Alibaba merges its two food delivery services to create a new on-demand local lifestyle and services company.
Merge of Ele.me and Koubei
The new company was created from the merger of Ele.me and Koubei. The Ele.me business is a food delivery service that has a fleet of 667,000 drivers. Koubei is a food review platform with an average of 167m active monthly users. The new entity, ‘Ali Local Lifestyle and Services Company’, claims to operate in a combined 676 cities, serving up to 3.5m merchants. The merger is done primarily to drive user traffic. Alibaba invested US$3m in the merger, along with SoftBank Group and other investors.
Redefine urban life
The internet giant regards the merger as an important milestone to redefine urban life and create a digital economy, in which marketing, logistics and membership systems are fused together to make urban life more convenient. This new company will expand beyond food and beverage industry into other categories under local life services, such as shopping, beauty, karaoke and entertainment.
Race to stay ahead
China has a sizeable on-demand market. It is estimated that food delivery alone in China will reach US$51bn by end of 2019. Online companies have been making heavy investment to provide new and additional services to stay ahead of competition. Delivering over-the-counter medicine has been on Alibaba’s agenda for a while. This newly company is certainly set out to compete with Tencent-backed Meituan Dianping, which is a hybrid of Groupon and Yelp-like service. In China, Meituan Dianping has nearly 60% of on-demand delivery market transactions in the first quarter of 2018.
Retail Analysis Asia