Alibaba Group and its financial affiliate Ant Financial Services Group plan to invest nearly $1 billion in a joint venture aimed at growing the market in China for local services that can be ordered and paid for using smartphones.
Alibaba and Ant Financial will each hold 50% of the venture, Koubei.com, after investing 3 billion yuan ($483.3 million) apiece. The companies said they planned to make Koubei.com into a hub for “online-to-offline” (O2O) e-commerce to “transform and upgrade China’s local services sector, offering consumers enhanced dining and shopping experiences.” Ant Financial executive Samuel Fan was named Koubei’s CEO.
Initially targeting the market for ordering meals online from local restaurants, Alibaba will transfer its existing food ordering and delivery business, called Taodiandian, to Koubei. Over time, Ant Financial’s merchant services in the areas of offline retail, healthcare and vending machines will be absorbed by the joint venture, the companies said. Ant Financial is an online financial services provider that is poised this week to launch one of China’s first Internet banks.
“Consolidating our resources under Koubei allows us to capture opportunities that navigate both the offline and online markets, Fan said in a statement. “Harnessing the power of mobile commerce and data technology, Koubei will build synergies between offline consumption and Internet-based offerings that will transform China’s local services market,” he said.
A recent McKinsey survey of Chinese consumers found that 71 percent are already using O2O services; nearly one-third of those who have not yet used O2O services said they would like to try them within the next six months. Respondents said they were eager for local-service offerings in entertainment (61%), healthcare (47%), and housing/car services (42%).
Consumers will be able to access Koubei.com through Ant Financial’s Alipay Wallet app and Alibaba’s Mobile Taobao app, allowing them to use mobile devices to find and purchase a variety of on-demand services from car repairs to movie tickets to take-out lunches to booking hospital appointments. Koubei will also serve as a platform through which local merchants can adopt mobile payment solutions and conduct mobile marketing campaigns.
According to a story in Tech in Asia, the Koubei site was launched in 2004 as an independent search engine for local services in cities across China. It was later acquired by Yahoo China, which is operated by Alibaba. In 2009, Koubei was merged into Alibaba’s Taobao Marketplace.
Ant Financial-owned Alipay, China’s largest e-payments provider, has been increasing ties to offline merchants and local governments in a bid to make smartphones central to the way consumers access and pay for neighborhood goods and services. Through local government partnerships, users of Alipay Wallet can obtain public services, such as checking the status of their applications for visas and passports, getting motor vehicle licensing information and paying for traffic violations.