BEIJING (Reuters) - China’s largest provider of on-demand services Meituan-Dianping, backed by Tencent Holdings Group Ltd (0700.HK), said it planned to invest heavily in offline retail services in a strategy that will pitch it directly against China’s top e-commerce firms.
Meituan-Dianping has more than $3 billion remaining from a $3.3 billion funding round in early 2016, and has no plans for an initial public offering before completing setting up infrastructure for services including offline retail, VP of strategy Shaohui Chen told Reuters on Wednesday.
“We foresee we will be the most aggressive investor in the offline retail space...traditional software players do not have the competence in China because this is new infrastructure.”
E-commerce giants Alibaba Group Holding Ltd (BABA.N) and JD.com Inc (JD.O) are already channeling substantial resources into big data, artificial intelligence and logistics to tap new consumers in China’s vast offline retail market - brick-and-mortar stores - that still make up over 80 percent of total retail sales in the country.
Alibaba, which coined the term “new retail” to describe a strategic integration of data and payment tools for offline partners, has invested upwards of $9.3 billion in brick-and-mortar stores since 2015. It launched many un-staffed concept shops in the past year, including grocery and coffee stores.
Meituan-Dianping opened its first offline concept store this week, where consumers can go and buy grocery items and seafood using the company’s app.
“What we are calling new retail is actually closer to us than to the traditional e-commerce” said Chen.
“(Offline stores) view us more as a partner to expand their business, while they are very scared that those traditional e-commerce companies will replace them.”
Meituan-Dianping will expand its base of strategic partners and invest in backend technology, Chen said.
Alibaba invested in Meituan prior to the latter’s 2015 merger with Tencent-backed Dianping, but its stake fell after the deal. It has since invested heavily in a separate group of on-demand service providers, including food delivery platform Koubei and ticketing service Tao Piao Piao.
Meituan-Dianping, which has 200 million monthly active users and was valued at $18 billion following its 2016 funding, is also focusing on its investment in a small-scale ride-hailing service and expanding its travel ticketing business, Chen said.
Reporting by Cate Cadell; Editing by Himani Sarkar