China’s online retailer Alibaba wants to invest $ 1.25 billion in the Chinese food delivery Ele.me. In return Alibaba will have 27.7 percent share of the company and thereby rise to become the largest shareholder.
Online platforms are growing in popularity in China, following a pattern found in Europe and the US. Many people are bookings taxis or the purchasing food from restaurants using mobile devices such as smart phones and tablets whenever possible. Earlier this year, Ele.me had collected $ 350 million from investors, including the Chinese IT firm Tencent and Alibaba’s rival JD.com.
China is the largest Smartphone market in the world. More and more Chinese people use their devices to go shopping online or just to order food. This has caused the interest of Alibaba and Tencent, which have their investments in online services boosted significantly.
According to a data released during 2015 Ele.me delivers food across 260 cities in China. The company has around 40 million users and $9.25 million in daily transaction value. More than 98% of transactions come from mobile devices. China’s three largest Internet companies Alibaba, Tencent and Baidu have been investing heavily in O2O services to keep users tied to their ecosystems. Last year, the three companies collectively invested $30 billion on acquisitions.