Chinese online food delivery service provider ele.me has sold an undisclosed stake to China’s largest car-hailing app Didi Chuxing, the company announced on Thursday.
The deal, which was completed earlier on Tuesday, can help Didi expand into the food delivery industry and become the largest urban delivery system in China, ele.me said in a press release.
The move is seen by analysts as part of Didi's strategy of offering delivery services aside from rides.
Didi, which is backed by China's Web titans Tencent and Alibaba, may soon announce investments in cargo delivery and logistics companies, Liu Dingding, an industry analyst at Beijing-based market research firm Sootoo, said on Thursday.
Ele.me, which relies on two-wheeled electric vehicles to make deliveries, expects its delivery scope to expand beyond its current 3-kilometer radius with the help of Didi's fleet.
An estimated 1.53 million taxi drivers and 5.5 million private car owners operate using Didi, a PR spokesperson with Didi Chuxing said on Thursday, although the company declined to reveal further details on the deal.
"Didi very likely got a large stake in ele.com for a bargain price," said Liu, noting the acquisition came at a fortunate time for ele.me, which is currently in a heated battle for market share against rival Meituan.com
Competition for domestic online food delivery in China is becoming tougher, with companies offering aggressive subsidies to merchants and consumers as early as 2014.
Alibaba-backed Meituan currently holds the lead in the online food delivery industry. For the first three quarters of 2015, Meituan ranks first with a 42.2 percent market share, with ele.me coming in second at 35 percent. Baidu's food delivery unit holds third place with 11.6 percent of the market, according to a report published in November by market consultancy firm BigData-Research.
iResearch, another market research firm, also posted an estimate in May that China's online-to-offline food delivery market would be worth 41.7 billion yuan ($6.52 billion) in 2017, a sizable increase from 9.5 billion yuan in 2014.
"Both China's online food delivery market and its car-hailing industry have the potential to accommodate several giants at once," said Li. This means that neither ele.me's rivals nor Didi's will be greatly threatened by the Didi-ele.me cooperation.