(Yicai) Feb. 12 -- Chinese 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 up to JD Takeaway by May 1, it was announced yesterday. Beijing-based JD.Com added instant delivery, including takeout services, to its mobile app last month, before the Chinese New Year holiday.

Meituan and Ele.me charge commission fees to restaurants and other businesses for using their platforms. Shares of Meituan [HKG: 3690], the larger of the two by market share, fell 4.1 percent to close at HKD155.20 (USD19.92) in Hong Kong today. Ele.me, which is owned by Alibaba Group Holding, is not listed.

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

A driver who works in Beijing for JD.Com'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 80 food outlets near Yicai's offices in Shanghai, 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 49 minutes, while Meituan and Ele.me both indicate 25 mins. The menu choice is more limited as well, with the restaurant offering only two meals on JD Takeaway, compared with a wide variety and new dishes on Meituan and Ele.me.

JD.Com'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.Com 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 stated that instant retail could potentially capture more than 10 percent of the e-commerce market in the long term.

He added that Meituan sees significant growth opportunities in all Chinese cities and towns where it provides delivery services and will explore ways to further grow the adoption of instant retail.

JD.Com's shares [HKG: 9618] ended 1.5 percent lower at HKD156.10 each in Hong Kong today, paring this year’s gain to almost 18 percent. In pre-market trading in New York, the company’s stock [NASDAQ: JD] was down 1.9 percent at USD40.01 as of 4.59 a.m. local time.

Editor: Emmi Laine