Why did Alibaba let Gaode "sweep the streets" with 1 billion?

On September 10, Alibaba celebrated its 26th anniversary. On this day, Amap, a subsidiary of Alibaba, announced the launch of the world's first ranking list based on user behavior, the "Amap Street Scanning List."

This move is interpreted as another important initiative by Alibaba to strengthen its local life service market following the launch of Taobao Flash Sale.

Tracing the Efforts in In-Store Consumption

According to China News Service, Alibaba's business adjustment was kept highly confidential before being made public on the 10th, with several media outlets frequently mentioning keywords such as "in-store," "restarting Koubei," and "group buying" in related reports. On the 9th, China News Service learned from informed sources that this significant business release is related to "Amap's in-store business" and not "restarting Koubei."

Before the press conference on the 10th, the Amap App homepage launched the "Amap Street Scanning List."

Screenshot of Amap App

Amap introduced that by opening the "Street Scanning List," users will see rankings corresponding to different types of behaviors, including the "Tire Wear Ranking," which reflects long-distance trips, the "Repeat Customer Ranking," which indicates multiple visits, and various rankings for local favorites, city-specific experiences, and highly-rated small shops, with each category updated daily based on dynamic data.

In fact, Alibaba's official announcement to strengthen its in-store consumption business has precedents.

On the evening of August 29, during Alibaba's Q1 fiscal year 2026 analyst conference call, Jiang Fan, CEO of Alibaba's e-commerce business group, stated that the Taobao Flash Sale business has reached a certain scale, with approximately 150 million active users daily, some of whom have needs for in-store pickup or group buying. Therefore, Alibaba will approach this from the perspective of meeting user needs, especially considering the synergy with offline delivery services, to provide users with more diverse services. He revealed that Alibaba is currently testing and exploring (in-store business) in some cities.

The in-store business is not new for Alibaba. In fact, Alibaba has not abandoned this business since investing in Koubei in 2006.

Public information shows that in 2008, Alibaba fully acquired Koubei. In 2009, Alibaba upgraded its "Big Taobao" strategy, integrating Koubei into Taobao.

In the following years, Koubei was perceived to have unclear positioning issues until June 2015, when Alibaba and Ant Financial jointly announced the restart of the "Koubei" brand. Since then, Koubei has been deeply involved in Alipay's "Double 12" activities, and this operational development model continued until 2018.

On April 2, 2018, Alibaba fully acquired Ele.me. In October of the same year, Alibaba officially announced the establishment of a local life service company, formed by the merger of Ele.me and Koubei.

However, in the takeout (delivery) and in-store consumption markets, the merger of Alibaba's two major local businesses has not achieved satisfactory results. Consequently, Amap has taken on some of Alibaba's aspirations in the local life market Back in 2013, Alibaba invested in AutoNavi and acquired a 28% stake. Shortly after, in 2014, Alibaba completed a full acquisition of AutoNavi for $1.1 billion. Following the acquisition, AutoNavi delisted from NASDAQ and gradually integrated into Alibaba's ecosystem. At that time, acquiring AutoNavi was considered a key move for Alibaba's layout in the mobile internet and O2O market.

In the past two years, AutoNavi has begun to take on more of Alibaba's local lifestyle business.

According to multiple media reports, on March 22, 2023, AutoNavi held an internal meeting and announced the official merger with Alibaba's local lifestyle service segment Ele.me's in-store business (formerly Koubei). In the future, all of Alibaba's local lifestyle in-store businesses will be unified under AutoNavi. Alibaba's financial report for the first quarter and the entire fiscal year of 2023 disclosed that in June 2022, AutoNavi had over 120 million daily active users.

Regarding this integration work, Yu Yongfu, then CEO of Alibaba's local lifestyle service company and chairman of AutoNavi Group, stated in a live meeting that organizational adjustments are merely a means, with the goal being business development, and everyone should work together to improve the in-store business. In the following quarter, the teams from AutoNavi and Koubei will explore how to integrate.

In terms of local lifestyle business, Alibaba has repeatedly mentioned the overall performance of in-store business in its financial reports. For instance, in the third quarter financial report for the fiscal year 2024, it was mentioned that the local lifestyle group's revenue grew by 13% year-on-year, and overall orders increased by over 20% year-on-year; in the first quarter financial report for the fiscal year 2025, it was noted that AutoNavi and Ele.me's order growth improved operational efficiency and business scale...

Now, AutoNavi has established a certain foundation for undertaking in-store business.

Alibaba's financial report released at the beginning of this year for the third quarter of the fiscal year 2025 showed that AutoNavi made significant breakthroughs, achieving profitability for the first time.

