It is no coincidence that coffee and milk tea have become the “eye of the subsidy storm” of the takeaway war, Taobao flash sale has chosen to launch a “milk tea offensive” to leverage consumers, and JD.com’s quality takeaway has also chosen coffee and milk tea as the entrance to enter the takeaway war, which is not accidental.
The takeaway rivers and lakes, which have been silent for a long time, have once again fallen into a hot battle situation in this early summer.
Following JD.com’s Meituan’s war of words on issues such as “choosing one of the two”, merchant commissions, and rider welfare, JD.com also announced a linkage with the animation IP Pigman, and Liu Qiangdong himself also personally went into battle to deliver food, once again sending this takeaway war to the hot search.
Ele.me, which has always been calm, can no longer sit firmly on Diaoyutai, and launched the “Hunger Supplement of More than 10 Billion” takeaway subsidy plan, and said that it will not fight a war of words in competition, and “only send real benefits”.
In addition, Alibaba also announced that the instant retail business “Hourly Delivery” has been officially upgraded to “Taobao Flash Sale”, and consumers can enter the “Flash Sale” page in the Taobao APP and link to Ele.me’s delivery service.
Not only that, Taobao Flash Sale also issued 100 million milk tea free single cards, and in just 6 days, Ele.me’s single-day takeaway orders from Taobao Flash Sale have exceeded 10 million.
Several major Internet platforms are close to each other, and consumers are happy to watch this “fairy fight”, after all, single-digit price coffee milk tea is rare nowadays, and this wave of wool is “not white”.
However, the rapid progress of the takeaway war has also made coffee and milk tea brands, which were almost out of the price war, roll in again.
For franchisees, the “second war” of coffee and milk tea may not necessarily be a good thing, after all, they have finally adapted to the current price system, and this takeaway war may break this balance again, and this wave of takeaway subsidy dividends may not be successfully undertaken by every merchant.
01 Takeaway Three Kingdoms killing, subsidy eye of the storm
During the past May Day holiday, coffee and milk tea brands were “busy”. According to the data, the sales of many stores across the country increased by more than 1,700% during the May Day period; The order volume of some of Nai Xue’s tea stores surged by more than 300% month-on-month compared with before the holiday.
The takeaway war between Meituan, JD.com, and Ele.me has brought sky-high traffic to major coffee and milk tea brands. According to Ele.me data, within 24 hours of the launch of Taobao flash sale, Cudi Coffee’s orders increased nearly 10 times, and Nai Xue’s tea Ele.me orders increased by 2 times year-on-year.
To achieve these three challenges, product managers will only continue to appreciate
Good product managers are very scarce, and product managers who understand users, business, and data are still in demand when they go out of the Internet. On the contrary, if you only do simple communication, inefficient execution, and shallow thinking, I am afraid that you will not be able to go through the torrent of the next 3-5 years.
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Some users posted takeaway orders on the JD.com platform, and after superimposing coupons and store activities, they can win Cudi’s raw coconut latte for just a penny.
Such a strong subsidy can be traced back to the “Thousand Regiments War” in 2015, when consumers could buy 1 cent pizza and 1 cent hamburger set…… But now it is an ancient legend.
Even in the very hot coffee and milk tea price war in the past two years, “8.8 yuan” is basically the limit of what coffee and milk tea brands can do.
In the final analysis, it is still the “banknote ability” of the capital platform that is easy to use, no wonder consumers applaud this takeaway war, and even said that they can fight for a while, and the wool has not been harvested enough.
However, unlike the previous round of “Thousand Regiments War”, most of this wave of takeaway subsidies are concentrated in the coffee and milk tea track, taking JD.com as an example, its explosive list has almost always been occupied by brands such as Cudi, Gu Ming, and Bawang Chaji.
It is no coincidence that coffee and milk tea have become the “eye of the subsidy storm” of the takeaway war, Taobao flash sale has chosen to launch a “milk tea offensive” to leverage consumers, and JD.com’s quality takeaway has also chosen coffee and milk tea as the entrance to enter the takeaway war, which is not accidental.
Compared with other catering categories, coffee milk tea has the attributes of low customer unit price, high repurchase rate, and wide coverage of scenarios, which makes consumers’ decision-making costs low, thereby more directly stimulating sales.
In addition, in recent years, the new tea and coffee track has ushered in rapid development, and brands such as Luckin, Cudi, and Naixue’s tea have expanded in many cities.
New players like JD.com choose to cut from the coffee and milk tea track, which not only avoids the shortcomings of small and medium-sized merchants’ resources, but also can quickly drain traffic with the scale advantage of chain brands, bringing market share growth with lower subsidy costs.
Of course, the advantages of multi-brand and multi-category coffee and milk tea track can undertake the needs of consumers with different spending power and merchants with different subsidies, and the platform can also adjust the subsidy strategy and commodity structure more flexibly.
The platform is willing to “subsidize” and the brand is willing to “take orders”, which has made the coffee and milk tea track popular in the past month. According to the tea coffee observation report, taking JD.com as an example, its 10 billion subsidy is independently chosen by merchants according to their own business plans, and the subsidy sharing ratio is jointly negotiated by both parties, but JD.com said that the merchant sharing ratio will remain lower than the industry average.
However, at present, no one can say how long this subsidy war will last, and it is still unknown whether all merchants will be able to catch this traffic dividend in the end.
02 Coffee milk tea was forced to go to war
In the coffee and milk tea track, “price war” has become an unavoidable topic in the industry in recent years. Luckin and Cudi hit from 9.9 yuan to 8.8 yuan, but they didn’t expect Mixue Bingcheng’s lucky coffee to directly hit the price to 5.9 yuan.
