Meituan

Spending 5 billion yuan to swallow Dingdong Fresh—Meituan still came out ahead. On the surface, this money bought assets; in reality, it bought efficiency, a defensive moat, and strategic initiative.

The last independent brand in grocery e-commerce is gone.

On February 5, Meituan released a disclosure as a listed company, announcing it would acquire 100% of Dingdong Fresh’s shares and its China business at an initial price of US$717 million (about RMB 5 billion). After the deal closes, Dingdong Fresh will become Meituan’s indirectly wholly owned subsidiary, and its financial results will be consolidated into Meituan’s financial statements.

This deal size may not rank near the top in the history of internet M&A, but for Dingdong—locked in brutal combat for nearly a decade—it carries a tragic, heroic undertone. Once grouped with MissFresh as the “two giants of the front-warehouse model,” Dingdong Fresh was ultimately absorbed into a tech giant’s empire after nine years of independent operations.

The market had previously been buzzing that JD.com was the most likely buyer of Dingdong—only for that to turn out to be a smokescreen for Meituan’s lightning interception. Meituan has been bleeding in the food delivery war—so why buy Dingdong, whose business overlaps so heavily with its own? Is this move defensive or offensive, a bargain hunt or an added burden? And as fresh grocery e-commerce shifts from “burning cash for scale” to “efficiency decides who lives and who dies,” can Meituan digest Dingdong and deliver a true “1+1>2”?

Why Meituan suddenly made its move

That Dingdong Fresh was looking to sell had long ceased to be a secret; the only unresolved question was who it would sell to.

Since late 2025, Dingdong Fresh founder Liang Changlin had said internally that the domestic front-warehouse fresh-grocery track was no longer one where startups could survive on their own, and selling the company was put on the agenda. At the same time, the market repeatedly reported that JD.com was in talks with Dingdong, seeking to shore up gaps in its instant retail infrastructure through an acquisition.

JD.com was presumably still weighing its options, but behind-the-scenes maneuvering was already underway. On February 5, Meituan dropped a single announcement, declaring it would take Dingdong private for US$717 million—sending shockwaves through the retail market. Why Meituan? And why so suddenly?

According to people familiar with the matter, last year’s repeatedly escalating food delivery war reshaped Meituan’s logic for external investments. In particular, after completing due diligence, JD.com still didn’t sign off for a long time—giving Meituan an opening to seize control of the deal.

From Meituan’s perspective, this was first and foremost a defensive acquisition. At a time when instant retail competition has entered a “infrastructure decides the winner” phase, a front-warehouse network is no longer a simple cost center—it is a strategic asset. If JD were to take over Dingdong, it would effectively obtain an instant-delivery network that covers East China and penetrates Tier 1 and Tier 2 cities, turning it into a forward base for pushing into Meituan’s core territory. Meituan was unwilling to hand over such infrastructure, and even less willing to pay a higher price to defend itself in the future.

Second, this was a crucial step for Meituan to shore up weaknesses in its supply chain. Meituan has formidable delivery capacity, but on the supply-chain side—especially for fresh groceries, a category that is high-frequency, high-waste, and highly demanding in terms of customer experience—it has long lacked depth. Its Xiaoxiang Supermarket also uses a front-warehouse model, but it still lags behind Dingdong, which has been deeply engaged for nearly nine years, in product breadth, direct-from-source procurement capabilities, and quality-control systems.

At a deeper level, Meituan is pushing a comprehensive upgrade of its instant retail strategy. In 2025, Wang Xing already made instant retail a clearly defined core strategy and put forward an ambitious vision spanning “16 major consumption scenarios.” Fresh groceries, as the highest-frequency entry point, are key to connecting the “everything delivered home” set of scenarios. Acquiring Dingdong wouldn’t just be buying warehouses and users—it would be buying a mature fresh-grocery operating system, injecting substantive content into its ambition to “deliver everything.”

Meituan’s move this time reflects its forward-looking judgment about how the industry landscape is evolving. The window for fresh e-commerce players to survive independently is closing. Whether it was Missfresh’s collapse or Dingdong’s choice to “come ashore” steadily even after turning profitable, both show that on a battlefield surrounded by giants, small and mid-sized platforms struggle to hold their ground for long.

