It’s no wonder that stocks in supermarkets are dropping and the investors are worried about future performance. Earlier this week we wrote about the effect of Amazon’s plans with Whole Foods on supermarkets in the West and now news from the East, Alibaba is joining forces with Baidu to bolstering food delivery in China as Ele.me merges with Baidu Deliveries. Why buy a ready meal at a supermarket when you can have a cooked meal delivered?
Baidu is a massive Chinese search engine roughly equivalent to Google in the West.
Ele.me received a $1.25 billion investment from Alibaba Group and affiliate company Ant Financial last year although it continued to operate as an independent company with Alibaba Executive Vice Chairman Joseph Tsai added to Ele.me’s board.
The deal combines Shanghai-based Ele.me’s 1.3 million merchants in 2,000 cities, with the 1 million merchants in 300 cities selling through Baidu Deliveries. Alibaba and Baidu plan to support Ele.me and Baidu Deliveries with technology, customer acquisition and food safety, while Alibaba will commit additional capital to support Ele.me’s plans for further growth. Ele.me is expected to contribute data and resources to improve the experience of Baidu Deliveries users.
Food deliveries might seem a bit tangential to ecommerce and marketplaces, but food deliveries in China soared by 44% annually between 2013 and 2016 and online-to-offline commerce is being targeted by Alibaba as it expands beyond running China’s largest e-commerce marketplaces by bringing local brick-and-mortar businesses into the digital economy.
Just as Amazon has a voracious appetite in the West and aims to inveigle themselves into every part of our lives, Aliaba has the same goal in the East and wants Chinese consumers to access just about everything from products to local services to takeaways through one of their platforms.