Alibaba Takes Hefty Stake in Mobile Food Delivery

Food delivery may be one of our greatest advancements as a civilization. The idea that, instead of hunting, gathering, or even preparing food may be replaced by pressing a few buttons—oh, and having money—is staggering in its way. Food delivery may be about to get much more mobile as Alibaba recently took out a hefty new stake in the Ele.me food delivery service.

Alibaba is set to buy all remaining shares of Ele.me, which is one of the biggest names in the market for food delivery in China. This is a move that will give it a leg up on competitor Tencent, which has been pushing particularly hard for offline customers of late. While Ele.me is expected to continue operating under its own brand, reports suggest it will also be combining some features with Koubei.

Current word suggests Alibaba—and affiliate Ant Small & Micro Financial Service Group Co Ltd—owns around 43 percent of the company, now worth $9.5 billion as a result. Under the terms of the deal, reports note, Ele.me will have a new chief executive: Alibaba’s vice president Wang Lei. The former CEO, and founder, of Ele.me will be chairman instead, and have a role as “special advisor” to Alibaba on new retail strategies.

That might sound like either a sop or a sinecure, but it makes some sense. After all, Ele.me was right at the forefront of a new retail strategy, so the guy who had insight enough to found the company accordingly might well be the guy Alibaba wants to talk to when it comes to other new retail strategies to pursue.

Alibaba likely wants new retail strategies beyond this too. Given how much of a fight Tencent’s been putting up lately—especially after that whole business with Walmart—Alibaba will need new strategies to keep it out in front. Considering how close Tencent is to Alibaba, particularly in the mobile payments stakes, Alibaba will need a new venture in the short term and many of them in the long term.

There’s no reason that food delivery can’t be at least one of those, and a real winner in the short term, too. Alibaba is likely hoping that will be the case in both senses, and that picking up Ele.me will give it further long-term advantage from there.