Alibaba Is Taking a Page From Amazon’s Playbook and Going Local

NEW YORK (TheStreet) -- Alibaba (BABA) is constantly expanding the definition of e-commerce in China, often looking to Amazon (AMZN) for hints. For its next venture, Alibaba will be taking local services more seriously.

Earlier this week, Alibaba announced a new joint venture with its subsidiary, Ant Financial, to be known as Koubei. The joint venture will focus on local services in China, pulling together some existing projects Alibaba and Ant Financial have launched separately, and expanding to new areas.

For example, Alibaba's Taodiandian business, which facilitates food delivery from nearby restaurants, will be folded into Koubei. Ant Financial's vending machine business will also eventually be folded in Koubei -- the vending machines are enabled to take mobile payments via Ant Financial's mobile wallet, Alipay.

Beyond that, Koubei will look into new ways to digitize the offline world through location-based services, focusing primarily on the food sector to begin with.

"Local service is a high-growth sector in China given that most consumption still takes place offline," Alibaba spokesperson Melanie Lee said. "Forming this JV allows us to focus exclusively on capturing offline consumption opportunities with a dedicated team."

In 2014, China's local services market was valued at around $38.2 billion, up 38% from the previous year, according to iResearch.

Both Alibaba and Ant Financial will be funneling about $483.3 million into Koubei to get it started. Each company will have a 50% stake in Koubei, and Ant Financial executive Samuel Fan will become its CEO.

If you liked this article you might like

Roku, Nucana and Other IPOs That Should Be on Your Radar in 2017

Alibaba Could Rally Another 27% After Already Doubling in 2017

Wall Street Deflates in Pullback After Fed Excitement, No Records for Dow

Markets Recede From All-Time Highs on Tech Selloff