Investment will provide channel to introduce other services to customers
China's leading search engine Baidu Inc has made an investment in online laundry service provider Edaixi, Chen Jianghua, a director of Edaixi, told the Global Times on Wednesday.
The Beijing-based firm just finished its second round of financing, which totaled $100 million.
Funding was also received from investment firms Matrix Partners and SIG China. Chen did not disclose how much Baidu contributed.
Founded in 2013, Edaixi offers laundry service to the growing number of Internet users in China who have formed the habit of shopping online.
People can have their laundry picked up, washed and returned within 72 hours by using the Edaixi app.
Edaixi received 20 million yuan ($3.2 million) of investment from Internet giant Tencent Holdings in July 2014.
The company also raised $20 million in its first-round financing in November 2014, according to media reports.
Currently operating in Beijing, Shanghai and Shenzhen, Edaixi plans to extend its services nationwide.
It receives more than 100,000 orders per day in 16 cities where it has 5 million customers, tech news portal 36kr.com reported on Wednesday.
It has a 90 percent market share in the online-to-offline (O2O) laundry business in those cities, the portal said, noting with the new investment, Edaixi plans to cover 100 cities in China.
The second round of funding will be used to offer subsidies to the laundry firm's customers, recruit local and foreign talent and build up its "e-housekeeper" team with the aim of expanding the domestic market, according to the report.
Experts said that through providing Edaixi's laundry service, Baidu can introduce its other O2O services and payment tools to consumers.
Baidu's investment in Edaixi is in line with the company's goal to expand its O2O business, Zhang Yi, CEO of the iiMedia Research Institute, told the Global Times on Wednesday.
Baidu's shares tumbled to a 13-month low on the NASDAQ after it released its second-quarter report on July 27. That fall was attributed to US investors' lack of confidence in its O2O business. However, CEO Robin Li Yanhong said that the company aims to be a leader in the O2O segment.
The Internet giant has already made several major moves in the O2O sector.
In June, Baidu decided to invest 20 billion yuan to develop its group-buying platform nuomi.com.
In July, media reports said that Baidu had invested 2 billion yuan in classified site baixing.com.
"Baidu is seeking a business model that can generate cash flow, so it is increasingly focusing on the O2O sector," Zhang said.
Zhang noted that Baidu is facing decreasing revenue from its search engine business, according to its second-quarter financial report.
Gross merchandise value, which refers to the total value of goods sold during a certain period, from Baidu's O2O business totaled 40.5 billion yuan in the second quarter this year, surging 109 percent on a yearly basis, according to the company's second-quarter report.
The O2O business represents the wave of the future as users turn to smartphones and away from personal computers, and no Internet company can afford to ignore this trend if it aims to succeed, Li Chao, an analyst at Beijing-based consultancy iResearch, told the Global Times on Wednesday.
Internet companies aim to provide as many services as possible to customers through their smartphones, and that will be the new income source in the era of the mobile Internet, Li noted.
Meanwhile, to purchase goods and services, customers must use their online payment accounts, which provide valuable information for Internet companies seeking to offer Internet-based financial services, according to Li.