Essentially, this is a pivotal positioning play by Meituan ahead of the next phase of the track’s upgrade. If JD were to acquire Dingdong, Meituan would be caught in a two-front squeeze in East China—Hema on the left, JD on the right—and its defensive costs would rise exponentially. In business warfare, the best defense is to buy the piece your opponent wants—one step ahead of them.

Meituan’s Calculus—and Dingdong’s Predicament

This deal may look sudden, but for Dingdong Fresh, which tried to save itself through an “efficiency-first” strategy, it was both a reluctant move and an inevitability of market consolidation.

Dingdong Fresh was founded in May 2017. It entered the fresh-grocery arena with a front-warehouse model and rose quickly on the promise of “direct sourcing from origin + delivery within 30 minutes.” A front warehouse refers to small local depots set up within a three-kilometer radius of residential communities, enabling inventory stocking, picking, and rapid delivery. Its core advantage is speed—but speed comes at a steep price. Warehousing, cold-chain logistics, sorting, and rider fulfillment often cost well over ten yuan per order, becoming a long-term burden it has had to shoulder.

Even so, Dingdong Fresh forced its way through the industry shakeout by relentlessly sticking with the front-warehouse model. Against the backdrop of Yonghui Life’s exit and Missfresh’s collapse, it became one of the few survivors to make it through the capital winter. Financially, Dingdong Fresh posted profits for multiple consecutive quarters; in Q3 2025, it reported revenue of RMB 6.66 billion and net profit of RMB 80 million.

Why would a company that is already profitable be in such a hurry to sell? And is it really worth it for Meituan to acquire a platform that so closely resembles its own business?

To understand this deal, you have to see the hidden risks beneath Dingdong’s halo. Despite turning a profit, Dingdong’s growth has clearly lost momentum. In Q3 2025, its year-on-year revenue growth was only 1.98%, a marked slowdown from the previous two quarters. This suggests that penetration in its core East China market is nearing saturation—trapping it in a regional cage: it can’t break out, and it can’t defend the position for long. After shifting from nationwide expansion to deeper regional cultivation, Dingdong lost the scale-growth narrative; its valuation in the capital markets kept sliding, hovering for a long time in the low range of $500–700 million.

More seriously, the so-called “regional moat” Dingdong talks about is being dismantled by the giants. Meituan’s Xiaoxiang Supermarket has continued to densify its footprint in East China; Hema restarted front-warehouse expansion; and Pinduoduo has been battering the market with low prices. With broader assortments and faster price-matching tactics, rivals have been steadily eroding Dingdong’s user base. Dingdong has tried to respond with “premium differentiation,” focusing on high-end consumers. But higher quality means higher costs, and shoppers in the fresh-grocery market are especially price-sensitive—making this path inherently narrow.

In internal meetings, Liang Changlin repeatedly pressed the executive team with the same question: If Meituan follows up, what do we do?

This scene reflects Dingdong’s anxiety as an independent platform: in the instant-retail battlefield—where business models are highly transparent and capital is deeply involved—any localized innovation is easily replicated by giants at speed, and the differentiated edge startups labor to build is often wiped out within a few subsidy cycles. Liang Changlin’s question wasn’t about tactics; it was about the survival proposition facing independent fresh e-commerce players squeezed into the gaps between giant ecosystems.

By contrast, what Wang Xing saw in Dingdong wasn’t its profit-and-loss statement. A net margin of under 2% is almost negligible in the eyes of a giant. With $717 million, Meituan bought not only Dingdong’s more than 1,000 front warehouses nationwide (about half of them in East China), but also a complete regional operating system—and a proven, high-value user ecosystem.

On the one hand, what Dingdong has built in East China is not merely a dense warehousing network, but a full operating system refined over nine years and deeply embedded in the region’s consumer ecosystem. It combines deep supply-chain capabilities through direct sourcing from production areas, mature and stable quality-control standards, and a precise grasp of East China users’ preferences—exactly the core weakness Meituan’s self-operated business had long struggled to overcome.

On the other hand, what the acquisition brings is not just 7 million monthly active users, but a proven fresh-grocery consumption ecosystem with high stickiness and high repeat purchase rates. These users’ behavioral data and consumption habits—together with the fulfillment-efficiency model and membership-operations playbook that underpin their experience—collectively form a user operating system with immediate commercial value, one Meituan can copy straight away.

