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Alibaba

Alibaba acquires food delivery platform Ele.me as it ramps up new retail strategy

Ele.me’s network of three million couriers will allow Alibaba to better compete in the on-demand delivery sphere, according to analysts

PUBLISHED : Monday, 02 April, 2018, 2:37pm
UPDATED : Monday, 23 July, 2018, 6:21pm

E-commerce giant Alibaba Group Holding said on Monday it will fully acquire food delivery platform Ele.me, buying the outstanding shares that it does not already own from other stakeholders including Baidu.

Ele.me, one of China’s leading food delivery platforms, is expected to help boost Alibaba's “new retail” strategy, by which it aims to integrate online and offline commerce. Reports of a potential buyout of Ele.me by Alibaba first surfaced in late February.

Unlike its Tencent Holdings-backed rival JD.com, Alibaba does not directly operate its own transport and logistics operations, which puts it at a disadvantage in the growing local services market that includes on-demand deliveries of food and groceries.

Ele.me’s network of over three million delivery men will allow Alibaba to better compete in the sphere, according to analysts, who say the acquisition would complement the Hangzhou-based e-commerce firm’s online grocer, Tmall Supermarket, and its offline chain of Hema supermarkets, both of which provide on-demand grocery delivery.

The transaction values Ele.me at US$9.5 billion, according to Alibaba, which currently owns about 43 per cent of the platform together with its financial affiliate Ant Financial Services.

“We are excited for Ele.me to become a part of the Alibaba ecosystem,” said Alibaba chief executive Daniel Zhang Yong. “Looking forward, Ele.me can leverage Alibaba’s infrastructure in commerce and find new synergies with Alibaba’s diverse businesses to add further momentum to the new retail initiative.”

Wang Lei, a vice-president at Alibaba, will take over the reins from Ele.me chief executive Zhang Xuhao, who will become Ele.me’s chairman and special advisor to Alibaba chief executive on New Retail.

Apart from its continuing push in the new retail industry, Alibaba has also invested in digital entertainment, with its entertainment arm Alibaba Pictures producing original film and TV series. On Monday, its gaming unit AliGames said on its official Weibo account that it had struck a deal with Hit-Point, the Japanese developer of the popular “travelling frog” mobile game, Tabi Kaeru, to bring a Chinese version of the game to the mainland.

The game, in which users take care of a frog that travels to different destinations and brings back souvenirs for its owner, captured the hearts of millions of Chinese gamers and even inspired a Chinese clone of the game, which was later taken down from Apple’s app store.

New York-listed Alibaba is the parent company of the South China Morning Post.