Alibaba and Ant Financial will set up a joint venture lifestyle service platform called Koubei (meaning word-of mouth) that focuses on transforming and elevating local lifestyle.
Alibaba and Ant Financial will each invest RMB3 billion (approx: US$483 million) to have equal 50% equity in the JV. The Koubei platform will take advantage of both companies’ resources, leveraging Alibaba’s gourmet service platform Taodiandian and Ant Financial’s offline operations resources and management team. Ant Financial’s payment operations manager Chi Fan will be the CEO of Koubei.
Why Alibaba needs Ant Financial
Alibaba said it believes the development of mobile internet has given rise to opportunities to transform local lifestyle services, including gourmet. The tie-up with Ant Financial will help both parties leverage years of experience to provide lifestyle services with better solutions. Alibaba’s mobile ecommerce platform and cloud computing service, and Ant Financial’s mobile payment, consumer credit, credit system and micro-loan, can work together effectively to offer consumers better services.
Ant Financial said setting up Koubei as an independent JV will allow the JV’s management to train its focus on setting up an ecosystem for local lifestyle service businesses. As the business involves online and offline operations, unlike pure operations of online business, the Koubei team has to be able to mix and match online and traditional businesses to achieve the right chemistry. “The Koubei team must first learn about the offline market and then offer the local lifestyle businesses what we know about the internet and big data,” a spokesperson said.
Koubei JV an independent operation
Alibaba and Ant Financial both said Kobei is a collaboration to upgrade local lifestyle services. Alibaba’s restaurant search Taodiandian has not only built up a wealth of business resources and a strong reputation among users but has also trained a team that is well experienced in finding solutions for its offline business partners and users. This team of veteran staff is Kobei’s biggest asset.
Alibaba’s relaunch of Koubei
The original Koubei website was one of the first online user-oriented local lifestyle information and ratings companies in China. It quickly built a good user and brand base that matched major ratings site Dianping. However, Alibaba suspended promotion of Koubei in 2011. In the first Weibo post of the relaunched Koubei, the company said: “We didn’t want to put (the suspension) down to any factors such as smartphone connection speed, industry awareness or market maturity. The only question we have been concerned with is: When are we making a comeback?”
With its comeback, Koubei has chosen to first embark on the gourmet segment, which is dominated by major players like Mietuan and Dianping after a few years of competition. Koubei said the relationship between local lifestyle services and the internet is still only just starting to deepen and their is tremendous market potential ahead. While the local lifestyle market in 2014 reached a scale of RMB235 billion (approx: US$37.8 billion) with a penetration rate of 4.4%, the online gourmet segment had a penetration of only 2.5% of the entire offline dining market worth RMB2 trillion(approx: US$322 billion) , according to iResearch.(Translation by David)