Alibaba enhances 'New Retail' strategy with local delivery app Ele.me

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Alibaba has acquired Chinese delivery app Ele.me in a bid to further bolster the brand’s 'new retail' strategy.

The deal sees Alibaba assume full ownership of the app, acquiring all outstanding shares in the start-up local delivery company. Alibaba previously held 43% of shares in Ele.me.

The deal, which values Ele.me at $9.5bn, will enhance Alibaba’s New Retail strategy by providing local delivery services from Ele.me’s huge national network of delivery drivers.

Alibaba also plans to expand Ele.me’s services beyond food to incorporate other products and services, in a bid to give the company a bigger slice of China’s booming local services industry.

Ele.me delivery services will be merged with local services platform Koubei to create integrated customer experiences for restaurants and businesses.

Ele.me will continue to operate its own brand and will have access to Alibaba’s New Retail infrastructure, product offerings and technology expertise. The app’s founder Zhang Xuhao will become chairman of Ele.me, while Alibaba vice president Wang Lei will become chief executive.

Daniel Zhang, chief executive of Alibaba Group, said the company had helped Ele.me to become the market leader in China’s online food delivery and local services sector.

“Our shared belief that New Retail will create more value for customers and merchants has brought us together. 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,” said Zhang.

Zhang Xuhao, founder of Ele.me said, “This acquisition shows that we have built Ele.me into one of China’s most valuable internet businesses. Our customers, merchants and partners will benefit from our further integration into the Alibaba family. We share the same strategic vision that New Retail has a bright future and being part of Alibaba’s ecosystem will take Ele.me’s growth to a new level.”

The deal sees Alibaba square off against rival Tencent, which is the financial backer behind Ele.me’s main rival Meituan Dianping. Meituan, which is described as a combination of Deliveroo, Yelp and Groupon is reportedly the world's fourth most valuable start-up with an estimated worth of $30bn, according to Bloomberg.

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