In episode 25 of TechBuzz China, co-hosts Ying-Ying Lu and Rui Ma talk about Alibaba’s recent moves to firm up its strategy around local services, putting pressure on Meituan-Dianping to defend itself. This war of “O2O,” or online-to-offline, is shaping up to be intense, with the latest battle round seeing the merger between food delivery rival ele.me (which Alibaba acquired for $9.5 billion in April) and Alibaba’s New Retail subsidiary, Koubei.
This episode of TechBuzz is the first in a series of deep dives into the local services space in China. Rui and Ying-Ying begin with some background on Meituan’s “unstoppable roll” on its way to becoming the “Amazon of services” for China: the gargantuan super app is currently dominating several verticals including food delivery, movie ticket sales, bike sharing, and travel. However, its dominance is being challenged by Alibaba, and in the food delivery space this shows up in the form of the ecommerce giant’s support for and acquisition of ele.me.
Rui and Ying-Ying tell the origin story of ele.me. The startup’s founder, former CEO, and now-Chairman Zhang Xuhao was a first year graduate student at Shanghai Jiaotong University when he started the company with five friends in 2008, back when entrepreneurship was considered rebellious and unconventional. The venture was self-funded for a few years before landing angel investment from GSR’s Allen Zhu, one of the best investors in China. Though ele.me grew quickly, it was still fairly small when it got its first big break — Dianping’s investment of $80 million, which allowed the startup to embark on an accelerated expansion plan. It went from 300 employees at the end of 2013 to 5000 at the end of 2014. By August 2015, with traffic from shareholder Dianping and additional investment from Tencent, ele.me was feeling like it was on top of the world.
The story, however, doesn’t end there. Listen to the newest episode of TechBuzz China and join our co-hosts in exploring the rise of ele.me, its sale to Alibaba, and what’s happened since. What is in store for the company — and more importantly, for the future of local services in China? What is New Retail, and why is it bleeding into local services? How do they reinforce each other, or do they? Why is there always a war on the Chinese internet, and who is going to win this one?
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