China-based e-commerce giant Alibaba said on Monday it will fully acquire food delivery platform Ele.me, buying the outstanding shares that it does not already own from other stakeholders.
While Alibaba did not say how much it is paying, Ele.me has been valued at $9.5 billion. Alibaba and affiliate Ant Small and Micro Financial Services Group Co. already owned about 43% of the startup’s voting shares. Alibaba paid all cash in the deal and has acquired all the shares formerly held by Baidu Inc., according to a Bloomberg report.
Ele.me, one of China’s leading food-delivery platforms, is expected to help boost Alibaba’s New Retail strategy, by which it aims to integrate online and offline commerce.
Currently, Alibaba does not directly operate its own transport and logistics operations, which puts it at a disadvantage in the growing local services market that includes on-demand deliveries of food and groceries. Ele.me’s network of over 3 million delivery people will allow Alibaba to better compete in the sphere.
“We are excited for Ele.me to become a part of the Alibaba ecosystem,” said Alibaba chief executive Daniel Zhang. “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.”
In an internal email to Alibaba staff obtained by Bloomberg, CEO Zhang said, “As one of the most frequently used applications, food delivery is the single most important entry point in the local services sector. We can already see that a vast, multi-dimensional local instant delivery network formed through a food delivery service will be an essential piece of the commerce infrastructure.”
The Ele.me acquisition comes as retailers and tech giants in China continue to cut deals to integrate shoppers’ online and offline experience.
Meanwhile, in other retail news from China, Reuters reported that Walmart Inc. has opened its first small-sized high-tech supermarket in China, which will stock products that customers will also be able to buy in the U.S. retailer’s store on Chinese online marketplace JD.com.
The store, located in the southern city of Shenzhen, will stock more than 8,000 items, 90% of which will also be available online. Items shopped can be delivered to customers within a two-kilometer radius in under 30 minutes, said Walmart.
Customers at the new supermarket will be able to use a mini program on Tencent Holding Ltd’s WeChat as they shop, according to the Reuters report, and bypass traditional checkout counters by paying via their mobile device.