Alibaba announced today to acquire delivery and local services platform Ele.me in a deal valued at U.S..5 billion, in a bid to push forward its new retail strategy.
The acquisition will deepen Ele.me's integration into Alibaba's ecosystem and advance the e-commerce giant's new retail strategy, which seeks to combine online and offline resources and technology capabilities to link merchants with consumers.
"Our shared belief that new retail will create more value for customers and merchants has brought us together and looking forward... Ele.me can leverage Alibaba's infrastructure in commerce and find new synergies with Alibaba's diverse businesses to add further momentum to the new retail initiative," said Daniel Zhang, CEO of Alibaba Group.
It's a major step for Alibaba Group to expand local lifestyle services within its e-commerce ecosystem and to provide new shopper experience, he said in an open letter to employees.
The on-demand delivery local network are also expected to serve as infrastructure for merchants to leverage under the new retail blueprint outlined by Alibaba so that they can access consumers.
Vice president of Alibaba Group Wang Lei will become chief executive of Ele.me while Ele.me founder Zhang Xuhao will become chairman of Ele.me and special advisor to Alibaba's CEO on New Retail strategy.
On demand food delivery has been a key step in attracting buyers and connect offline merchants with Internet users.
The online-to-offline market size is estimated at 978 billion yuan by the end of 2017 with top players like Tencent-backed Meituan Dianping and Alibaba-backed Ele.me.