Ele.me aims to grab a majority share of China’s overall food-delivery market in the near future, CEO Wang Lai said Tuesday.
Moving into Alibaba’s ecosystem has already created new and immediate opportunities for Ele.me and the 3 million-strong delivery force registered through its platform, Wang said. While core food delivery is likely to provide strong growth longer-term, insights offered by various Alibaba apps and platforms, coupled with a growing need for last-mile delivery in Alibaba’s overall New Retail strategy, offer hints of what’s to come.
Alibaba took control of Ele.me in May. In June, after plugging the delivery company into its ecosystem, Ele.me delivery orders for categories including supermarkets, convenience stores under Alibaba’s Ling Shou Tong program, fresh fruits and flowers climbed 110% from a year earlier. In the future, Wang said there’s the chance for tie-ups with other Alibaba business units and collaboration with nationwide food chains as a delivery partner.
Ele.me has already begun benefiting from consumer insights derived from Taobao, Tmall, Alipay, Youku and other platforms and apps in the Alibaba ecosystem. The ecosystem, which runs the gamut from physical-goods orders to digital entertainment, drives traffic to Ele.me and helps it understand the needs of Chinese consumers.
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As for Ele.me’s core food-delivery market, the Alibaba unit recently launched a RMB3 billion summer promotion campaign that’s already starting to show results in several Chinese cities. In Hangzhou, Ele.me added 100,000 customers to its membership program in early July. In Changsha, during just the first two weeks of July, gross transaction volume climbed by almost 15% over the same period in the previous month.
The summer campaign kicked off with discounts and coupons for late-night snacks delivered during the recently ended FIFA World Cup 2018 tournament. The World Cup deals spurred what Ele.me said was a “rapid rise in food delivery” in early July, with momentum sustained since then.
But it is the sector’s longer-term prospects that excite Ele.me’s CEO. Chinese customers spent around RMB4 trillion on food in 2017, according to China Cuisine Association data. Less than 10% of that went toward food delivery, which has become one of the fastest-growing and most-competitive areas in China.
“We view the limited penetration of delivery in the food and beverage sector to-date as a tremendous opportunity for growth,” Wang said.
Wang said Ele.me also complements Koubei, Alibaba’s local services platform. By combining Ele.me’s on-demand delivery service with Koubei’s consumer-acquisition and in-store engagement capability for restaurants and service establishments, Alibaba can offer an integrated online/offline experience to consumers, in line with the group’s overall New Retail strategy.
“The local-services market is a must-win for Alibaba as part of its New Retail strategy, and we look forward to Alibaba’s continued financial and technological support to win this market,” Wang said. “As the spending power of Chinese shoppers continues to grow, the local-services sector becomes critical for Alibaba to build customer and merchant engagement and fulfill its mission of accelerating the digital transformation of traditional retail.”