6 Signs of No Alibaba Apocalypse

the top staff at Alibaba

Alibaba is neither taking over the world nor tanking. 

We do a lot of reporting on Alibaba. Some is to clear up confusion about its different platforms, and where a western company belongs on them, to wit:

– NOT Taobao (lowest profit margin wins)

– NOT Tmall Global (we proved it to the WSJ)

– NOT 1866 (China is for selling to now, not buying cheap stuff from)

Maybe Tmall

Otherwise, with half China’s online B2C, almost all the C2C, and the biggest IPO in history, Alibaba is China online personified, since the company has a very public persona in Jack Ma.

These seven recent Alibaba developments tell us much about the China market in general, and its online situation specifically.

1. Jack Ma just bought a $23m estate in the Adirondacks.

Jack Ma estate in AdirondacksNot in Malibu. Not in Cannes. In the sylvan splendor of upstate New York. Lounging on yachts is for bankers. 28,000 acres of grass to trod, with no 28-inch-waisted guard telling you not to? (“Ni hao…”)

Clean, green, and environmentally responsible. That’s a China dream more and more non-billionaires are getting behind.

2. Alibaba is not coming for your business, or your babies.

Jack’s offloading all U.S. assets, most significantly phantom menace 11 Main. C’mon folks, you want a healthy IPO, you’ve got to act ready to conquer the world.

Alibaba has scaled down its global ambitions with a pending move into India, which we predict will prove another loss leader.

 3. Alibaba’s making a scramble for O2O (Online to Offline)

“Scramble”, not “play”. Investing $1b in group-buying site Koubei is like Baidu’s investing $3.2b in group buying site Nuomi: an irrational bid that O2O can be steered away from Tencent’s WeChat, where offline stores fight to survive.

A one minute run down on what real China O2O means. Group buying still has legs, but no light wings with which to overperch Tencent’s lofty walls.

 4. Tmall Global is niching out

Adding eleven countries to its cross border site is a clear sign that “platforms” and “malls” no longer cut it with the ever-evolving Chinese consumer.

Instead, specialization is the latest Darwinian ecommerce twist, as we advised some time ago. JD and Tmall can’t hope to rival the passion and community content of sites truly committed to a niche, but they’re earnings-bound to try.

 5. Alibaba CEO admits “Data is oil in the new economy,”

Zhang the Alibaba CEO

Daniel Zhang loves data.

Not Ma. Zhang. Ma’s an English teacher who staked everything on his knowledge of what the Chinese consumer wanted.

A decade-and-a-half in, Ma’s CEO knows what we don’t know: the Chinese consumer. We’re a fairly diverse bunch, to be fair.

To be successful, quantitative info must replace qualitative humbug. Alibaba is a merciless space for vendors, but those who know their customers through data will serve best, and thereby profit most.

Or, to be less geeky: marketing? Meh. Targeted marketing? Bingo.

6. Banking and Boob-tubery

Ecommerce is lucrative. Running the platform? Well, margins are slim; no doubt Jack often wonders why he didn’t just go with gaming, like cash-heavy Tencent (Over $3b from in-game purchases last quarter.)

That’s why Alibaba leverages all its massive user base muscle to break new online ground, in industries like banking. It gave a savings-friendly nation starving for financial products Yuebao, letting customers put Taobao spare change into mutual funds.

Now Alibaba’s MYbank will become an online lender. You don’t wedge into China’s sacrosanct state-owned banking sector without some serious need to diversify. Because ecommerce is slowing? Heaven forbid. But smaller, specialized players will eat more of China’s online market growth.

The move into subscription based entertainment via Internet, cable, and mobile video isn’t quite as audacious as taking on totalitarian bankers, but is akin to invading Russia in the winter. Video is Baidu and Tencent’s territory, with hundreds of millions watching videos on sites like the former’s iQiyi every day, for free.

Will the Chinese warm up to pay for play because it’s tied to Alibaba? They ignored its WeChat attempt, Laiwang, the same way they ignored WeChat when it tried to go ecommerce with a JD partnership.

Jack Ma started as an English teacher. Perhaps it’s time to revisit Macbeth:

Thriftless ambition, that wilt ravin up 
Thine own life’s means!



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