Alibaba steps up battle with Meituan-Dianping
Alibaba Group Holding Ltd announced on Friday the consolidation of two of its food review and delivery-related businesses, intensifying a battle with Tencent Holdings Ltd-backed rival Meituan-Dianping for dominance of the Chinese market.
Food delivery app Ele.me has merged with restaurant review and lifestyle services platform Koubei, according to Alibaba. The new entity will have a presence across 676 Chinese cities, covering 3.5 million active merchants, the internet giant said in a press release.
The new company stands to benefit from Ele.me's instant delivery fleet of 667,000 deliverymen and Koubei's consumer analytics capabilities derived from its 167 million active users, aiming to promote the digitalization of China's local service market, the company said.
Wang Lei, CEO of Ele.me, will lead the new unit and drive forward its digitalization plan, which envisions guaranteeing a maximum 30-minute door-to-door delivery service for customers within 3 kilometers of their ordered goods.
According to a June report by Chinese research firm iiMedia Research, thanks to its acquisition of Baidu Waimai, Ele.me commanded a 55 percent share of China's food delivery market in the first quarter, compared with Meituan-Dianping's 41 percent.
In April, Alibaba bought the shares it did not already own in Ele.me in an all-cash deal that valued the startup at $9.5 billion. Koubei - launched in 2015 by Alibaba and its payments arm Ant Financial Services Group - has teamed up with various restaurants to help them attract and retain diners through customized incentives.
For instance in July, Koubei helped Singaporean bakery chain BreadTalk Group Ltd install an unmanned outlet, using cameras and sensors to detect when customers open fridge doors and select items. Money is deducted automatically from shoppers' Alipay wallet when they close the fridge door.
Alibaba said the merger comes ahead of the annual Nov 11 shopping extravaganza, for which the company said it anticipates much higher revenue growth to come from online-to-offline shopping experiences, such as food delivery.
The value of online-to-offline transactions in China jumped 72 percent last year to $146 billion, according to Beijing-based research firm Analysys.
"Alibaba and Meituan-Dianping are the two main companies that can offer comprehensive online-to-offline services," said Jia Mo, a research analyst with technology consultancy Canalys.
He said Alibaba's food units, which also include the indigenous data-backed supermarket chain Hema Fresh, are "complementary to each other and there is strategic logic to merging them into one platform to compete with Meituan-Dianping".
