Chinese e-commerce giant Alibaba Group Holding and its financial arm Ant Financial Services Group jointly announced that they will each invest 3 billion yuan ($483.40 million) to set up a new joint venture on Tuesday, targeting the local services market in the country.
The new venture, named Koubei, will start from food ordering and delivery business, in which Alibaba's catering and delivery service platform taodiandian.com and Ant Financial's off-line merchant resources will play key roles, according to a statement sent to the Global Times by Alibaba on Tuesday.
The two investors will take 50 percent stake each in Koubei, the statement said.
The new company is also expected to integrate the convenient elements of mobile commerce and big data to transform and upgrade local services, as the statement showed.
Analysts viewed Alibaba's investment as a consolidation of its own resources.
"Alibaba has been working on its O2O [online to off-line] strategy in recent years, and by cooperating with the company's different affiliates, the new platform could benefit from a diverse customer base," Liu Xuwei, an analyst from Beijing-based market research firm Analysys International, told the Global Times Tuesday.
In 2006, Alibaba bought koubei.com, offering local classifieds service while providing a platform for users to share information about goods and services, restaurants and entertainment.
Koubei.com was reportedly integrated into Alibaba's consumer-to-consumer marketplace taobao.com in 2009.
The e-commerce major stopped promoting koubei.com four years ago, Ant Financial said in a Weibo post on Tuesday, without elaborating on the specific reasons.
Liu noted that the investment in the new joint venture could be seen as a new beginning for Alibaba's expansion in the country's fast-growing local services industry, also known as O2O.
A report issued by Beijing-based market research consultancy iResearch in February said that the transaction volumes generated by China's O2O industry increased 42.8 percent in 2014 year-on-year, accounting for 1.4 percent of the country's 12.3 trillion yuan e-commerce transactions in total.
O2O segment will become the fastest-growing sector in the Chinese e-commerce market in the future, iResearch predicted.
Ant Financial has been developing the company's O2O services since 2013.
By using Alipay Wallet, an online payment mobile app run by Ant Financial, consumers are able to book flight tickets online, pay taxi fees and electricity bills via their smartphones.
However, some analysts see Alibaba's new investment in O2O as a move to compete with its arch rival Tencent Holdings in the mobile payment sector, particularly after Tencent is actively promoting the payment function of its well-established social networking app WeChat.
"The O2O sector will continue to be a major battleground for domestic Internet giants Baidu, Alibaba and Tencent," Li Chao, an analyst from iResearch, told the Global Times Tuesday.
Li holds a bearish outlook on the prospect of Alibaba's O2O business, which he said is likely to be overshadowed by Tencent due to the latter's large base of loyal users amassed through WeChat.
