E-COMMERCE giant JD.com is enticing restaurants to join its new food delivery service by offering a year free of commission fees, throwing down the gauntlet to Meituan and Ele.me, the dominant players in this highly competitive market.

Restaurants will not need to pay commission on food orders for an entire year if they join JD Takeaway by May 1, the company announced this week. Beijing-based JD added instant delivery, including takeout services, to its mobile app last month, before the Chinese New Year holiday. In contrast, Meituan and Ele.me charge commission fees from restaurants and other businesses for using their platforms.

A restaurant manager said that their establishment is willing to try JD Takeaway since it has now done away with what is typically a charge of around 25% to cover platform and delivery costs.

A driver who works in Beijing for JD’s on-demand delivery platform Dada Group said JD Takeaway was launched last October, but orders were few and far between and there was no marketing. Orders picked up last month, the person noted.

As a newcomer, JD Takeaway has fewer participating restaurants, mainly fast-food eateries. The app displays around 60 food outlets near Shenzhen Daily offices in Shenzhen’s Futian District, many of them outlets of the same brands, while Meituan and Ele.me offer a much wider variety.

Delivery times are also longer. For one listed restaurant, JD Takeaway shows a delivery time of 39 minutes, while Meituan and Ele.me both indicate 29 minutes. The menu choice is more limited as well, with the restaurant offering 11 dishes on JD Takeaway, compared with a wide variety and new dishes on Meituan and Ele.me.

JD’s takeaway business is more about driving consumption in instant retail and quick delivery channels, aiming to boost growth in the instant retail business, according to Bailian Consulting founder Zhuang Shuai. The company can leverage Dada and its e-commerce logistics infrastructure to support its takeout services, Zhuang said.

According to Zhuang, JD feels threatened by other instant retail platforms. Meituan uses high-frequency businesses such as food takeaways to drive low-frequency e-commerce sales, and in recent years it has expanded quickly in the 3C (computers, communications, and consumer electronics) digital sector. Last year, it linked arms with Xiaomi on phone and smart home product deliveries from thousands of Xiaomi stores.

E-commerce is evolving toward instant delivery. During last year’s third-quarter earnings call, Meituan founder and Chief Executive Wang Xing said that instant retail could potentially capture more than 10% of the e-commerce market in the long term.(SD-Agencies)