Alibaba steps up bat­tle with Meituan-Dian­ping

China Daily (Hong Kong) - - BUSINESS - By HE WEI in Shang­hai hewei@chi­nadaily.com.cn

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”.

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