E-Commerce major Alibaba Group Holding Limited of China announced recently that it would acquire the remaining shares of Ele.me, a key player in China’s food delivery market, as the latter is competing with Tencent Holdings Limited Services for offline customers, according to a Reuters report.
At present, Alibaba and its affiliate Ant Small & Micro Financial Services Group Co Ltd own an estimated 43% of Ele.me, and the latest deal will value the start-up a $9.5 billion, citing Alibaba statement, the report. Ele.me, meaning Hungry, is part of a fast-growing and competitive e-commerce market in China driven by consumers eager to use smartphones to make purchases from groceries to cinema tickets, noted the report.
As early as August 2017, Ele.me acquired major rival Baidu deliveries from Baidu Inc. For Alibaba, the latest buying out enhances the e-commerce firm’s food delivery empire, which also includes delivery platform Koubei, as it competes with Meituan Dianping, backed by Tencent Holdings Ltd, the report pointed out.
Investments in Offline Services
Of late, both Alibaba and Meituan are both investing heavily in offline services, including deliveries, mobile payments, and unstaffed stores, to tap a wider demographic as China’s online commerce market shows signs of slowing, the report said and added that Ele.me would continue to operate under its own brand following the acquisition, said Alibaba, but will combine some functionalities with Koubei. What is more, as part of the deal, Alibaba will install Alibaba Vice President Wang Lei as Chief Executive at Ele.me, while the current CE and founder of Ele.me will become chairman and serve as a special advisor to Alibaba on new retail strategies, added the report.
Alibaba is a Chinese multinational e-commerce, retail, Internet, AI, and technology conglomerate established in 1999. The group that provides consumer-to-consumer, business-to-consumer and business-to-business sales services via web portals, as well as electronic payment services, shopping search engines and cloud computing services. The group also owns and operates a diverse array of businesses around the world in several sectors, and is named as one of the world’s most admired firms by Fortune magazine.
At closing time on the date of its initial public offering (IPO) – the world’s highest, September 19, 2014, Alibaba’s market value was $231 billion. As of January 2018, Alibaba’s market cap stood at $527 billion. In fact, Alibaba is one of the top ten most valuable and biggest companies in the world. As early as in January this year, Alibaba became the second Asian company to break the $500 billion valuation mark, after Tencent.
Alibaba is the world’s largest and most valuable retailer since April 2016, with operations in over 200 countries, as well as one of the largest Internet firms. Its online sales and profits surpassed all US retailers (including Walmart, Amazon, and eBay) combined since 2015. Furthermore, the company has been diversifying into the media industry, with revenues rising by triple percentage point’s year-on-year. Amazon had orchestrated China’s Singles’ Day into the world’s biggest online and offline shopping day, with its own sales reaching over $25.4 billion on November 11, 2017. In the not so distant past, Alibaba had outperformed major cloud players including Amazon, Microsoft, and Google in public cloud revenue growth, achieving triple-digit percentage revenue growth year-on-year.