Alibaba steps up push into on-demand local services as overseas expansion intensifies
Investments in Ele.me will expand the Shanghai-based subsidiary’s business beyond transporting meals to consumers into other on-demand services
More than 19 years since former English teacher Jack Ma Yun led a group of 18 people to build an online retail business in China that would become an e-commerce powerhouse, Alibaba Group Holding has its sights trained on the next big thing – the burgeoning on-demand local services market.
Analysts forecast strong long-term growth for Alibaba, thanks to the inclusion of food-delivery unit Ele.me to the company’s core commerce business. This main business, which includes online retail platforms Taobao Marketplace and Tmall, currently make up about 85 per cent of the group’s revenue.
New York-listed Alibaba, which will report its latest quarterly financial results before the US market opens on Thursday, is expected to post a 61 per cent increase in revenue to 80.8 billion yuan (US$11.8 billion) for the three months ended June 30, according to Bloomberg consensus analyst estimates.
“We believe Alibaba is building a stronger ecosystem, with Ele.me as a strategic asset to expand its offline retail business and penetrate the online fast moving consumer goods segment,” wrote Mae Huang, an analyst at SWS Research, in a report published ahead of Alibaba’s results announcement.
Alibaba completed its acquisition of Ele.me in April this year with a US$9.5 billion deal that saw it buy out other Ele.me stakeholders, including Chinese online search giant Baidu.
