Alibaba, Tencent take their rivalry to online food delivery services

The duel between China's business conglomerates Alibaba and Tencent will move to online food ordering services.

On Monday, Alibaba and its financial arm, Ant Financial, signed an agreement with online food ordering platform Ele.me to buy out and take full control of the platform for $9.5 billion (59.58 billion yuan).

The move is a breakthrough in Alibaba's "from new retail to new consumption" plan, and Ele.me's timely delivery network will be the infrastructure of the "new retail", according to a public letter from Alibaba's Zhang Yong.

Previously, Alibaba and Ant Financial had invested $2.25 billion to acquire about 30 percent of Ele.me.

After the deal, Zhang Xuhao, the founder of Ele.me, will become chairman of the new Ele.me, while Zhang Yong, vice-president of Alibaba, will be CEO, according to the public letter.

Last August, Ele.com purchased Baidu Waimai, a food delivery unit of internet search company Baidu, to take nearly half the share of the online food ordering market.

Alibaba will integrate Ele.me's businesses to compete with Meituan, a Tencent-backed online lifestyle platform that has some share of the market, according to the news portal thepaper, citing Futu Securities.

Ele.me and Meituan are not only food delivery service platforms, but also have classified offline shopping information to provide group-buying service to local people.

As controllers of Ele.me and Meituan, the competition between Alibaba and Tencent will extend from the online market to the offline market.