On Tuesday, Chinese ecommerce giant Alibaba and its affiliate Ant Financial announced the investing of around $1 billion in a joint venture called Koubei that will provide web-connected local services like food delivery and booking appointments.
In recent days, local services or online-to-offline (O2O) seems to be on a boom in China, with some of the country’s most valuable startups like Didi Kuaidi, the taxi-hailing app in the area. Other than requesting for taxis, these app will help users to order things like delivery of food or leisure items through their smartphones. As the number of people using smartphone to order everything is growing every day, local services has become a prominent battleground for China’s internet giants Alibaba, Tencent Holdings Ltd and Baidu Inc as they try to rope in users to their platforms.
Alibaba and Ant Financial said, “The joint venture, Koubei, will integrate the convenient aspects of mobile commerce and big data to transform and upgrade China’s local services sector. It is aimed in capturing opportunities within China’s local services market, with an initial focus on the food and beverage segment.” According to the deal, each firm will put in half of the capital and hold a 50% stake of the company.
The move by Alibaba is ensure its top position in the ecommerce in China is retained despite of the concept broadening from ordering pizza to requesting a cab from an App. Range of startups have made it big in this online-to-offline space in the past years like Ele.me for food or Didi dache and Kuaidi Dache for cabs. Alibaba may hold an upper hand in the taxi-hailing app game with Kuaidi Dache but it is not very strong enough in other O2O areas like on-demand tailors, beauticians, manicurists or car repair mechanics or handyman that are growing fast in the country. Now the joint venture of Koubei is to make sure it enters this area too.
Melanie Lee, a spokesperson from Alibaba said, “The Koubei brand will be revitalized under this JV as a platform for local services. Alibaba’s food ordering and delivery business operating under the Taodiandian brand will be injected into Koubei while Ant Financial’s merchant services in the areas of offline retail, healthcare and vending machines will be gradually consolidated into the joint venture.” She also added that Koubei can be accessed from the Mobile Taobao and the Alipay Wallet apps.