Alibaba is contemplating on combining its food delivery platform Ele.me and food and lifestyle services firm Koubei into one business, according to Reuters. Alibaba also plans to raise close to $3 billion to $5 billion for the merged entity, which is valued at $25 million. SoftBank Group Corp.’s Vision Fund is said to lead the funding.
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Despite their popularity, both Ele.me and Meituan are running into huge losses, mainly due to the heavy discounts offered on food.
Food-delivery business in China is booming
According to a report by Meituan Waimai, a food delivery firm, there was a 23% rise in the online food delivery to 204.6 billion yuan (about $31.9 billion) in 2017. And nearly 300 million users have ordered food using online services.
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Due to this, both the rival companies are now pumping money into this business and are working towards expanding their offerings. Currently, they offer a wide range of services right from food delivery to restaurant reviews to groceries.
In fact, Meituan-Dianping has also forayed into the bike-sharing sector by acquiring Mobike for $3.7 billion. Mobike’s main rival is Ofo, backed the Alibaba.