Online domestic food delivery service provider ele.me said it has sold an undisclosed stake to China's largest car-hailing app Didi Chuxing, in an attempt to jointly forge the largest urban delivery system.
According to a press release ele.me sent to the Global Times on Thursday, the deal, which was completed on Tuesday, can help Didi diversify into food delivery.
The move is in line with Didi's strategy of offering delivery services in addition to rides, analysts said.
Didi, backed by Internet giants Tencent Holdings and Alibaba Group Holding, may announce investments in cargo delivery and logistics companies, Liu Dingding, an industry analyst at Beijing-based market research firm Sootoo, told the Global Times on Thursday.
Ele.me, which now mainly relies on 2-wheel electric vehicles, expects to expand its delivery scope beyond the current 3-kilometer radius with the help of Didi's fleet.
Currently, 1.53 million taxi drivers and 5.5 million private car owners run businesses via Didi, a PR representative with Didi Chuxing told the Global Times on Thursday, while declining to comment further on the new agreement. Ele.me also declined to reveal the value of the deal when contacted by the Global Times.
"Didi very likely got a large stake in ele.com for a bargain price," said Liu, noting that the purchase came at an opportune time for ele.me, which probably needs money given its battle for market share with meituan.com.
Competition in the domestic online food delivery has been heating up, with participants offering aggressive subsidies to merchants and consumers since 2014.
But despite the cash being splashed around, Alibaba-backed Meituan retained its lead. In the first three quarters of the year, waimai.meituan.com ranked first with a 42.2 percent share, with ele.me not far behind at 35 percent. Baidu's food delivery unit held third position with 11.6 percent of the market, according to a report issued by Beijing-based market consultancy BigData-Research on November 10.
Another Beijing-based market research firm iResearch estimated in May that China's online-to-offline food delivery market would be worth 41.7 billion yuan ($6.52 billion) in 2017, increasing from 9.5 billion yuan in 2014.
"Both China's online food delivery market and its car-hailing industry have the potential to accommodate several giants at once," so neither ele.me's rivals nor Didi's will be greatly threatened by the Didi-ele.me cooperation, said Liu.