Even Naixue and Heytea, which once took the high-end route, have also reduced prices in the past two years, pushing the mainstream product line to less than 20 yuan; Starbucks, which has always been cold, will also launch a “15 yuan breakfast combination” in 2023, which is interpreted by the industry as a disguised price reduction.
Red meal big data shows that from 2020 to 2023, the proportion of consumption of new tea brands below 10 yuan will increase from 7.1% to 29.6%; the proportion of more than 20 yuan decreased from 32.7% to 3.6%.
Factors such as weak economy and consumption downgrade have pushed consumers to “disenchant” high-end tea brands, resulting in the unit price of tea coffee falling to the range of 10~15 yuan.
However, as the price war continues to intensify, many brands have not yet tasted the “sweetness” of increasing revenue, but have tasted the “bitterness” of losses first. Taking Luckin as an example, after a year of price wars in 2023, it recorded a net loss of 82.3 million yuan in the first quarter of 2024, ending the previous six consecutive quarters of profit records.
After that, Luckin began to gradually withdraw from the price war, including the cancellation of the “9.9 coupon” that was exchanged for the whole site, and only 10 categories (including non-coffee) were left to participate in the 9.9 yuan discount.
Starbucks, which has been dragged into the price war, has also made it clear that it is not interested in getting involved in the price war, and aims to become the preferred brand in China’s high-end coffee market. According to the International Finance News, Starbucks China’s unit price has declined year-on-year for eight consecutive quarters, but the transaction volume has shown a trend of increasing first and then decreasing, which means that its price reduction cannot significantly stimulate consumption.
Therefore, in this takeaway war, Luckin behaved relatively low-key, and it only retained some 9.9 yuan products on JD.com’s takeaway, rather than hitting the price to a new low of about 5 yuan like Cudi.
Although Starbucks has actively participated in the takeaway war, a significant price reduction is obviously not its main goal, and it hopes to accelerate the penetration of the sinking market through takeaway services and tap new incremental space
At present, Starbucks China has announced that the special star delivery service has officially entered the JD takeaway platform, with the help of JD.com’s channels and logistics, Starbucks can more accurately reach users in the sinking market, further enhance brand influence, and alleviate the pressure of diminishing marginal benefits in the process of store expansion.
However, compared with Luckin and Starbucks, there are many merchants who are willing to be “wooled”, hoping to use the takeaway war to gain new traffic.
Taking Cudi as an example, it announced at a recent joint venture meeting that it will give two new subsidy policies of “high rent and low cup volume” to new stores from May 6 to June 30, covering high-tier cities with high rents and low-tier cities that still need to cultivate the market, so as to further lower the threshold for associates to open stores.
At present, these two new policies may also have something to do with Cudi’s participation in the takeaway war, and comprehensive online reports show that low-price subsidies are not one-sided to bring traffic to Cudi franchisees, and some stores are “losing money and making money”.
Some Cudi franchisees said that JD.com subsidies are not available to all stores, for multi-store franchisees, they get more subsidies, and there are more outlets that can schedule orders, a cup of 5.9 yuan raw coconut latte, multi-store franchisees can get about 10 yuan.
However, for single-store franchisees, it is not only difficult for stores to cope with online orders, but also fewer offline pick-up orders. However, no matter how much the platform subsidizes, after all, offline orders that do not require commissions are more profitable.
03 Tripartite profits are a positive cycle
The takeaway war is still ongoing, but this “second war” of coffee and milk tea seems to have gradually deviated from its original intention.
As platforms such as JD.com and Taobao flash sales continue to increase subsidies, some “wool communities” have begun to teach users how to make coffee for 0 yuan; In order to obtain platform subsidies, some merchants have also started a gray industry of arbitrage and arbitrage.
It can be seen that as the takeaway war continues to begin, platforms and merchants will inevitably need to face the problem of “unsustainable subsidies”.
Whether it is for the platform or the merchant, its own value is not only reflected in the expansion of scale, but in the process of operation, it can enable the platform, merchants and consumers to continue to make profits.
One of the reasons why JD.com’s entry into the takeaway market has attracted so much attention is that it has put the issue of riders’ welfare benefits on the table, breaking the phenomenon of unilateral profits made by food delivery platforms through scale advantages in the past.
If the takeaway subsidy is based on the concession brought by the platform to reduce the delivery fee, the platform takes out the investor’s wallet, or the merchant loses money to buy traffic, the interests of one of the three parties cannot be protected, and the takeaway subsidy model will be difficult to sustain.
On the contrary, the takeaway business can achieve a virtuous circle only when consumers enjoy convenience, merchants receive additional order revenue, riders receive income protection, and the platform also receives traffic blessings through these factors.
Taking Luckin as an example, although it withdrew from the price war last year, its net income in the first quarter of this year was 8.87 billion yuan, a year-on-year increase of 41.2%; the average number of monthly transaction customers reached 74.27 million, a year-on-year increase of 24%. It can be seen that Luckin, which does not fight a price war, is steadily improving its brand mentality.
Of course, for coffee and milk tea brands, takeaway subsidies can bring “limited-time” traffic, and short-term marketing can also take the opportunity to increase brand exposure. But in the long run, it is still unknown whether the “Cudi” can catch and convert more traffic in the takeaway war.
What is certain is that for both platforms and merchants, the temporary low-price carnival is just a “false prosperity”, and the reality of profitability is the “battle for survival” that platforms have to face. Internet platforms have the strength to “run long-distance”, and whether brand merchants should follow for a long time needs to think twice.
