Like Amazon, Alibaba has the scale and financial resources to disrupt many markets and traditional industries from e-commerce to financial payments, filmmaking and logistics. Today’s roundup gives you insight into the latest Alibaba developments and strategies with this huge global business leader.
TechinAsia compares China’s Singles Day 2015 sales of $14.3 billion with US Black Friday/Cyber Monday sales of $5.8 billion. Alibaba announced the promotion will run for 24 days instead of one day. Last year’s Singles Day sales for Alibaba alone totaled $13.5 billion, up 54% from the previous year, and this year they expect 40,000 global companies to take part.
Alibaba reported record Q2 revenue of $4.8 billion, with 75% of revenue from mobile devices. It plans to incorporate bricks-and-mortar stores into its business operations along with expansion outside of China. With over 450 million Chinese users, AliPay opened its mobile payment services in Hong Kong, as it moves to expand its financial payment services globally. Richard Windsor of Radio Free Mobile says AliPay is hoping to offer its financial payment services to US and other global companies wanting to sell into China.
In big news last week, Amazon launched its Amazon Prime service in China for a $57 annual membership and familiar features to other markets. Alibaba and retail giant Suning Commerce Group plan to invest 1 billion yuan ($148 million) to set up an e-commerce firm in Chongqing to compete with JD.com. Alibaba-owned Lazada is buying online grocery service Redmart for $30-40 million.
Despite a soft Chinese economy, e-commerce companies are thriving. The record $1.4 billion IPO for Chinese ZTO Express logistics firm reflects that e-commerce success in the China market where 21 billion packages were shipped in 2015. Finally, Internet Retailer looked at why Alibaba’s business model is successful and found seven core components.
China’s Singles Day vs America’s Black Friday and Cyber Monday
Every November, the average shopper in the US and China spends a fistful of Benjamins and a fistful of Maos on the year’s hottest sales events.
It happens first in China on Singles Day, which falls on November 11. Next it’s the turn of American shoppers the day after Thanksgiving on Black Friday, and then again on Cyber Monday. So which day is bigger? Which country wins? Tech in Asia – Connecting Asia’s startup ecosystem
Alibaba’s Big ‘Single’s Day’ Gamble: The Chinese E-Commerce Giant Expands Promotions From 24 Hours to 24 Days
Shoppers in China can have their party cake now and eat it, too. That’s because New York-listed e-commerce giant Alibaba Group has expanded its 6-year annual promotions for “Single’s Day” to 24 days instead of the usual 24 hours. That occasion usually refers only to Nov. 11 — where the two ones represent singles — an informal Chinese holiday marked by exchanges of gifts between increasingly moneyed unmarried people. It’s often compared to Cyber Monday, the biggest online shopping day in the United States.
The 24-day scheme might help declare the shopping holiday’s chief commercializing force Alibaba the most sought-after suitor in China as e-commerce rivals get stronger. It could also just make Alibaba’s Single’s Day spree seem as routine as an old married couple as consumers get used to it. Via forbes.com
Alibaba unveils plans for its massive Singles’ Day event
Chinese e-commerce goliath Alibaba Group Holding Ltd. today foreshadowed a few of its plans for Singles’ Day, the 24-hour online shopping extravaganza held Nov. 11 in China. Last year the event generated 91.217 billion yuan ($13.53 billion) in online marketplace sales for Alibaba, up 54% from the same date a year earlier.
At a press conference in Hong Kong, with representatives from global brands including Macy’s Inc., No. 6 in the Internet Retailer 2016 Top 500 Guide, and Costco Wholesale Corp. (No. 8), Alibaba CEO Daniel Zhang said the shopping festival, which takes place on Nov. 11 (the repetition of the number “1” in the 11/11 date represents people who are not married), has evolved far beyond a 24-hours sales event.
“From today through Nov. 11, consumers will discover, explore, play, watch, comment, share, recommend and shop across our entire ecosystem with our merchants both online and offline,” he said. “Leveraging our robust infrastructure, global merchants have been empowered with unprecedented capability to seamlessly engage and serve customers through new technology and new environments.” Alibaba expects 40,000 global merchants to participate in the Chinese shopping festival this year. That’s up from 27 merchants in 2009, the inaugural year of Singles’ Day. Via internetretailer.com
Alibaba CEO: Pure-play e-commerce faces ‘tremendous challenges
In a letter to shareholders emailed Thursday, Alibaba Group Holding CEO Daniel Zhang said that the company is planning to integrate physical stores into its operations in an effort to overcome the “tremendous challenges” inherent in pure-play e-commerce, Bloomberg reports.
