There are no eternal enemies, only eternal interests. When Wang Lu, Baidu’s vice-president, and Zhang Xuhao, the founder of Ele.me, clasped hands, even as the delivery guys in different colors outside the window were still engaged in a "contest" over who squeezed into the narrow elevator first, the pattern of the delivery market had changed.
On August 24th, Ele.me formally announced the merger of Baidu Takeaway. After the merger is completed, Baidu Takeaway becomes a wholly-owned subsidiary of Ele.me. The two sides did not disclose the transaction amount, but only through two "internal letters" from Ele.me and Baidu Takeaway to close the long-circulated merger. When the dust falls, how will the newly formed "blue and red combination" run in? What changes will happen to the mentality of each individual in the battlefield? Even if many of the core issues of the merger are deliberately "blurred", there are always clues to be found.
Will there be Baidu takeaway in the future?
Baidu takeaway maintains its existing brand and organizational structure to operate independently
"If the two sides merge, will the new brand be renamed Duzi Hungry?" Of course, the joke of netizens did not come true. Baidu Takeaway still develops as an independent brand and operating system, and the personnel structure including management remains unchanged.
Zhang Xuhao, CEO of Ele.me, said in an internal letter that Baidu Takeaway and Ele.me come together, but it would be the best decision to let Baidu Takeaway operate independently with its existing brand and organizational structure. Zhang Xuhao said that Baidu Takeaway operates independently, which does not mean that it does not interact with each other. The two sides will help each other and complement each other’s advantages to form a joint force of 1 + 1 > 2. Ele.me will invest funds, traffic, manpower and other resources in Baidu Takeaway to support Baidu Takeaway to become bigger and stronger, so that the user experience can be greatly improved.
Baidu Takeaway also said that after the merger, Baidu Takeaway will continue to develop as an independent brand and operating system, and the personnel structure including management will remain unchanged. The acquisition does not involve Baidu Nuomi, which has attracted much attention before. "We will make every effort to strengthen strategic coordination with Ele.me to achieve a win-win effect. This is the trend of industry development and the common choice of management. Some students may not be able to accept this change for the time being. Yesterday we were still fighting in blood, and today we have clasped hands. However, the change must be for a better start."
2 Who brokered the deal?
Alibaba and Baidu, of course.
Alibaba provided financing support for the acquisition of Baidu food delivery by Ele.me. Cai Chongxin, executive vice chairperson of Alibaba Group, said that Alibaba and Ele.me have reached a strategic cooperation for a year, which has created great value for the users of both parties. The market position established by Ele.me so far also proves the excellent strategic vision and execution of the management team. Alibaba supports Ele.me to integrate the food delivery market. It believes that Ele.me will be able to consolidate its leading advantage after merging Baidu food delivery. The group will continue to give strong support to the new platform in terms of traffic and financing.
This transaction is of course also supported by Baidu Group. Lu Qi, president and chief operating officer of Baidu Group, said that he is very happy to see Baidu Takeaway and Ele.me marriage, and believes that the integrated resources and technical capabilities can bring a better consumer experience to consumers.
Baidu Takeaway also said in an internal email, "Baidu and Alibaba will also give us all-round and greater support. This also means that we will receive double the resources from now on."
3 Is Baidu takeaway "cheap"?
In 2015, Baidu takeaway was valued at $2.40 billion
In yesterday’s official announcement, the parties did not disclose the transaction price. But according to Caijing magazine, the deal is only $800 million, with $200 million in cash.
"Caijing" reported that the price is divided into two parts: Baidu takeaway 500 million dollars for sale; in addition, Baidu packaged some traffic inlet resources to Ele.me, priced at 300 million dollars, including mobile Baidu, Baidu Nuomi, Baidu map, the term is five years, Baidu search period is two years. This 800 million dollars 200 million dollars in cash, Ele.me issued shares 300 million dollars, Baidu accounted for 5% of the shares of Ele.me after the completion of the transaction, the remaining 300 million dollars lock period of five years.
If the price is true, it is indeed impressive.
In 2015, after Baidu takeaway completed the A round of financing of 250 million US dollars, Baidu founder and CEO Robin Li once said that Baidu takeaway was valued at 2.40 billion US dollars. In 2016, Baidu takeaway also frequently contacted investors, and the proposed price of B round financing happened to be about 500 million US dollars.
Two years later, the delivery fees of the three major takeaway platforms have quietly risen, but the valuation of Baidu takeaway is far less than that of the year it was established. This price may only make the A round investors not lose money. What’s more, the "traffic package" worth 300 million US dollars covers almost all of Baidu’s high-quality entrances, including mobile Baidu, Baidu Nuomi, and Baidu Map.
What does Alibaba want?
Another layout of the new retail strategy
The latest financial report released by Alibaba shows that in April 2017, Alibaba and Ant Financial further increased their holdings in Ele.me, with a total investment amount of 400 million US dollars. After the completion of this investment, Alibaba’s shareholding ratio in Ele.me was 32.94%, replacing the Ele.me management team and becoming the largest shareholder of Ele.me.
