It is the largest acquisition in Chinese Internet history. On April 2, Alibaba Group holding LTD, Ant Financial Services Group and Ele. me jointly announced that Alibaba has signed an acquisition agreement to complete the wholly-owned acquisition of Ele. me with Ant Financial for 9.5 billion US dollars.
Ele. me is officially a “super unicorn.” This also means that Alibaba’s new retail strategy has achieved a major breakthrough in the deep expansion of local life services.
At 10:20 am, Alibaba Group CEO Daniel Zhang and Ele. me founder Zhang Xuhao appeared together at ele. me headquarters in Shanghai in front of ele. me’s young core team.
“This is the most important investment Alibaba has ever made.” Zhang’s words won a round of applause. He also said that Ali Ecology will fully support Ele. me to win the market, “before the local life service sector, everyone rushed to the second floor, ele. me can directly stand on the sixth floor.”
It is reported that Ele. me will integrate into the strong Alibaba ecosystem, while remaining an independent brand and operating independently. Upon completion, Zhang xuhao will become chairman and special assistant to Alibaba’s CEO on new retail strategy, while Wang Lei, who stepped down as CEO of Ali Health a few days ago, will become CEO of Ele. me.
Zhang xuhao added: “Appointing ele. me as CEO is the most important requirement that the founding team and I have made for Alibaba. As the chairman, I spend more on strategic planning and decision-making, 60% on company operation and the rest on strategy. At the same time, I served as the special assistant of Xiaoyao zi (the nickname of Alibaba CEO Daniel Zhang) in new retail, and gained more resources.”
Next, the market will focus on what variables the acquisition will bring to the local lifestyle service market, how Alibaba will use its new retail ecosystem resources to support Ele. me, and what key role Ele. me will play in the new retail system of Alibaba.
What does Ele. me mean to Ali?
Alibaba’s takeover of Ele. me seems unsurprising.
The strategic value of this blockbuster acquisition for Alibaba lies in building a high-quality, full-category entry point for local lifestyle services. Just as Alibaba CEO Daniel Zhang said, Ele. me’s leading delivery service will, together with koubei’s in-store service, expand the brand new local life service field for Ali Ecology, and complete an important step from new retail to new consumption.
This isn’t going to be a simple physical merger, and Ele. me is clearly moving quickly into Alibaba’s “new retail” ecosystem. Ali has proposed the “three-kilometer ideal life circle”, hema’s “half-hour” and 24-hour family emergency services, “Tmall supermarket within an hour”, and many first-tier brands “online ordering stores within two hours of delivery” and other services. The addition of Ele. me will undoubtedly become a key part of Alibaba’s comprehensive local lifestyle service platform.
At the same time, the acquisition will also be Alibaba “new retail” eight column, a new important new force. This eight-way columns including, represented by Tmall brand upgrade, represented by Yintai new retail formats, digital electronics and suning cooperation, represented by box of horse and rt-mart consumer business super, through pathways between urban and rural areas of rural taobao, for small businesses to the wisdom of the shop, represented by unexpectedly the home of the home life, and represented by hungry yao and word of mouth of local service life.
What does Ali mean to Ele. me?
In recent days, the local life service market is highly competitive, and taxi users in cities such as Shanghai and Nanjing have witnessed fierce subsidy wars between the two sides. In the broader local life service market, to maintain a leading position, on the one hand, we need to continuously optimize our products, improve our services, and increase our platform capabilities. On the other hand, sufficient capital is the basic guarantee. Now ele. me is being acquired by Ali, whose strong product, operational and technical capabilities, as well as financial resources, will give ele. me a significant advantage in the competition.
Some analysts believe that one of the biggest benefits of the acquisition for Ele. me is to make up for its lack of financing ability as a vertical platform. Ele. me, which includes Baidu Waimai, accounted for 50.6 percent of the food delivery market in 2017, compared with 41.8 percent for Meituan Waimai, according to analysys. The balance of the competitive landscape, coupled with didi waidi’s surprise attack, makes the profit outlook of the food delivery market still uncertain. Ele. me’s choice of Ali will free the company from financial worries and focus more on improving its product and platform service capabilities.
Moreover, Alibaba emphasized that ele. me will further receive alibaba’s full support in new retail infrastructure, products, technology, organization and other aspects after the acquisition.
Zhang Yong, CEO of Alibaba, said that he would support Ele. me in building a super portal for local living, “giving whatever you need.”
“To store + takeaway + retail”,
How to construct a new paradigm of local living Service?
According to Zhang xuhao’s letter to employees, ele. me, which started out in the dormitory of Jiaotong University 10 years ago, has amassed 260 million users, more than 2 million merchants and more than 3 million delivery personnel, and has cultivated take-out food as the third regular way of eating for Chinese people.
At the same time, he mentioned that at the present stage of the development of the local life service market, the market penetration rate of both traditional food delivery and new retail is still very low, and capital alone is far from enough. The future trend will be the cooperation between new retail and food delivery. Therefore, Ele. me chose to join Alibaba, because Alibaba has the strongest and most complete ecosystem in the new retail field.
Zhang Xuhao revealed that since the previous access to the flow of Taobao and Alipay, the daily number of new customers of Ele. me has exceeded the entire Xinmei Group, showing the aggregation effect of super APP. Last October, Ele. me gained access to alipay’s primary page. After the wholly-owned acquisition, Ali is expected to increase traffic support for Ele. me in addition to the existing taobao and Alipay portals, which will undoubtedly give Ele. me a head start in the competition for the remaining incremental market.
