What signals are being sent by Meituan's acquisition of Dingdong Maicai?

On February 5th, Meituan announced on the Hong Kong Stock Exchange that it will acquire 100% equity of Dingdong Maicai’s China operations for an initial consideration of approximately $717 million. Meituan stated that this acquisition will help fully leverage both parties’ advantages in product strength, technology, operations, and other areas, providing consumers with a better shopping and delivery experience.

On the same day, Dingdong Maicai confirmed to reporters from The Beijing News that Meituan is acquiring Dingdong Maicai, with an overall valuation close to $1 billion. “Currently, the company’s business and team are operating normally and stably.”

Industry insiders see Meituan’s acquisition of Dingdong Maicai as an important step to enhance the supply chain. The trillion-yuan instant retail market, along with supply chain and front warehouse logistics, are key elements in industry competition. Through this acquisition, both sides can combine their supply chain scale effects to develop a new efficiency model.

Continuing Existing Models During the Transition Period

The news of Meituan’s acquisition of 100% of Dingdong Maicai’s China business has attracted attention. It is understood that overseas operations are not included in this transaction and will be divested before the deal is finalized. During the transition period, Dingdong Maicai will continue to operate under its pre-acquisition model.

Regarding the considerations behind this acquisition, Meituan mentioned in its announcement that the company highly values the instant retail business. Dingdong Maicai’s pursuit of the理念“Good users, good products, good service, good mindset” aligns well with Meituan’s mission to “Help everyone eat better, live better.” This acquisition will help fully leverage both parties’ advantages in product strength, technology, and operations, providing consumers with a higher quality shopping and delivery experience.

Latest financial reports show that Dingdong Maicai achieved a GMV of 7.27 billion yuan and revenue of 6.66 billion yuan in Q3 2025, both setting new records. Additionally, the company’s net profit for the quarter was 1.33 billion yuan (GAAP standard). Dingdong Maicai has achieved profitability under Non-GAAP standards for 12 consecutive quarters and under GAAP standards for seven consecutive quarters.

Why is Dingdong Maicai, which has been consistently profitable, being acquired? Dingdong Maicai’s founder and CEO, Liang Changlin, explained some of his considerations in an internal letter, which The Beijing News also confirmed.

In the internal letter, Liang Changlin mentioned that the decision was “carefully deliberated by the board.” “Let me share my thoughts: Dingdong has built a strong supply chain over the years, sourcing over 85% of fresh produce directly from sources, with 12 self-operated factories and 2 self-operated farms. In the past year, our black pork accounts for over 37% of pork consumption, organic vegetables, LOWGI products, and healthy snacks have all grown over 30% year-on-year, and hotpot quick dishes grew 28% compared to last winter. These capabilities are the result of over eight years of painstaking effort, refining each step. As industry peers, Xiaoxiang Supermarket has also achieved strong growth in recent years by sourcing high-quality products, continuously improving user experience, and quickly becoming an industry leader, which aligns with our ‘4G’ strategy.”

Liang Changlin stated that after the merger, Dingdong’s three core competitive advantages—extreme product quality,超预期的服务力, and the efficiency built through the supply chain system—will not disappear but instead will be amplified on a larger platform, “playing a greater role.”

Regarding the most concerned issues of Dingdong Maicai employees—jobs and future—Liang Changlin clarified that Dingdong Maicai’s business and team will remain stable, “Everyone will still have a very stable development platform. Moreover, Meituan’s business scope is very broad, and this merger opens up larger career opportunities for everyone.”

Completing the Jiangsu, Zhejiang, and Shanghai Business Map?

According to public information, Dingdong Maicai was founded in Shanghai in 2017 and is one of the few brands that survived and thrived during the “barbaric growth” era of fresh produce e-commerce. Especially during the pandemic, Dingdong Maicai expanded rapidly and became a leading enterprise in the fresh produce platform sector. Liang Changlin also mentioned this in his internal letter: “In 2017, when Dingdong Maicai was founded, Shanghai already had more than a dozen fresh produce e-commerce companies. We were the latest to enter. No one believed in us at the time, but we found our own way—delivering live fish and shrimp to homes with 29-minute rapid delivery. We succeeded by delivering each order carefully and refining each product, surviving fierce competition.”

In 2021, Dingdong Maicai went public. Two months after listing, the company emphasized “efficiency first, scale second.” Liang Changlin believes this decision “cost us the chance for rapid expansion but saved the company’s life.” By Q4 2022, Dingdong Maicai achieved profitability and has maintained profit for 12 consecutive quarters.

As the money-burning model of fresh produce e-commerce ended, Dingdong Maicai gradually shut down some non-core regional sites and cities in 2023. In 2024, Liang Changlin revealed during the earnings call that Dingdong Maicai will deepen its presence in the Yangtze River Delta and gradually penetrate smaller cities.

In the past two years, Dingdong Maicai has opened over 200 front warehouses, more than 60% of which are located in third- and fourth-tier cities and county-level areas, including Chongming District in Shanghai, Xuancheng and Chuzhou in Anhui, and Shaoxing Shengzhou and Ningbo Ninghai in Zhejiang. By the end of 2025, Dingdong Maicai will have established a presence in 25 county-level markets across Jiangsu, Zhejiang, and Shanghai, with the most recent market being Yancheng in Jiangsu.

