Alibaba (BABA) is increasing its presence in China’s local services market through its mapping app, Amap. Recently, Amap introduced a new feature called “Street Stars,” which ranks restaurants, hotels, and tourist attractions. This move is directly aimed at competing with Meituan (HK:3690), known for its popular Dianping review platform.
With 170 million daily users, Amap plans to roll out Street Stars across 300 cities, showcasing around 1.6 million businesses. The feature leverages AI to provide rankings and recommendations. To encourage user adoption, Alibaba is providing 1 billion yuan (about $140 million) in subsidies for coupons redeemable on ride-hailing and other local services.
Competition with Meituan
Meituan has long been a go-to for Chinese consumers seeking dining recommendations. In anticipation of Amap’s launch, Meituan announced it would offer 25 million consumption coupons through an update to its takeaway services. This rivalry highlights a larger contest for prominence in what is known as China’s “instant retail” sector—where companies strive to deliver everything from food to services promptly.
Both Alibaba and Meituan heavily rely on discounts and incentives to draw customers. This strategy has raised some regulatory concerns, as it can lead to unsustainable competition and consumer confusion.
AI’s Role in Alibaba’s Future
Alibaba’s CEO, Eddie Wu, emphasized in a recent earnings call that enhancing Amap with AI capabilities is crucial for transforming it into a versatile platform for future lifestyle services. This aligns with Alibaba’s vision of creating a comprehensive consumption platform that merges e-commerce, local services, and payment solutions.
Analyst Insights
Market analysts are optimistic about Alibaba’s stock performance. Currently, there are 12 Buy ratings and one Hold rating on BABA, leading to a Strong Buy consensus. The average price target is $163.99, suggesting an approximate 11.5% increase from current prices.
In a digital age where quick access to services is vital, understanding how companies like Alibaba and Meituan evolve can provide insights into future trends in local services and e-commerce. As both companies push the envelope with technology, consumers can likely expect richer and more varied options.
Keeping an eye on these developments can shed light on shifts in consumer preferences and the competitive landscape in China’s tech market.
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