The Alibaba E-Commerce Empire

Posted by Joel

â€œI want to influence others, not let others influence me.â€ â€“ Jack Ma

Take a good look at the face in this picture. If there is one Chinese Internet company CEO that you need recognize it is Jack Ma, founder of Alibaba Group. Ma, named one of the worldâ€™s 30 best CEOs by Barronâ€™s this past March, started off as an English teacher. However, in 1999 he founded Alibaba out of his Hangzhou apartment with about $60,000 determined to build a bridge between Chinese small to medium manufacturers and foreign buyers around the world. Alibaba Group is now the largest e-commerce company in all of China and is a global e-commerce leader.

Below is a breakdown of Alibaba Groupâ€™s core businesses (adapted from Alibaba company website):

Alibaba.com - Global business-to-business marketplace

Alibaba.com Limited (HKSE:1688) is the world’s leading B2B e-commerce company. It connects millions of buyers and suppliers from around the world every day through three marketplaces: an English-language marketplace (alibaba.com) for global importers and exporters, a Chinese-language marketplace (alibaba.com.cn) for domestic trade in China, and, through a joint venture, a Japanese-language marketplace (alibaba.co.jp) facilitating trade to and from Japan. Together, the marketplaces form a community of 36 million registered users from over 240 countries and regions.

Taobao - China’s largest consumer e-commerce company (Comparable to Ebay)

Taobao (taobao.com) is the largest online shopping marketplace for consumers in China. With a registered user base of more than 80 million as of September 2008, Taobao reaches an overwhelming majority of online shoppers in China. In 2007, Taobao’s transaction volume, or gross merchandise volume (GMV), was RMB43.3 billion, up 156% year-on-year. In the first half of 2008, Taobao’s GMV was RMB41.3 billion. Since its launch in 2003, Taobao has grown into an ecosystem where over 1 million online merchants reach a growing online consumer population in China.

Alimama (alimama.com), China’s largest online advertising exchange platform, was combined with Taobao in September 2008. Alimama helps China’s more than 1 million small and medium-size websites, which generate an estimated 80% of China’s Internet traffic, to sell online advertising inventory and monetize their traffic. It currently serves 3 billion ad impressions that reach 80 million consumers every day. Launched in November 2007, Alimama’s network currently includes 400,000 web publishers and advertisers.

Alipay - Safe and secure online payment (Comparable to Paypal)

Alipay (alipay.com) is China’s leading online payment service, enabling individuals and businesses to execute payments online in an easy, safe and secure manner. Founded in 2004 by Alibaba Group, Alipay is the designated online payment service provider for Taobao and Alibaba.com’s China marketplace, as well as a widely-accepted online payment method for retail websites and other Internet businesses in China. Alipay partners with domestic PRC banks to provide an escrow service for payments, which reduces the settlement risk faced by Alipay’s customers in their e-commerce transactions.

In August 2007, Alipay launched an online payment solution to help merchants worldwide sell directly to consumers in China and now cooperates with over 300 global retail brands and supports transactions in 12 major foreign currencies. At the end of August 2008, Alipay facilitated 2 million transactions each day with a registered user base of over 100 million and daily payment volume of RMB450 million.

Yahoo! Koubei - Online classified listings for local services and search

Yahoo! Koubei is a trusted platform connecting Chinese Internet users to their local communities, their interests and the information they need to inspire their lives. It operates two websites: China Yahoo! (yahoo.com.cn), a leading Chinese language portal and search engine in China, and Yahoo! Koubei (koubei.com ), China’s leading classified listing website providing consumers with local information on various topics, including real estate, restaurants, travel, entertainment and employment.

In October 2005, Alibaba Group acquired China Yahoo! in a transaction whereby Yahoo! Inc. became a substantial shareholder of Alibaba Group. Yahoo! Koubei (then called “Koubei.com”) became part of Alibaba Group in 2006 through a strategic investment. The China Yahoo! and Yahoo! Koubei businesses were integrated in June 2008.

Alisoft - Internet-based business management software

Founded in January 2007, Alisoft develops, markets and delivers Internet-based business management software targeting China’s more than 40 million small and medium companies. Alisoft, through its Software as a Service (SaaS) model provides SMEs with low-cost, easy-to-use enterprise and financial management tools, including email, customer relationship management, invoicing and bookkeeping.

Alisoft was the first company in Asia to launch a “software interconnection” platform which integrates advanced Internet, telecommunication and software applications. With the support of thousands of independent software vendors (ISVs), its software interconnection platform forms an online supermarket where software can be used by SME customers on a pay-as-you-go basis. In August 2008, Alisoft and Microsoft announced that they would partner to provide a hosted business-class e-mail service leveraging Alisoft’s software interconnection platform.

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