Over the past year, Dingdong Maicai’s “home base” advantages in Jiangsu, Zhejiang, and Shanghai have become even more apparent. According to public information, in Q3 2025, GMV in Shanghai and Jiangsu-Zhejiang regions increased by 24.5% and 40% year-on-year, respectively. The average daily warehouse order volume in Shanghai has approached 1,700 orders. The Jiangsu-Zhejiang region is also considered a “must-win” area in retail, with Shanghai always being a weaker region for Xiaoxiang Supermarket.

Industry analysts believe Dingdong Maicai holds over 30% market share in East China, especially in Shanghai, where its influence is significant. It has also built a mature supply chain system in East China, particularly for vegetables and other categories, with strong private label capabilities. Dingdong Maicai’s dense channel coverage in East China can also create value for Meituan. “Channel density affects logistics and fulfillment costs, improves demand forecasting, and enhances fresh produce loss control and ordering accuracy.”

Zhuang Shuai, an industry expert and founder of Bailian Consulting, told The Beijing News that Meituan’s acquisition of Dingdong Maicai strengthens Xiaoxiang Supermarket’s self-operated front warehouses and instant retail business, while increasing market share in Jiangsu, Zhejiang, and Shanghai.

Food industry analyst Zhu Danpeng believes that Meituan’s acquisition of Dingdong Maicai is a “cherry on top” for its instant retail business; for Dingdong Maicai, it is a “lifesaver,” with both sides benefiting and complementing each other. This move will help improve Meituan’s instant retail layout and further strengthen its business map.

The Industry Enters a Stockpile Era Focused on Deepening Supply Chains

According to the Ministry of Commerce’s Research Institute, China’s instant retail market is expected to surpass 1 trillion yuan in 2026 and reach 2 trillion yuan by 2030. The recent “Instant Retail Industry Development Report (2025)” from the E-commerce Research Institute of the Ministry of Commerce indicates that industry competition is shifting from price-driven to user experience-driven. Instant retail is entering a new stage emphasizing efficiency and quality, evolving from “fast fulfillment” to “stable service” and “excellent products,” all supported by a strong supply chain.

Within Meituan’s instant retail business, the main C-end offerings include Meituan Flash Purchase and Xiaoxiang Supermarket. The latter was previously known as “Meituan Maicai” and has been upgraded to a self-operated fresh produce business, making it one of the most frequently used online food delivery services outside restaurant takeout.

According to publicly available data from June 2025, Xiaoxiang Supermarket had nearly 1,000 front warehouses across 20 cities nationwide. As a fresh produce-focused brand, market estimates suggest that in 2025, Xiaoxiang Supermarket’s agricultural product sales will exceed 20 billion yuan. It has also gradually built a mature supply chain and distribution network and continues to expand its private labels.

Previously, Meituan CEO Wang Xing mentioned during the earnings call that in Q2 2025, the company would shift its focus on fresh produce to Xiaoxiang Supermarket, aiming to develop it extensively and expand to all first- and second-tier cities nationwide.

Dingdong Maicai’s supply chain capabilities, nationwide direct sourcing from fresh produce origins, and a user base exceeding 7 million monthly buyers as of September 2025 will also support Meituan’s instant retail expansion.

Zhuang Shuai believes that Meituan’s acquisition of Dingdong Maicai is a crucial way to enhance its supply chain. “The instant retail industry will focus on deepening supply chains and differentiated competition, strengthening private brands, integrating online and offline (300959) operations, and improving in-store and fulfillment experiences—these are key factors for winning in competition.”

In the race of instant retail, front warehouses are a critical infrastructure and a key focus for companies. Some argue that for Meituan, why not build front warehouses independently instead of acquiring?

Zhuang Shuai explained that besides cost considerations, time and payback periods are also important. Dingdong has been profitable for several consecutive quarters, significantly boosting Meituan’s post-tax profits. Additionally, integrating Dingdong with Xiaoxiang will not be overly difficult, as both operate self-managed front warehouses with similar organizational structures and processes. Different key regions can also complement each other.

Lai Yang, a member of the Expert Committee of the China Business Federation and executive vice president of the Beijing Business Economics Society, analyzed for The Beijing News that this is a strategic move to replace “time assets” and “supply chain depth” with capital. The transaction consideration of about $717 million is a high-cost-effective asset package for Dingdong Maicai, which owns over a thousand front warehouses and self-operated factories. While Meituan has a powerful cloud logistics network, it lacks deep physical fresh produce resources. This move allows it to bypass the long ramp-up period of infrastructure development, directly acquiring a mature fresh produce service network and existing customer scale, with a significantly lower overall cost than building from scratch. He added that building a thousand warehouses in core urban areas would face extremely high rent and administrative costs, so acquisition also directly takes over Dingdong’s 7 million users, greatly reducing customer acquisition costs. Furthermore, Dingdong’s “85% source direct sourcing” supply chain capability fills a gap in Meituan’s management of non-standard fresh produce. The overlapping traffic at the same physical sites makes it easy to break through the break-even point of order density per warehouse, achieving scale effects and decreasing marginal costs. Lai Yang also believes this marks a shift in the instant retail industry from a traffic competition to a focus on deepening supply chains.