In addition, this acquisition will also make ele. me and Koubei more closely coordinated, the two sides of the “group battle” will become a normal. Ali said, “to the hungry? As a local service life of one of the highest frequency application delivery business, with the word of mouth to data technology can assign offline businesses catering to the shop business, service in the field of new form of local life”, hungry, and word of mouth play “home + to shop” intentions obvious synergistic effect.
Since 2016, Ele. me and Koubei have gradually opened up merchant resources and user systems, and the synergy model has become increasingly mature. When the two parties further integrate, the big data of merchants and users accumulated by word-of-mouth, as well as the commercial infrastructure such as Alipay behind it, will become a big advantage of Ele. me in merchant services and product experience, which will help ele. me to build the competition barrier fundamentally.
“Ele. me’s leading delivery service, together with Koubei’s in-store service, will expand the brand new local life service field for Ali Ecology and complete an important step from new retail to new consumption.” Alibaba CEO Daniel Zhang said in an internal email to all employees.
What dividends will catering businesses get?
Ele. me’s products and merchant service system cover 2,000 cities and counties across China, with more than 2 million catering businesses on the platform. For the majority of catering businesses, what direct and lasting dividends will be brought by the comprehensive upgrade of local living services promoted by Ele. me and Koubei?
“Ali’s acquisition of Ele. me is definitely good for us. Recently, I am also considering increasing the semi-finished retail business to catch up with new retail. “Said Wang Xudong, head of a restaurant chain in Shanghai. “Ele. me’s entry into alibaba’s system has opened its imagination, and merchants are curious about the chemistry.”
Word-of-mouth mainly focuses on in-store consumption, while Ele. me mainly focuses on home consumption which is mainly sold out. In the future, catering businesses will be able to achieve online and offline integration within a system of Ali based on consumers’ demand for “eating”. A physical store, an Ele. me store, a word-of-mouth store, this will also become a standard catering business.
Among them, merchants can plan linkage marketing, provide overall services, tap more benefit growth points, and even have the opportunity to open online stores on Tmall and Taobao to sell semi-finished products or specialty food.
It is understood that in the future, consumers can also get through the coupons and membership cards on platforms such as Koubei and Ele. me, which not only reduces the marketing cost of merchants, but also significantly improves the consumption experience.
The integration of Ele. me into Ali ecology has greatly improved the level of operation data and comprehensively upgraded the supply chain, which has more far-reaching value for catering businesses.
Previously, whether it is home service or shop service, business background is a single level of data. With the opening of ele. me and word-of-mouth data, catering products will be able to make more accurate business decisions based on big data, such as the optimization of taste matching and dish design based on the omni-channel consumption data of dishes.
At the same time, with the in-depth integration of various businesses of Ele. me and Ali, especially the injection of resources such as Retailing Link and Cainiao, catering businesses will enjoy much better catering supply chain services, which will change the current situation of complex domestic catering supply chain, multiple transaction links and small and scattered suppliers.
How can new retail be accelerated?
In the past year, Alibaba’s new retail system has been speeding up: hema “half an hour”, Tmall supermarket “one hour”, many first-tier brands “online order store delivery within two hours”… “New speed” is one of the key kernels of the new retail, and the just-in-time delivery system represented by Ele. me hummingbird is sure to accelerate this new speed.
According to public information, Ele. me’s Hummingbird delivery has 3 million registered riders, and after the acquisition, Hummingbird will naturally provide transportation capacity for various scenarios within Ali’s new retail system. This is certainly a strategic asset for Alibaba, and the change of role for Ele. me is even more significant.
In terms of volume, the consumer goods market with an annual output value of 30 trillion yuan is an order of magnitude larger than the catering market, which will be a huge source of orders for hummingbird. In terms of capacity utilization, access to new retail orders will solve the problem of idle capacity utilization of instant delivery and significantly improve human efficiency; In terms of technology, new retail orders are different from food and beverage takeout in terms of timeliness and scheduling. The variables brought by new retail orders will also help hummingbird accumulate richer distribution data, improve the existing distribution system, and make instant delivery more “versatile”.
The integration into Alibaba’s new retail system also provides new imagination space for ele. me’s existing new retail business. At present, Ele. me has initially formed a new retail business matrix consisting of branded convenience stores, co-operated large and medium-sized convenience stores, small convenience stores, pre-storage and unmanned shelves. Combined with the existing supply chain enabling tools such as Retailing Link of Ali, the two sides are expected to form a full-chain business alliance of “front-end + back-end” with complementary advantages.
It is worth noting that ele. me NOW unmanned shelf project, which covers 30 cities in China, recently announced to achieve profitability in Shanghai. In the case that Ali has not yet deeply involved in the unmanned shelf field, ele. me NOW will undoubtedly become its leader in the field in the future.
How will the industry change?
Ali’s acquisition of Ele. me will undoubtedly bring great imagination to new retail and new consumption.
In fact, when Ali incorporated word-of-mouth into the new retail system and formed a new catering retail column in January this year, Zhang yong positioned “from food and clothing to food and drink” as one of the four trends in the new retail.
Since Alibaba put forward the concept of new retail more than a year ago, the strategic cooperation and business integration between Alibaba, which represents the power of online commerce, and traditional offline retail formats has promoted the overall improvement of commercial infrastructure and the overall improvement of consumption experience, forming a human-centered network of new consumption and new life.
The new dimension of the local life service system with Ele. me and word-of-mouth as the core forces will once again push the business synergy of new retail, new consumption and new life to a new height and lead the transformation direction of the whole industry.
“The ultimate goal of new retail is to upgrade commerce, consumption and quality of life through the reconstruction of people and goods yard.” Alibaba CEO Daniel Zhang wrote in an email to all employees.
The original article was published on April 2, 2018
The author of this article: net business jun
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