DHAKA – Alibaba Group Holding has reached an agreement under which it will purchase a leading Bangladeshi online meal delivery service as part of one of its first international forays into the rapidly growing industry.
Alibaba took full control of Ele.me, the second largest food delivery service in China, in 2018.
The platform, which has expanded to include services such as manicures and housekeeping, brought in 24.29 billion yuan ($ 3.75 billion) in revenue for Alibaba in the nine months leading up to the 31st. December. Ele.me and other Alibaba “local service” units had 290 million customers. and 850,000 drivers, according to a presentation of the company last September.
HungryNaki, Alibaba’s new Bangladeshi subsidiary, is much smaller. Founded in 2013, it boasts more than 500,000 regular customers who order from 4,000 restaurants in five cities. The company has 500 drivers and 100 employees.
âThis is the first acquisition of a Bangladeshi startup,â Managing Director AD Ahmad told Nikkei Asia. “It’s a matter of pride. We have made the deal and it may take a month to finalize the acquisition process.”
As part of the deal announced Thursday, Alibaba acquires 100% of HungryNaki from its local owners through Daraz Group, the Pakistan-based e-commerce platform it acquired in 2018. Daraz plans to expand the network from HungryNaki to around 100 cities, with investments in infrastructure, technology and human resources, officials said. No price was disclosed.
âWe believe that instead of starting our own food delivery business from scratch, the acquisition of HungryNaki is ideal,â Daraz spokesperson Shayantani Twisha told Nikkei.
Daraz has been Alibaba’s primary operating vehicle in Bangladesh, Pakistan, Myanmar, Sri Lanka and Nepal. Alibaba has invested more in India, but over the past year some of its applications have been banned and other investments have been restricted due to the border dispute between China and India.
Ant Group, Alibaba’s financial services subsidiary, bought a 20% stake in bKash, a Bangladeshi peer, in 2018. Ant also invested in the Indian food delivery app Zomato.
The food delivery market in Bangladesh has already aroused international interest. Berlin-based Foodpanda was launched in the country shortly after HungryNaki. Most recently, Singapore-based Golden Gate Ventures led a $ 15 million funding round for rival delivery service Shohoz.
With up to nine delivery apps competing for about 100,000 orders per day, many services have lost money. Uber Eats shut down local operations last year.
An investor in HungryNaki told Nikkei that he would suffer a significant loss on the capital he invested in the company when selling to Alibaba.
âThis is not a success story for local entrepreneurs, but rather a failure for startups,â he said.
Maliha Quadir, founder and managing director of Shohoz, told Nikkei she remains optimistic about the prospects for food delivery in the country, given rising incomes and female employment rates, but is concerned. the entry of foreign operators.
âThe big players will make it difficult for local startups,â she said. “The Bangladesh market is small.”
Others, however, see Alibaba’s move as a vote of confidence in the country’s private sector.
“It will be a positive decision,” said Muhammad Abdul Wahed Tomal, secretary general of the Bangladesh Electronic Commerce Association. “HungryNaki is going to get bigger.”