Alibaba Acquires “Ele.me” Food Delivery Service, Meituan Dianping Starts Delivering Men’s Apparel
Smartphones are rapidly spreading, and mobile payment service has developed in China, thus a new business model “O2O” is booming, which does not exist in Japan. The model consists of sharing (ride-hailing app), bike sharing, and food delivery services. Those services are now in the phase of oligopoly by major companies.
The food delivery industry covered in this column was consolidated by two companies, namely Ele.me and Meituan Dianping. It seemed settled for the time being, but it was reported that Alibaba acquired Ele.me and Meituan started a delivery service on clothing. The news is covered by economic news sites such as Jiemian and Caijing. How will this industry change?
A popular restaurant in Shanghai
There is a casual Taiwan restaurant at Gubei New District in Shanghai where many Japanese live. The restaurant serves good and reasonable food and is also very popular among the Japanese. A QR code is attached to well-used tables inside the restaurant. Immediately you finish your meal; you are required to call a staff to fix your bill. By scanning your code with Alipay (Alibaba mobile payment), your payment will be completed. That is a cashless restaurant.
Further, about 10 motorbikes in three colors such as blue, yellow, and red are standing by in front of the restaurant. Those are for food delivery troops. Blue motorbikes are for Ele.me, yellow is for Meituan, and red is for the restaurant. The restaurant can immediately respond to orders from any route. This is how popular restaurants in China are like in this modern time. A new movement has been seen in this food delivery industry.
Alibaba acquires Ele.me
It was reported late February that Alibaba planned to acquire the entire shares of Ele.me for $9.5 billion within three months. Alibaba invested $1.25 billion in April 2016 to become the largest shareholder. Alibaba invested an additional $1 billion in May 2017 to let Ele.me acquire the competitor Baidu Group “Baidu Waimai”. Thus, the industry mapping has been consolidated by Ele.me and Baidu Waimai.
Then, Alibaba will reportedly acquire Ele.me entirely. However, the founder of Ele.me, Zhang Xuhao said that it was not true on social media. Even if all is not true, Alibaba’s intention is apparent.
Ele.me vs. Baidu Waimai, that is, Alibaba vs. Baidu Dianping (Tencent)
That means Alibaba will eliminate the founder from Ele.me and then Alibaba Group is prepared for battles against Baidu Dianping in terms of general life service. Baidu is backed up by Tencent anyway. Take a look at the conflicting relationship.
Ele.me: 2009- 2,000 cities, 1.3 million, 260 million users
Baidu Waimai: 2013- 1,300 cities, 1 million, 200 million users
* year founded- number of cities, number of affiliates, number of users
It looks like Ele.me is in a better position, but they are comparable in sales volume.
There are bitter conflicts in other business services.
Koubi Wang vs. Baidu Dianping: General life service
Hema Xiansheng vs. Zhangyu Shengxian: New retail service integrating O2O
Taobao vs. Maoyan: Ticketing service
Fei Zhu vs. Meituan Travel: Travel service
* Alibaba vs. Baidu Dianping
Baidu Waimai delivers men’s apparel
The major men’s apparel shop “HLA” tied up a partnership with Tencent Group around early February. Baidu Dianping is one of the affiliates. Not even a month passed after the tie-up, Baidu Dianping already announced that it would start delivering the HLA products. 53 items will be listed on the Baidu Dianping website, and orders will be delivered within an hour from 66 stores in Beijing and 142 stores in Shanghai.
Delivery drivers stand by in front of restaurants where orders are likely to be placed. If there is an HLA store nearby, it will surely be easier. They can operate during the break-time as well.
By the way, HLA was tied up with Alibaba last year. Both camps are fighting hard battles for their encampment.
It is not unusual that the founder of a company will be eliminated in such a close conflicting relationship. Zhang Xuhao founded Ele.me when he was at Shanghai Jiao Tong University. He is still very young. If Alibaba acquires the entire shares of Ele.me, he will receive a huge amount of money. People will pay attention to what he will do next. Japan cannot be compared with China’s O2O industry. It is just dynamic.