Alibaba injects more services into Juhuasuan to compete with Meituan

China’s technology giant Alibaba will allow part of services originally offered on its local services platforms Koubei and Ele.me to be listed on its group-buying platform Juhuasuan from December 12, 36Kr reported on Monday.

Photo credit: moovstock / 123RF

Dining services from restaurants like Pizza Hut, McDonald’s, KFC, and other services like photo shooting and body care offered by various merchants will also be soon promoted on Juhuasuan, which was originally a platform exclusively for merchandise sales then later recalibrated in an effort to compete with other platforms such as Pinduoduo and Meituan.

“This means that in Alibaba’s digital economy, the two existing consumer services core business – Koubei and Ele.me – will be strategically connected and integrated with Juhuasuan,” an unidentified executive at Alibaba’s local consumer services segment told 36Kr.

The association allows Ele.me and Koubei to tap Juhuasuan’s user base to compete with Tencent-backed Meituan, the largest local service provider in China. The new offerings can also increase Juhusuan’s attractiveness, as the platform will offer more services to its users at discounted prices.

Meituan reported a total of 27.5 billion yuan (US$3.9 billion) in revenue in the third quarter, up 44.1% year on year. In a breakdown, Meituan made 15.6 billion yuan (US$2.2 billion) in revenues from its food delivery business in the second quarter, up 39.4% year on year. In-store, hotel, and travel business contributed 6.2 billion yuan (US$881 million) in revenues, up 39.3% year on year.

Alibaba, although a dominant ecommerce player, is still weaker in local services compared with Meituan. In the quarter ended September 30, the Hangzhou-based company booked 6.8 billion yuan (US$ 956 million) in revenue from its local consumer services, up 36% year on year.

Alibaba initially had a close connection with Meituan, as it led the company’s US$50 million series B round financing in 2011, when Meituan was still focusing on the service-centric group-buying business in China. Alibaba started to offload its stake in the company in 2015 when Meituan merged with Dianping, a restaurant review platform based on user-generated content, and shifted its focus to on-demand services such as food delivery, later securing US$2.3 billion in a new round financing from investors led by Tencent in early 2016, KrAsia reported.

Alibaba’s management told investors in January 2016 that its exit from Meituan would only be a matter of time, and reportedly, reached a US$900 million deal to sell its stake in the on-demand platform at the end of the same month. Since then, Alibaba started to bet bigger on Koubei, a joint venture it set up with Ant Financial that first provided listings and reviews of local service establishments including restaurants.

In 2018, Alibaba acquired food delivery service Ele.me and later merged with Koubei to compete directly with Meituan in the local service sector.

This report was first published on KrAsia.

Currency converted from Chinese yuan to US dollar: US$1 = 7.04 yuan.