International

Alibaba's $1.2B Bet On Online Food Delivery

Alibaba is prepped to kick off 2016 with a major investment, according to recent media reports.

Multiple media outlets, citing China's business news source Caixin, reported that Alibaba will invest $1.2 billion into Ele.me, a Chinese online food delivery service. This, according to the sources, will provide the eCommerce giant with a 27.7 percent stake in the company.

While this news has been widely reported, neither Alibaba nor Ele.me has formally commented on the matter.

The company that Alibaba would be investing in would fit into Alibaba's mold that's included a surge of funding in the online-to-offline (O2O) market. This has also included cab-hailing companies that help connect consumers to services online or via app. Ele.me ("Hungry now?" in English) aligns with other investments in the space for Alibaba.

The food delivery service has also raised big money from Alibaba's rivals, Tencent and JD.com. The motivation for these companies to invest in this space is to use other commerce platforms as a method to push those users to their own sites.

Alibaba's most recent major investment, which has capped off a year of investments from the company, was its acquisition of the South China Morning Post.

With Alibaba's special attention and expertise in advancing mobile platforms, this latest buy positions it further to be involved in the coverage of where China fits into the overall global economy. A VentureBeat report about Alibaba's investments and acquisitions shows that Alibaba could conduct at least $38 billion in deals, based on data from a BNP Paribas SA analyst. That's quite a big jump from 2015's spending of $15 billion.

This investment/acquisition push may be to pit it further against Tencent and Baidu, who have the capacity to spend $35 billion and $15 billion in 2016, respectively. All three of the Internet giants are investing heavily in the O2O space, VentureBeat noted.

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