If Meituan were to build a network of comparable density from scratch, leaving aside the capital cost, it would take at least 2–3 years. More importantly, switching costs in fresh groceries are extremely high: once regional mindshare is established, it’s very hard for latecomers to pry it loose. Dingdong’s user recognition in the East China market is the kind of trust Meituan couldn’t buy with any amount of subsidies.

Seen from this perspective, Meituan still came out ahead. On the surface, this money bought assets; in reality, it bought efficiency, a defensive moat, and strategic initiative.

For Dingdong’s management, it wasn’t a bad deal either. Cashing out early and exiting with money in hand is, in a sense, the fate of independent fresh-grocery e-commerce—its old rival MissFresh had already written the prequel. Perhaps for Dingdong Fresh’s investors and management, factoring in the $280 million in cash that could be taken out, making a graceful exit at roughly $1 billion was, at the capital level, a clear-eyed cash-out.

Integration challenges

The acquisition is only the beginning of the deal; integration is the real battleground.

The first challenge Meituan faces is how to deal with the internal tug-of-war between two “in-house sons.” Xiaoxiang Supermarket and Dingdong Fresh have similar models, overlapping users, and head-to-head competition across regions, yet they differ in systems, teams, and even corporate culture. A simple merger would inevitably create internal friction; keeping them independent begs the question—where does the synergy come from?

The deeper challenge is this: Meituan must prove that after acquiring Dingdong, it can prevent it from becoming a second “Dada”—that is, a business slowly hollowed out, a team pushed to the sidelines, and ultimately reduced to nothing more than an empty logistics network.

To that end, Meituan is likely to adopt a synergy strategy of “dual brands operating independently + gradual back-end integration.” The Dingdong Fresh app will very likely be retained to preserve its brand salience and user habits in the East China market; Xiaoxiang Supermarket will continue to cover a broader range of categories and usage scenarios. On the back end, the two companies’ supply chains, warehousing systems, and delivery networks will be progressively interconnected.

The most imagination-stretching upside lies in integrating the delivery systems. Dingdong’s fulfillment costs had remained stubbornly high (with a fulfillment expense ratio of about 21.5%), while Meituan has the industry’s most powerful rider network and dispatch system. If Dingdong orders are plugged into Meituan’s capacity pool, it could significantly reduce average delivery cost per order while also raising Meituan riders’ order density and utilization—delivering cost reductions and efficiency gains on both sides.

On the supply-chain front, Meituan can combine Dingdong’s fresh-produce direct-sourcing capabilities with Xiaoxiang’s standardized-goods supply chain to build a richer product mix; at the same time, leveraging Meituan’s larger order volume to negotiate better procurement prices upstream, further strengthening its cost advantage.

However, the integration process is also fraught with risk.

First are organizational and cultural clashes: how will the two companies’ teams be integrated? Can Dingdong employees adapt to Meituan’s pace and culture? Second is the complexity of system integration: connecting orders, warehousing, delivery, and membership systems requires time and technical investment—and could affect the user experience along the way.

In addition, Meituan will need to strike the right balance among multiple business lines, including Dingdong, Xiaoxiang Supermarket, and “flash warehouses.” As a platform model, flash warehouses emphasize rapid expansion and asset-light operations; Xiaoxiang and Dingdong, by contrast, represent the heavier, self-operated model. How the three can be positioned to develop without stepping on one another—and avoid internal friction—will test Meituan’s strategic resolve and operational judgment.

Meituan’s acquisition of Dingdong Fresh marks China’s fresh e-grocery sector entering a “big-tech ecosystem era.” Standalone platforms are gradually exiting the stage; going forward, competition will be an all-around contest among giants such as Meituan, Alibaba, and JD.com—across supply chains, efficiency, and ecosystem synergy.

For Meituan, this deal is a pivotal move to cement its leading position in instant retail. Through Dingdong, Meituan shored up its weakness in fresh supply chains, strengthened its footprint in East China, and, strategically, prevented rivals from becoming stronger.

However, an acquisition is only a means to an end. The real test is whether integration can succeed, whether synergies can actually be realized, and whether Meituan can maintain organizational vitality and financial health through a prolonged war of attrition.

For the industry, this deal signals a complete shift in the logic of competition: the era of cash-burning subsidies is fading, and deep work on efficiency, supply chains, and user experience will become the core. In the second half of the instant retail race, it will be a tug-of-war centered on refined operations. Meituan’s move this time is both a shot in the arm and the starting gun.

A harsher war has just begun.

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