blurred, so the competition among giants like JD.com can be said to be timely.

In the old business of food delivery, which has low profit margins and low technological content, everyone has burned money to fight a new battle.

According to statistics, Alibaba, JD.com, and Meituan collectively consumed 80 billion yuan in food delivery subsidies in the second and third quarters of this year. The capital market was not optimistic about this expensive burning war from the start, and concerns were validated in Q3 financial reports.

However, JD.com disclosed in its Q3 report that the conversion rate of its food delivery users to other businesses is nearly 50%, explaining why it continues to invest in instant retail despite short-term profit pressure.

Logistics resources and rider teams are crucial to winning the future instant retail battle. JD.com injects high-frequency food delivery orders into its logistics network, which can fill delivery troughs, improve overall utilization of warehousing, trunk lines, and last-mile capacity, thereby spreading costs and further enhancing the combat effectiveness of rider teams.

If JD.com doesn't do this, Meituan might do it even more aggressively from another direction. This is absolutely what Liu Qiangdong does not want to see.

In contrast, "e-commerce leader" Alibaba's vision for a second growth curve is more radical. Its investment in food delivery is just a few tens of billions in disguised marketing expenses, while its investment in AI infrastructure is conservatively estimated at 380 billion yuan over three years, almost an all-in without regard for cost.

However, this approach of expanding business boundaries at all costs also reflects, from another level, how severe the growth anxiety in the entire e-commerce industry is now.

Returns

The seemingly thriving new generation of internet companies—represented by content platforms like Douyin, Kuaishou, and Xiaohongshu—also have concrete anxiety about growth, and they choose to attack both e-commerce and AI businesses simultaneously.

The anxiety of content platforms comes not only from growth needs but also from the limitations of their business models. After all, the current model of relying purely on advertising monetization looks highly profitable, but the ceiling is also quite obvious.

As the most important "traffic middlemen," content platforms' advertising revenue essentially sells users' attention to advertisers such as e-commerce platforms and brands. This is a typical cyclical industry, where budget size is directly related to corporate confidence and profit levels, and advertising budgets are often the first to be cut during economic downturns.

In contrast, commission income from e-commerce transactions is tied to more fundamental consumer demand. Although it is also affected by the economy, its volatility is relatively smaller than the discretionary advertising budgets of companies.

By building a self-contained e-commerce loop, content platforms can convert their traffic internal circulation into a commercial internal circulation, profiting multiple times and at multiple levels from a single transaction—including commissions, payment fees, logistics services, merchant SaaS tools, etc.—thereby deeply mining single-user value and breaking through the ceiling of per-capita advertising revenue.

Kuaishou's Q3 financial data is very illustrative. In this quarter, Kuaishou's total revenue increased by 14.2% year-on-year to 35.6 billion yuan, and e-commerce became the key driver for its core commercial revenue to grow at a higher rate (19.2%).

Not long ago, OpenAI launched an instant checkout feature, further proving that e-commerce, or real goods transactions, remains the most core and certain profit model in the internet world.

As a typical AI company, OpenAI has long coveted the e-commerce business. In April this year, it introduced a product recommendation feature in ChatGPT, but users still had to jump to external platforms to make purchases. By September, it officially launched the instant checkout feature, relying on partners like Etsy, Shopify, and Walmart for fulfillment.

Although the e-commerce business is still in its infancy, given ChatGPT's 700 million weekly active users and 75.6 million conversations about products, the capability of AI companies to do e-commerce should not be underestimated. Moreover, the capital market will inevitably be eager to give positive evaluations to all related changes.

The current industry consensus is that the degree of AI adoption has become a key variable determining the long-term competitive direction. It is not only a tool to improve operational efficiency but also a fundamental force to reconstruct the "people, goods, and places" framework.

The current strategic moves of e-commerce platforms and content platforms mean they all want to step on the corpses of competitors to enter the next cycle, not just be used as tools.

Therefore, the most intense and targeted competition with Alibaba now is actually ByteDance, not Tencent.

In e-commerce, Douyin's GMV has exceeded 4 trillion yuan, directly squeezing the market share of Taobao and Tmall (whose GMV is about 8 trillion yuan). In AI entry points, Doubao and Qianwen apps are competing for the top spot among domestic AI applications. Even Alibaba just launched Kuaike glasses, and ByteDance launched Doubao phones.

As ByteDance's valuation exceeds Alibaba's to reach $480 billion, the battle between the two giants in the AI e-commerce battlefield will only become more real.

Return

AI e-commerce: is the focus on AI or e-commerce? That is a question.

Similarly, when traffic dividends peak and the market enters a stock game, a fundamental strategic question is placed before all internet companies: should they position themselves as technology companies constantly pursuing growth, or return to the essence of business and more firmly define themselves as retail enterprises?

In the past, internet companies were keen on telling technology stories, skilled at using high-investment, high-risk models to win winner-take-all excess returns. Whether it was the early subsidy wars to establish industry patterns or the current arms race in AI large models, this logic is reflected.

However, during economic downturns, high investment does not necessarily bring high returns, but it likely brings high risks. This has already been reflected in the giants actively competing in food delivery.

As of the end of September 2025, JD.com's cash and short-term investments totaled 198.272 billion yuan. Alibaba remains the "cash king," with total cash and other current investments of 573.889 billion yuan, still ranking first in cash flow across the industry. Meituan's situation is more severe, with intense competition leading to faster cash consumption.

Compared to these Chinese e-commerce companies in fierce competition, retail giants in the standard sense appear much more stable.

Retail companies typically have very low gross margins and must rely on huge sales scale and extremely fast inventory turnover to profit, requiring ample working capital. Moreover, during economic downturns, sufficient cash means they can pay suppliers in advance to obtain larger discounts and supply chain power.

Walmart, the king of retail, is globally recognized as a cash management master. Its classic cash conversion cycle is negative year-round, meaning Walmart pays suppliers only after selling goods and receiving customer payments. This cash strength ensures Walmart can withstand long-term low-price competition and squeeze competitors' profit margins.

The low-price strategy is the foundation of the retail industry. So over the years, Walmart seems never to get involved in concepts like new retail or artificial intelligence, instead focusing all resources on building sustainable low-price capabilities. After all, the appeal of quality goods at low prices to consumers never goes out of style.

Therefore, ensuring quality goods at low prices on the supply side is the most critical basic skill for retail enterprises. In this regard, companies backed by China's manufacturing base generally have a relatively solid foundation. The vast number of manufacturing enterprises and industrial belts specializing in specific products are the most important foundation for these large domestic and foreign channels.

Attention to the supply chain and extreme insistence on cost-effectiveness may not be as sexy as stories of investing hundreds of billions in AI or tens of billions in instant retail, but they align with the consistent logic of the retail industry throughout its long history:

Enterprises can seize new scenarios through rapid change, but ultimately, they must return to the essence of the industry to obtain true long-term revenue and long-term value.

【Moving Towards the C-End】The 11th China FMCG Conference Time: March 16-18, 2026 Location: Chengdu, China