Alibaba acquires food delivery service Ele.me for US$9.5 billion

04/04/2018

China e-commerce titan Alibaba fully acquires startup Ele.me marking further progress in O2O integration

 

Ele.me’s name roughly translates to “Are you hungry?” After this week’s acquisition by Alibaba, food delivery aficionados won’t be hungry for long. In a move to further the integration of online and offline retail space, Alibaba fully acquired the Shanghai-based food delivery startup, plans for which were announced last week. Alibaba and Ant Financial owned 43% of the startup before the acquisition.

The move takes Alibaba’s New Retail initiative one step further. The Ele.me food delivery platform employs approximately three million people to meet founder Zhang Xuhao’s commitment to 30-minute delivery in multiple Chinese cities. As part of Alibaba’s internet empire that places the whole world at Chinese mobile users’ fingertips, the Ele.me platform will bring Alibaba closer to integrating online and offline experience. Zhang Yi, the founder of consultancy iiMedia, told Forbes that Alibaba may put Ele.me drivers to use by delivering consumer packages of all kinds – from food to groceries and convenience store products.

 

Tencent and Alibaba face off in the race for New Retail

 

To the foreign eye, many restaurant stalls in major Chinese cities appear too small to support profitable traffic, or mysteriously empty. That’s because a huge percentage of Chinese restaurants’ business takes place through delivery via mobile app. Similar to the ubiquity of mobile payments, the industry of Chinese food delivery is without parallel and hard to imagine unless experienced first-hand.

The New Retail race between Tencent and Alibaba is on. While Tencent’s key markets are gaming and social media, it’s seeking to keep up with Alibaba’s O2O initiatives by investing in data analytics and mobile payments in physical stores. Tencent owns a stake in Meituan Dianping, a delivery platform and services app that rivals Ele.me, and has also formed retail partnerships with Wanda Commercial malls and Yonghui.

According to CBInsights, Alibaba has formed partnerships with over 6,000 shops across China. Other brick-and-mortar endeavors include its new Hema Supermarket chain, over 60 Tmall pop-up stores, and fully automated store Tmall Supermart.

 

 

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