According to Zhang, China’s largest e-commerce firm is taking steps to upgrade its retail businesses and targeting efficiency gains across product manufacturing, distribution and service, teaming with Suning Commerce Group (in which it is a stakeholder) and Intime Retail Group to combine its online efforts with brick-and-mortar sales.
Alibaba is also targeting new markets: After saturating e-commerce in urban areas of China, it moved into more rural areas and overseas, and as the Chinese economy has slowed, it has also expanded farther into Asia, spending $1 billion for a controlling stake in Singapore-based e-commerce startup Lazada Group, its biggest foreign investment so far. Via retaildive.com
Jack Ma’s Alipay expands to Hong Kong
Alibaba spin-off Alipay, the top mobile payments app in China with over 450 million active users, has expanded to Hong Kong. It’s Alipay’s first launch outside mainland China.
Starting today, people in Hong Kong can use Alipay for shopping with the local currency, the Hong Kong dollar, reports the Alibaba-owned South China Morning Post newspaper. For the moment, this launch only extends to Hong Kongers shopping on Alibaba’s online marketplaces, Tmall and Taobao.
“We hope that HK users can pay with HKD via Alipay in offline stores in HK soon,” explains a representative of Alipay parent company Ant Financial to Tech in Asia. That will put Alipay up against Apple Pay and Samsung Pay – and also against Hong Kong’s ubiquitous Octopus card. Via techinasia.com
Alibaba’s subtle ecommerce strategy to seed the world with Alipay
Just as foreign companies have struggled to gain a presence in the Chinese market, Chinese companies are likely to have a similarly difficult time in getting a foothold in the overseas market.
A number have tried and failed. A couple of years back, Alibaba had a spectacular failure when it bought New York-based e-commerce site 11 Main, made a mess of it and sold it on for about a third of the original price a year later. Alibaba, like the other cash-rich Chinese digital platforms, like to partner and acquire businesses, but this was a lesson that going straight into e-commerce in the West is not the answer.
Technology analyst Richard Windsor of Radio Free Mobile believes Alibaba is now trying a slightly more subtle strategy. He said: “They have started from the perspective that obviously retailers, particularly in the US, want to sell branded products to Chinese consumers. “So they approach retailers like Bloomingdale’s or Macy’s and say if they support Alipay, they will be able to get customers in China to buy on their website and then send them products into China, no problem.” Via ibtimes.co.uk
Alibaba posts record growth as mobile revenue tops desktop for first time
Alibaba saw record growth in Q2 2016 as the company’s Chinese retail marketplaces surged and users on mobile out spent those on desktop devices for the first time. The e-commerce giant reported revenue of RMB 32.2 billion (US$4.8 billion), which is a 59 percent increase year-on-year — the highest growth since Alibaba went public in September 2014 in the largest U.S. IPO in history.
There’s been talk of an economic slowdown in China, but that didn’t seem to impact Alibaba’s business on home soil. The company’s China marketplaces pulled in total sales of RMB 23.4 billion (US$3.5 billion), 49 percent higher than the same time last year. Of that figure, 75 percent of revenue came from mobile devices — RMB 17.5 billion (US$2.6 billion) — which is up 119 percent year-over-year.
Mobile revenue outstripped desktop for Alibaba’s Chinese marketplaces last year, but now the scale has finally tipped to mobile across its entire business with average spend higher from users on mobile than those accessing Alibaba via a PC. Handling the switch to mobile was a critical concern for investors prior to the IPO, and Alibaba executives admitted that the speed of this shift has surprised even them. Via techcrunch.com
Look out Alibaba: Amazon brings Prime to China in bid to take on e-commerce rival
Amazon has expanded its Prime subscription program to China in a move to compete with the country’s dominant e-commerce player Alibaba. Information on Prime in China first appeared on Amazon’s China website Friday morning. Amazon called the program the “first-ever membership program offering unlimited free cross-border shipping,” with access to more than 4 million international items.
Orders of Chinese products include free shipping under the 388 Yuan ($57) annual subscription. U.S. International orders exceeding 200 Yuan ($30) will also include free shipping.
