Chinese e-commerce giant Alibaba has been eyeing Chinese leading online delivery platform Ele.me for several months now, until deciding to fully acquire it for $9.5 billion.
The move was expected as Alibaba invested in Ele.me two years ago and this will be the latest in a string of investments and acquisitions made by Alibaba.
If we analyse Alibaba’s retail strategy, we’d know that the e-commerce giant is aiming to expand its physical retail presence, blurring the line between online and offline retail, and dive deeper into brick-and-mortar retailing.
Ele.me (‘are you hungry?’ in English) is one of the two most popular online food delivery platforms in China along with its rival Tencent-backed Meituan.
According to local research, Ele.me exceeded 200 billion yuan ($31.8 billion) in sales last year.
So, Ele.me seems to be the best fit for Alibaba to leverage its service network and promote its future retail experience.
How will these two companies work hand in hand?
Company executives envision a future where it will be easier for users to move (and also to spend money). They will visit store fronts but they’ll place orders through their smartphones and their purchases will be sent to their doorsteps within 30 minutes without them having to carry any bags.
‘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,’ says Alibaba chief executive Daniel Zhang in a statement.
As for the roles, Wang lei, Alibaba’s vice president, will become Ele.me’s CEO, while Zhang Xuhao, Ele.me’s founder, will step down and serve as a special adviser to Wang lei.
Will the integration of online and offline create a successful retail experience? We’re curious to see what the future holds.