Chinese online retail giant Alibaba is betting big on online-to-offline services. Citing sources familiar with the matter, business weekly Caixin reported Friday that Alibaba has agreed to invest $1.25 billion in online food delivery service Ele.me. The report adds that the Jack Ma-led company will get 27.7% stake in Ele.me, becoming the largest shareholder of the six-year-old startup.
Alibaba’s yet another investment in O2O sector
The online-to-offline (O2O) services have grown manifold in China in recent years. O2O services are those where users seek offline services through smartphone apps. It includes taxi-hailing, food ordering, movie ticketing, etc. Alibaba has been investing heavily in O2O services. In August, the e-commerce behemoth invested $4.6 billion for 20% stake in Suning, China’s largest electronics retailer. The company has also invested in taxi-hailing and movie ticketing platforms.
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Founded in 2009, Ele.me has raised about $1.09 billion until August 2015 from investors including JD.com, Tencent, and Sequoia Capital, according to data from Crunchbase. In August, the startup raised $630 million in Series F funding from a group of investors led by CITIC Private Equity and Beijing Hualian Department Store. Last month, there were rumors that Chinese taxi-hailing service Didi Kuaidi invested an undisclosed sum in Ele.me.
Ele.me has 40 million users
As of July 2015, Ele.me, which translates to Hungry now?, offers online food ordering services across 260 cities in China. The company claims to have 40 million users and $9.25 million in daily transaction value. More than 98% of transactions come from mobile devices. China’s three largest Internet companies Alibaba, Tencent and Baidu have been investing heavily in O2O services to keep users tied to their ecosystems. Last year, the three companies collectively invested $30 billion on acquisitions.
The e-commerce giant has also been betting big on media & entertainment. Earlier this month, Alibaba acquired the Hong Kong-based newspaper South China Morning Post for $266 million. It is also investing $86 million in Chinese movie studio Bona Film to take it private along with many other investors.