How Meituan’s $3.4b Mobike buyout redefines the bike-sharing battleground

Photo credit: Kentaro IEMOTO

The web was awash with rumors on Tuesday; by Wednesday afternoon, Meituan-Dianping announced it was buying Mobike in a multi-billion-dollar deal.

The transaction, reported to be in the region of US$3.4 billion, looks to be the most significant bike-sharing deal to date – not just in terms of value, but also the impact it will have on the industry.

Here’s what the deal means for service providers, their investors, and consumers.

Meituan instantly a big player

Meituan-Dianping – the result of a merger between two group-buying websites – is one of China’s highest-funded startups.

It offers services ranging from online shopping and on-demand food delivery to restaurant reservations, hotel bookings, user reviews, and movie ticketing.

This approach to localized ecommerce has brought it into conflict with tech giant Alibaba, the archrival of Tencent, which in turn is an investor in both Meituan and Mobike. Alibaba itself has backed Mobike’s main competitor, Ofo.

For such a diversified business as Meituan, moving into personal transportation was a logical step. The company launched its own ride-hailing service last month.

By acquiring Mobike, Meituan instantly becomes one of the two biggest players in bike-sharing.

“The transportation market is full of potential, and bike-sharing is a key component,” says Xue Yu, senior analyst at IDC China. “Meituan needs a partner, and Mobike – at this moment – is the best choice, given that Ofo has joined Alibaba’s ecosystem.”

Startups need to think about how to leverage the power of ecosystems, either by creating one or joining an existing one.

Meituan and Mobike users could both benefit from integration of the two firms’ platforms. As evidenced by other collaborations in the space – such as Grab’s partnership with oBike in Singapore – a host of opportunities for user deals, discounts, and other perks can open up, while a shared framework for payments and loyalty rewards, among other things, becomes possible.

“Competition in the internet industry is very likely to become the competition of ecosystems. So [startups need to] think about how to leverage the power of ecosystems, either by creating one or joining an existing one,” says Xue.

Another notable aspect of this deal is the footprint it gives Meituan outside of China.

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