Online-to-offline (O2O) commerce and providing ultra-speedy local deliveries are two of Alibaba’s main growth targets. Now the e-commerce giant is significantly increasing its commitment to both verticals. Alibaba and subsidiary Ant Financial announced today that they will each put RMB 3 billion (about $483.3 million) into a joint venture called Koubei.
The total investment of about one billion will go toward shopping and dining services, with Ant Financial (the maker of Alipay, China’s largest mobile payments platform) providing tools for merchants on the platform. The two companies will each hold a 50 percent equity stake in Koubei.
Like other Chinese e-commerce companies, Alibaba has been investing heavily in its mobile businesses, which puts pressure on its bottom line. O2O services allow Alibaba to capture the attention of shoppers even when to go into brick-and-mortar businesses. For example, they can check Alibaba’s apps for discounts and promotions, use their Alipay Wallets for purchases, or order goods from local stores for delivery.
Alibaba has made a host of investments to enhance its O2O offerings, including Israeli QR code developer Visualead and department store operator Intime. It’s also been busy expanding its logistics network across China to power next-day deliveries of items like fresh produce and prescription drugs. Koubei, however, marks its most organized and aggressive effort so far to tackle O2O and hyperlocal e-commerce.
Taodiandian, Alibaba’s restaurant delivery business, and several of Ant Financial’s services for offline merchants—including vending machines and tools for healthcare retailers—will be folded into Koubei.
Samuel Fan, Koubei’s new chief executive officer, said in a press statement that “consolidating our resources under Koubei allows us to capture opportunities that navigate both the offline and online markets. 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.”