Chinas e-commerce companies are getting singed by a price war

Intensive competition leads to significant cash burning and margin jam.

Analysts foresee profit warnings and downward revisions for large companies

Regulatory printing can prevent aggressive pricing strategies

Shanghaı is expected to suppress the short and medium-term profits even more and contribute to deflationist pressures in the world’s second largest economy to win the “instant retail” battle of the “instant retail” between the major online companies of China.

Alibaba, Meituan and JD.com’s likes, exploding hours of delivery segment to gain market share, burning their money in the process, eating edge gaps and strategy to collect questions from investors fill consumers with discounts and coupons.

In addition, weak real estate prices and weak work stability contributed to the permanent consumer fatigue, the companies pressed aggressive pricing and subsidies to ensure that people spend, and increased examination of a downward price spiral in China.

In recent weeks, e-commerce and food distribution companies have reported earnings for the quarter that ended on June 30, the theme of competition dominant analyst calls and executive comments.

JD.com CEO Sandy XU warned about “extreme competition”, while Meituan CEO Wang Xing pointed to a “new competition phase” and the common CEO of PDD Holdings, and Zhao Jiazhen marked the “further intensifying” industry competition for a quarter.

The first shots were fired at the beginning of this year, JD.com, which Meituan was concerned about the selling movement of a wider range of products, JD.com opened an application to compete with the basic food distribution business of Meituan. Alibaba, who operates the Ele.me Food Distribution application, followed the case by accelerating the investment in the segment.

All three companies promised billions of dollars to gain market share. Nomraura estimated industry -wide cash Burn analysts exceeded $ 4 billion in the second quarter.

“The landscape looks like a more challenging, high -betting chicken game, which player’s first yields can be wasted. We expect this intense competition to continue at least. [Singles’ Day] The Shopping Festival in November. Ken

S&P Global Analysts will spend at least 160 billion yuan for the next 12-18 months to defend or grow the market share in Meituan, JD.com and Alibaba, Food Distribution and Instant retail sales. For the next 12-24 months, he warned that margins were low-probability of healing and warned them about “important downward revisions” for the snow.

It is expected that Meituan’s food distribution is the most difficult to make the most contributes to the income. Analysts, JD.com’s food distribution losses almost eliminated the second quarter profit, while Alibaba was less exposed, instantly formed a smaller part of the retail business.

Pinduoduo, the local platform of the PDD, is largely far from instant retail wear, but the low -cost advantage is eroded by a discount of competitors.

“We do not believe that the profit levels of this quarter are sustainable and that they expect fluctuations in the snow in future neighborhoods.” He said.

Contributing to the margin jam in the current quarter, there will be difficulties to maintain e-commerce revenues from the quarter to the end of June, which includes support from the mid-year ‘618’ shopping festival of China.

Nevertheless, Companies betting that short-term pain is worth long-term earnings, and Jiang Fan, the General Manager of Alibaba’s e-commerce business group, can add 1 trillion yuan to the annual increase in gross goods volume for Alibaba in the next three years in the next three years.

Among the key metrics that need to be followed in the second half are those who immediately show retail users switching to basic e-commerce platforms. JD.com’s three -month active customers increased by more than 40% annually in the second quarter, while Alibaba’s Taobao application saw that monthly active users jumped 25% in the first three weeks of August and helped food distribution user transformation.

Although companies seem ready to dig for a long -term war, these price wars have the chance to stop by external forces.

The organizers have repeatedly warned the platforms against the “Racing from the bottom” competition and led Meituan, Alibaba and JD.com to promise to block price wars in July.

“Companies’ commitments to rationalizing the competitive dynamics of the government’s commitments to the government’s commitment to the government of the government for the government’s in-involution measures, Ying said Moody’s Senior Analyst Ying Wang.

This article was created from an automatic news agency feeding without changing the text.