Ele.me to Enhance the Collaboration with Alibaba, Fighting Against Meituan

Consumer Staples Author: Yue Liu Editor: Luke Sheehan Aug 17, 2020 04:37 PM (GMT+8)

In 2020, Ele.me will no longer focus on winning 50% market share, something initially named as a '50/50 strategy,' but will pay more attention to high-quality growth.

Image credit: EqualOcean

Alibaba's local life services company made a new round of strategic organizational adjustments to Ele.me. In terms of business strategy, from the '5050 strategies' to 'high-quality growth strategy,' focusing on synergy with Alibaba Group. In terms of organization, the country's 24 districts have been downsized into seven regions with a flatter hierarchy. After this adjustment, it will return to the system structure in place before Alibaba acquired Ele.me.

In April 2018, Alibaba wholly-acquired Ele.me through at USD 9.5 billion. In October 2018, Alibaba integrated Ele.me and Koubei to establish a local life services company. At the time, Wang Lei, CEO of Ele.me, stated that Ele.me must account for at least 50% market share." In the past two years, this goal has not been achieved, but the gap has widened. Meituan ranks first in China with a 67.3% share, while Ele.me accounted for only 26.9% in 2019.

According to data released by Meituan on August 8, 2020, its orders exceeded 40 million, but Ele.me has only 20 million daily orders. Besides, the MAU of Ele.me is 76.61 million, while Meituan's MAU is 144.78 million, nearly twice that of Ele.me.

To fight against Meituan, Ele.me is considering to enhance the collaboration with Alibaba and fully leverages its resources, though synergy in large companies is not smooth. For example, in collaboration with Taobao, Wang Lei hopes that Ele.me's products will be found directly in Taobao. It seems a simple matter but will not start to land until 2020 due to complicated structure problems and multiple parties' interests being involved.

"Collaboration is different in 2020. To turn a good foundation into a business plan, we need to discuss more in-depth and detailed cooperation with Alipay, Taobao, Gaode, and Fresh Hema," Wang Lei said.