On September 10, AutoNavi disclosed for the first time that AutoNavi Map covers over 7 million restaurant locations nationwide, with 120 million life service-related searches conducted daily, and navigation to 13 million life service destinations.

On August 29, Alibaba's financial report for the first quarter of the fiscal year 2026 mentioned that for the three months ending June 30, 2025, the revenue from "instant retail" business was 14.784 billion yuan, a year-on-year increase of 12%, mainly due to the order volume growth brought by the launch of "Taobao Flash Purchase" at the end of April 2025.

What impact does this have on consumers?

In the competition for local lifestyle in-store business, Meituan, as the incumbent, has a leading market share.

On August 27, Meituan released its performance report showing that in the second quarter of this year, Meituan achieved revenue of 91.8 billion yuan, a year-on-year increase of 11.7%. Among them, the in-store business continued to grow in that quarter, with order volume increasing by over 40% year-on-year, and the number of annual active merchants reaching a new high.

Interestingly, on the same day that the "AutoNavi Street Ranking" was released, Meituan announced the "relaunch" of its quality takeaway service on Dianping. In Meituan's introduction, it also mentioned "large model empowerment"—using self-developed large models on the B-end, combined with massive real review data to analyze user needs, further eliminating non-authentic review data, and providing reliable decision-making for users with "AI + real high scores." What market impact will Alibaba's push into in-store consumption bring at this time?

Zhang Yi, CEO and chief analyst of iiMedia Research, told China News Service that Alibaba's focus on in-store business at this time is influenced by multiple factors. On one hand, the scale of China's local life consumption market is continuously expanding, while pure online business has actually reached a bottleneck. Coupled with Meituan's significant lead in the local life service market and Douyin also taking a share of the pie, Alibaba's move is aimed at capturing market share and better developing its online moat. On the other hand, Amap has high-frequency traffic and platform advantages, and activating in-store business can yield good expectations and synergistic effects.

Ma Jihua, founder of Beijing Darui Management Consulting Co., Ltd. and a senior analyst in the internet industry, told China News Service that Alibaba's deeper exploration of local life will help create a multi-layered consumption ecosystem across all time periods, forming a complete commercial closed loop from multi-day delivery to same-day and even minute-level delivery. Directly, in-store business can drive traffic to the entire e-commerce sector; in the long run, it can improve the user consumption big data view, providing a continuous resource impetus for the future era of artificial intelligence.

What advantages does Alibaba have in facing market defenders? Zhang Yi believes that Alibaba's advantage lies in its comprehensive ecosystem, including payment, e-commerce, maps, and other integrated systems, which can provide rich traffic entry points and user data for in-store business. For Alibaba, the future operational direction of in-store business is crucial.

Ma Jihua also believes that besides its prominent ecological synergy, Alibaba is technically advanced in AI and cloud computing, with a solid foundation and experience in expanding the B-end market. "Of course, in terms of deep operation of offline merchants, Alibaba is not as strong as Meituan. The Dazhong Dianping app has already occupied users' minds, and changing that is not easy."

A report released by iiMedia Research previously predicted that the online food delivery market will reach 1.7469 trillion yuan by 2025, and the local life service market will exceed 2.5 trillion yuan by 2025. However, regardless of how these internet giants adjust their businesses, what consumers care about most is obtaining benefits and convenience.

Ma Jihua believes that Alibaba's move provides consumers with richer choices, and competition will enhance service experiences, allowing users to even take advantage of subsidies. Additionally, this competition will accelerate technological innovation, providing opportunities for breakthroughs in the industry.

Regarding the subsidies that consumers are concerned about, Ma Jihua stated, "Subsidies are inevitable, but they will definitely be more precise and not just a flood of resources."

Zhang Yi also mentioned that high subsidies or related disguised activities will certainly exist. Alibaba can leverage its technological advantages to provide consumers with a more convenient consumption experience.

On the day the "Amap Street Ranking" was released, Amap announced the launch of the "Support Plan for Good Stores," which encourages users to consume in-store through substantial subsidies in three areas.

In terms of travel subsidies, Amap has issued a special in-store travel subsidy package worth 200 million yuan for users whose departure or destination is offline merchants, including subsidies for public transportation, taxi vouchers, and fuel vouchers, to subsidize users' travel costs.

In terms of transaction subsidies, Amap will issue 950 million yuan in consumption vouchers to encourage users to visit good stores and experience quality services, including in-store discount coupons and signature dish discounts, with all costs borne by the platform Author of this article: Li Xiaoxuan, Source: China News Service, Original title: "Spending 1 billion, why does Alibaba let Gaode go 'street sweeping'?"

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