International

Alibaba, Ant Financial Bet $1.25B On Food Delivery

Alibaba and its financial affiliate, Ant Financial, are betting big on the food delivery service.

$1.25 billion big, to be exact.

Recent reports show that Alibaba and Ant Financial have invested in Chinese food delivery app Ele.me — a move that positions the duo further into a growing market as more and more consumers turn to mobile in the already dominated mobile commerce market.

Alibaba’s investment is $900 million, while Ant Financial is putting up $350 million, an Ant Financial spokeswoman said. This comes at a time when the space is heating up and includes companies like Meituan-Dianping and Nuomi.

Alibaba has also made a deal with Ele.me to incorporate its own online food services platform, Koubei, to advance its reach. Ant Financial is also a major backer in that company, joining Alibaba last year in investing $464.2 million. This report about Alibaba’s investment follows a similar one from December that had rumors about its involvement in this space.

China’s business news source Caixin reported that Alibaba’s investment would provide the eCommerce giant with a 27.7 percent stake in the company.

The company that Alibaba now seems to be investing into fits 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 an 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.

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