Alibaba Chews on Food Delivery Acquisition

2018-02-26 20:47:54

Alibaba is considering acquiring the remaining stake in food delivery giant, according to a person familiar with the matter, as the e-commerce giant continues to expand its offline empire.

Alibaba, which has ventured into offline retail with its “new retail” strategy, is already a major stakeholder in thanks to a $1.25 billion (7.89 billion yuan) investment in the business in 2016 alongside its affiliate, Ant Financial. The duo increased their investment by another $400 million in April last year.

But Alibaba may extend its stake in the company further, said the source, who requested anonymity because they were not authorized to speak on the matter. The person told Sixth Tone that if the deal goes through, Alibaba will buy out so it owns 100 percent of the company’s shares.

Sixth Tone’s sister publication The Paper reported earlier on Monday that Alibaba planned to buy out with $9.5 billion in the next three months. Alibaba declined to comment on the deal, and did not respond to Sixth Tone’s interview requests.

For Alibaba, the deal could further increase its presence in the offline retail realm, where the company aims to integrate the online and offline shopping experiences.

By acquiring, Alibaba could mobilize the food delivery business’ logistics service to reach its consumers in a more timely and efficient fashion, the source said. In the past, Alibaba has relied on a limited number of warehouses stocked with goods to dispatch packages to buyers, which can be time-consuming and inefficient, but with’s sprawling delivery network, Alibaba could beef up its performance in “last mile” delivery, the person added.

If the deal materializes, Alibaba and its rival Tencent — which backs food delivery company Meituan Dianping — will dominate China’s multibillion-dollar food delivery market. The industry has seen a marked transformation in the past few years. In 2015, startups Meituan and Dianping agreed to merge, and last year Shanghai-based acquired Baidu Waimai, an also-ran previously owned by search engine Baidu.

Alibaba has already opened its first offline grocery store, Hema Xiansheng, in Shanghai, where buyers can shop and pay in-store with Ant Financial’s mobile payment service, Alipay, or order online through an app and have fresh food delivered in 30 minutes within a 3-kilometer radius. Meanwhile, the company’s first brick-and-mortar megamall, More Mall, is slated to launch in April 2018 in the eastern city of Hangzhou.

Editor: Julia Hollingsworth.

(Header image: An courier waits outside a restaurant in Wuhan, Hubei province, March 26, 2016. VCG)