Alibaba wants control of China’s top takeaway app
Chinese Ecommerce giant Alibaba is making a play for control of the country’s most popular takeaway app, Ele.me (translated: “hungry yet?”). According to an anonymous source, Alibaba wants to use the startup to “shore up its delivery network”. Ele.me runs a fleet of motorbikes around the country that could be a boon to Alibaba’s last-mile ability to deliver parcels to customers’ doorsteps.
Alibaba’s share price is up by an impressive 80% over the last 12 months
SOURCE: Yahoo Finance
The company is hoping to buy out other investors, including fellow tech titan Baidu, and gain ownership of the biggest chunk of Ele.me. If it manages to do so, this would put it in direct competition with Meituan Dianping, the country’s second-biggest online food order-and-delivery service, backed by Tencent, the country’s third and final (for now) tech titan.
The food delivery market is estimated to heave hit 67.7 billion yuan ($10.7 billion) in the fourth quarter of 2017, up 16.2% from the third quarter. If Alibaba closes the deal to buy out Baidu (which is choosing to exit its peripheral businesses and focus on search and advertising) then it will dominate this fast growing industry, alongside Meituan and Tencent.
Steven Zhu, a Shanghai0based analyst with Pacific Epoch, told reporters this could be a detriment to Alibaba’s margin in the short term, but would be worth it in the long term. He said:
“With its online traffic and Koubei business, Alibaba could create a lot of synergy with this acquisition. This would be a drag on the margin, because Alibaba now owns more delivery men and inventory, but it has no choice because long-term wise most consumption still takes place offline.”
Dominion holds Alibaba, Tencent and Baidu in its Global Trends Ecommerce Fund.
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