As planned since February, Alibaba will buy all the outstanding shares of Ele.me that it does not already own. Better known for its deliveries of food products, Ele.me claims to be the largest platform for online delivery and local services in China. In an announcement, Alibaba said the deal values Ele.me at $ 9.5 billion. Alibaba, which first invested in Ele.me two years ago, and its subsidiary Ant Small and Micro Financial Services Group currently hold approximately 43% of the company’s outstanding voting shares.
This is the latest in a series of investments and acquisitions by Alibaba to expand its physical retail presence as part of its strategy of “New retail” to combine e-commerce and offline commerce. The purpose of the company is to facilitate the movement (and money) between traditional stores and Alibaba companies like Tmall and Taobao. For example, they can see products in pop-up stores, and then order them on their smartphones for near-home delivery.
Ele.me, which will continue to operate under its own brand, is at its heart a logistics technology company. Founded in 2008, it uses its logistics system to provide services like Fengniao, an express courier service for local deliveries. After the agreement is finalized, Alibaba said that founder and CEO Zhang Zhuhao (also known as Mark Zhang) will become chairman of Ele.me and special adviser to Alibaba Group’s CEO Daniel Zhang on his new sales strategy by retail. Wang Lei, currently vice president of Alibaba Group, will take over as CEO of Ele.me.
In a press release, Zhang said, “Under the leadership of its founder and management team, Ele.me has achieved a leading market share in China’s food delivery sector. Online and local services.Our common belief that New Retail will create more value for customers and merchants has brought us together.For the future, Ele.me can take advantage of the infrastructure. Alibaba in Commerce and
find new synergies with the various activities of Alibaba to add new impetus to the New Retail initiative. “
Bloomberg announced in late February that Alibaba was considering buying the remaining shares of Ele.me from its other investors, including Baidu.
The agreement deepens Alibaba’s competition with Tencent, particularly its own local services and delivery platform, Meituan Dianping, which was formed by a merger in 2015. Alibaba held shares in Meituan Dianping, thanks to his investment in Meituan, but began discharging them shortly after the merger with Dianping.
In a statement, Alibaba said Ele.me was completing its subsidiary Koubei, a platform that allows restaurants and stores to connect online and reach more local customers.
“By combining Ele.me’s online home delivery services with Koubei’s consumer acquisition and engagement capacity for a range of restaurants and service outlets, Alibaba will be able to offer an integrated experience to online and offline customers. ”