China’s food-to-flight services platform, Meituan-Dianping has been witnessing fast growth posing threat to larger rivals such as Alibaba (BABA). And Alibaba is now hoping to combine its food delivery services into one business as well as raise funds for it, in a move to tackle this new threat.
The on-demand service, which is a huge business in China today, is seeing a growing rivalry between Meituan-Dianping, which is backed by Chinese Internet services giant Tencent Holdings Group Ltd, and Ele.Me, the food delivery app Alibaba acquired for $9.5 billion this year.
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.
RELATED: Alibaba’s Ele.Me to deliver food using drones in China
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.
RELATED: Alibaba digests Chinese food delivery platform Ele.me
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.
Most Popular
Earnings calendar for the week of March 8
On the heels of lawmakers moving closer to passing the stimulus bill, inflations concerns gripped the market after Federal Reserve chief Jerome Powell at a meeting said the reopening would
Why Costco’s (COST) growth prospects might depend on beating costs, digital lag
Though the retail boom triggered by the pandemic was estimated to be short-lived initially, the shopping spree continued as customers stocked up on essential items, concerned about the persistent market
Gap (GPS) hopes to see a favorable recovery by the second half of 2021
Shares of Gap Inc. (NYSE: GPS) were up 5.8% in afternoon hours on Friday. The stock has gained 103% over the past 12 months. Gap reported mixed results for the
