Ele.Me Gets $1.25 Billion Investment from Alibaba
What gift did the .Me community receive under its Christmas tree? An investment for one of its members, the leading Chinese food delivery platform Ele.Me that we wrote recently about. Alibaba Group, which operates the “Amazon of China”, is to invest $1.25 billion in Ele.Me! Next time you’re in China and want to order food – you’ll definitely be using a .Me 😉
Ele.Me Brings Tencent and Alibaba Closer Together
The investment of $1.25 billion gives Alibaba Group a 27.7 percent share in Ele.Me, becoming the single largest shareholder in the growing Chinese food startup that has become one of the country’s most highly respected unions, reaching an estimated valuation of $3 billion.
Interestingly enough, this valuation was a result of an August $350 million investment from Tencent, a long time rival of Alibaba. It’s not the first time that these two companies, often seen directly competing for the Chinese consumer and entertainment market, ended up working together through shares of new startups.
On-demand service and review website Dianping, which previously received an investment from Tencent, invested $80 million into Ele.Me in early 2014, which resulted in the two companies sharing merchant data and ordering services. Dianping has since merged with Meiutan, an Alibaba-backed and the “Groupon of China”.
While Tencent is competing with Alibaba to offer more location-based entertainment and shopping services to the more than half a billion mobile internet users in the Chinese market, Ele.Me seems more of a sign of the two digital giants working together.
What Can We Expect in 2016.?
1. By investing in Ele.Me, e-commerce giant Alibaba is cementing its position as leader in the digital commerce space in its core Chinese market. Alibaba isn’t going to let anyone get a slice of any part of the e-commerce market if it can dominate it through new products, investing or acquiring growing startups in its “niches.”
2. Support for Ele.Me shows how the business of delivering food in China is just growing. The online food delivery market in the country had, according to a report by iResearch Consulting Group, overall transactions of 9.51 billion yeah ($1.47 billion) in 2014 alone!
3. With Alibaba’s obvious support for Ele.Me, it remains to be seen what will happen to Koubei, its own small food delivery platform. While far smaller than Ele.Me, the platform whose name means “word of mouth” is still operational. We expect Alibaba to merge Koubei with Ele.Me in the future, creating one unified platform that will operate under the obviously unique Ele.Me brand.