In fact, before May 2014, Meituan still belonged to the Ali department, but with the merger of Meituan Dianping, Ali and Meituan also "broke up".
The industry generally believes that Ele.me’s acquisition of Baidu takeaway is another layout of Alibaba’s new retail strategy. Ali’s strategy is to develop offline and penetrate into various scenarios related to payment, which will inevitably conflict with Meituan’s business. In April 2016, Ele.me integrated the word-of-mouth of Alibaba to provide operational support for the takeaway service of the word-of-mouth platform. Today’s Ali is building a new retail ecosystem. After losing control of Meituan, the combination of Ele.me + Baidu takeaway is even more important to Ali.
5 Baidu to get rid of the burden?
The soaring stock price speaks for itself
In fact, when the news was not finally confirmed on Monday, Baidu’s soaring share price was enough to explain everything.
Although Baidu founder Robin Li said in 2015 that he would invest in 20 billion within three years to support the development of O2O business, including Baidu takeaway, the business model of burning money and unsmooth financing have made Baidu takeaway lose the qualification to compete for the first place in the industry.
Since the second half of last year, Baidu Group has made it clear that artificial intelligence will be the main development goal, and Baidu’s takeaway business, which requires a lot of money, will eventually become an "abandoned child". In Baidu’s latest second-quarter financial report, Baidu has set a new strategic goal of transforming AI. Li Yanhong said that Baidu uses artificial intelligence as the driving force to continuously improve its existing core business, especially mobile Baidu, search, information flow and other core products, and did not mention Baidu’s future layout and strategy in the O2O field.
How can the takeaway industry landscape be rewritten?
The tripod becomes a two-man competition for hegemony
After the merger of Ele.me and Baidu Takeaway, some of Baidu Takeaway’s mid-to-high-end customer resources will complement the customer base of Ele.me, which started in the campus market. In addition, Baidu Takeaway’s technical advantages will also become a "weapon" for the development of Ele.me. Analysys analyst Yang Xu believes that Ele.me takes over Baidu Takeaway as a business, user and rider who value Baidu. "Baidu has always been positioned as a high-end and white-collar user, and it is a model of quality takeaway, so Ele.me can access the cooperation of Baidu quality merchants."
At present, the competition between Ele.me and Meituan is particularly intense, and the market share of the two sides is also increasing. According to the "Research Report on China’s Online Catering Takeaway Market in the First Half of 2017" released by iiMedia Consulting, Ele.me maintains the lead with a share of 41.7%, followed by Meituan Takeaway with 41%, and Baidu Takeaway retains a share of 13.2%. After the merger of Ele.me and Baidu Takeaway, the market share will exceed 50%, which will greatly change the current stalemate between Ele.me and Meituan Takeaway.
7 What does Meituan think of this merger?
"There is still a lot of room for growth in the takeaway market"
Yesterday, Meituan takeaway officials finally spoke out. Meituan said that the takeaway industry has come to this day, which is a process of mutual achievement for each participant in the market. No matter how the industry landscape changes, what remains unchanged is customer-centric. The takeaway market still has a lot of room for growth, and is willing to work together with peers to expand the takeaway market, improve industry norms, practice social responsibility, and provide better services to consumers.
Han Won Jia, Beijing Morning Post reporter
■ News link
Aizhan’s net profit fell by 80%
The sale of Baidu takeaway may affect its performance
Beijing Morning Post (Reporter, Chen Qiong) As one of the shareholders of Baidu Takeaway, Weiqian (China) Holdings Co., Ltd. used this investment to achieve a 2.6-fold increase in net profit last year, but this "dividend" did not last. With the sale of Baidu Takeaway to Ele.me, the performance prospects of Weiqian (China) Holdings Co., Ltd. have become increasingly blurred.
According to the semi-annual report released by Weiqian (China) Holdings Co., Ltd., Weiqian achieved a turnover of 1.152 billion yuan in the first half of 2017, down 2.5% year-on-year; net profit was 109 million yuan, down 80.9% year-on-year. In addition, the group’s other losses were 3.015 million yuan, down 100.5% from 623 million yuan in the same period in 2016. For the decline in operating performance, Weiqian attributed the reason to the decline in the number of stores and same-store sales during the reporting period. The semi-annual report shows that the number of Weiqian stores in mainland China fell from 625 in mid-2016 to 619 in the middle of this year.
In the second half of 2015, Weiqian invested 70 million US dollars (about 466 million yuan) in Baidu’s takeaway business. This investment accounted for less than 10% of Baidu’s takeaway equity, but brought 260.5% net profit growth to Weiqian in 2016. However, this investment has not changed the slump of Weiqian’s main ramen business. In recent years, Weiqian has launched more than a dozen sub-brands such as Hito Zang and Westinghouse Musashi in one go. However, the strategy of intensively launching sub-brands has not saved the decline of Weiqian’s main catering business.
With the sale of Baidu Takeaway at a "low price", the performance of shareholder Weiqian (China) has also become uncertain. According to the announcement of Weiqian, according to recent market news, one of the company’s "designated financial assets at fair value through profit and loss has a certain degree of uncertainty", which actually refers to the company’s investment in Baidu Takeaway.