Amazon has historically struggled to break into the Chinese market. But by offering free shipping on some international orders, Amazon is taking advantage of a growing demand from China’s rising middle class for foreign goods and products. The Prime China page promotes a mixture of domestic companies as well as many foreign brands across a variety of categories, such as KitchenAid, Major League Baseball, Kenneth Cole and Timberland. Via geekwire.com
Alibaba, Suning to set up e-commerce firm
Chinese e-commerce giant Alibaba Group Holding Ltd and retail giant Suning Commerce Group Co plan to invest 1 billion yuan ($148 million) to set up an e-commerce firm in Chongqing, a move that is likely to intensify their competition with JD.com Inc, China’s second-largest e-commerce player.
Suning will invest 510 million yuan, gaining a 51 percent stake in the new joint venture, while Alibaba will pay 490 million yuan, owning a 49 percent stake, according to a statement issued by Suning on Tuesday evening. The business scope of the new e-commerce firm covers services, wholesale and retail, and technological development and consulting.
The joint venture will operate and manage the stores opened by Suning on Alibaba’s online platform, expand business based on the customer-to-business model to improve the brand’s services and their quick response to consumers’ requests, as well as innovate the online-to-offline operating model to improve the service quality for small-and medium-retailers and consumers, the statement said. Via chinadaily.com.cn
Ecommerce fight looms in SE Asia as Alibaba-owned Lazada buys Redmart and Amazon moots launch
Southeast Asia ecommerce giant Lazada is buying online grocery service Redmart for $30-40 million, according to reports. The companies said they hope to use each other’s infrastructure to boost their ecommerce business in Southeast Asia but will leave Redmart to operate independently, with a transaction slated to close this quarter.
Maximilian Bittner, CEO of Lazada Group, said: “As part of our growth strategy, we are always looking for ways to serve our customers better by adding new product categories and improving our service offering. RedMart’s strong management team and their relentless focus on putting the customer first has resulted in customers loving them in Singapore.”
Lazada sold a controlling stake to Chinese ecommerce giant Alibaba earlier this year, adding Redmart into the fold gives Alibaba an even stronger foothold in Southeast Asia. Via thedrum.com
ZTO Express of China Has Largest US IPO This Year
The company, ZTO Express, is one of a host of delivery companies that have emerged in China to ferry packages from merchant to consumer, to propel the country’s vast e-commerce revolution. China is now the world’s largest delivery market; nearly 21 billion packages were sent last year, roughly 70 percent originating from online transactions, according to the market research firm iResearch.
That concept enabled ZTO to raise a greater-than-expected $1.4 billion in an initial public offering of stock on Thursday, the largest I.P.O. in the United States this year, according to Dealogic, a deal information provider. But by the close of trading in New York, its shares on the New York Stock Exchange had tumbled 15 percent, to $16.57, a concerning signal for new listings, which have been challenged this year.
The offering’s size eclipsed the $1.3 billion that the Japanese messaging company Line raised in July. That also makes it the largest American debut by a Chinese company since the $25 billion stock sale in 2014 by the Alibaba Group, the Chinese e-commerce giant that has underpinned the rise of companies like ZTO. Via nytimes.com
Seven reasons for Alibaba’s success
Alibaba was initially founded in Jack Ma’s apartment in Hangzhou in 1999, before Alibaba.com was launched later that same year. In 2003, as the number of Internet users in China reached 80 million, according to Alibaba’s prospectus, Taobao.com was launched as an online market. Shortly afterwards, both Alipay and Aliwangwang (instant messenger on Taobao) were launched to complete the purchasing process in Taobao.
In 2007, the number of Internet users in China rose to 210 million and Alimama was launched as an advertisement transaction platform. Taobao started to monetize that same year. Tmall was launched in 2008, as Alibaba ran both B2C and C2C platforms. In 2009, Alibaba Cloud computing was founded, illustrating Alibaba’s commitment to prioritize big data as part of its strategy. In 2010, the following three platforms were launched as part of Alibaba’s increasing focus on mobile payment: Juhuasuan (a platform for C2B); AliExpress (a global consumer marketplace); and Mobile Taobao App. Via internetretailer.com
Watch for Singles Day sales update
We’ll have an update on Alibaba Singles Day sales later this month as well as regular updates on Black Friday and holiday sales in the US. You can get Cashback Industry News free in your inbox three days a week (M-W-F) by subscribing at the top of the page. It’s always filled with global industry news you can use.