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Apr 20, 2016 07:41 AM EDT

Alibaba’s Hungry for Food-Delivery Investment

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Alibaba addresses accusation of selling fakes

Food delivery app, Ele.me has sealed the deal with the leading e-commerce company Alibaba for capital investment. Alibaba invested $900 million whilst sister company, Ant Financial, was giving $350 million for internet finance purpose.

The Shanghai based company lets users to order food online from restaurants that don't feature food delivery. Literally means 'Hungry Now?', Ele.me app links online to offline business, using the app.

Based on a TechCrunch article, it's no surprise that Alibaba is eager to invest because it is part of the strategy in O2O (offline to online). An article published in HuffingtonPost believes that O2O commerce is a huge money opportunity for startup entrepreneurs; aside from the risks of not be able to track online impression and actual sales at the offline side.

So, what's the catch?

Now that customers can order foods via Ele.me, conventional merchants are also able to get involved in online purchases. Customers are getting dependant on online apps, such as looking for products, reviews and even hailing for taxis.  In fact, the service is becoming a trend in China and many food delivery apps have been in service in the country with Hungry House and Deliveroo are among them.

As for Ele.me; it has long been anticipating the agreement with Jack Ma's company since last year. The investment from Alibaba is a vehicle for Ele.me to fiercely compete head to head with its rivals.

Apart from the takeaway trend, analyst warns these investments would crash due to over-focusing on network scale, as Business Insider reported.

Alibaba's 'careful' investments

Alibaba has always been careful to whom it's investing. The massive empire feels that there is always a room for improvement after jumping in to various businesses. Before Ele.me, the company purchased ChinaVision that handles mobile games; formed a marketplace called Koubei; and invested $1 billion in Lazada.

What could be next?

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