Everytime when I look at the financials and KPI’s behind Alibaba, I understand the new dimesion China and Chinese online companies added already to our reality:
- – The biggest IPO comes from a Chinese company, not from a US American.
- – Alibaba is the biggest eCommerce Player according to its market cap (221 B USD), not Amazon (177 B USD) or Ebay (68 B USD)
- – Alibaba is truly global not only in China
- – Alibaba is making per second 8,400 USD of GMV
Since the beginning of the internet, all the above would be associated with US companies. Alibaba’s IPO is a landmark change for the entire global internet industry.
I remember the first time I have heard about another Chinese company, Tencent. This was in August 2010 and during the negotiations with the Naspers group. It was the first time I have met the visionary Hein Pretorius, at that time CEO of the Naspers Internet Division. As track record is very important, Hein was sharing with me the acquisition history of Naspers. Against that background, he shared also the story how the Naspers group invested into Tencent. As I understood what a giant Tencent is, how successful they are and what their vision was…. I was ashamed not having a clue about Tencent but in the same time fascinated and excited. With that day, I started to learn about China’s Online landscape. Obviously, as they will become the biggest economy in the world, they will have also the biggest gaming sites, social communities, content providers and of course the biggest eCommerce sites.
Coming back to Alibaba… What are the next steps? Lets do some brain storming.
Expect that Alibaba will enter many other areas of eCommerce. This can be different formats (classifieds, eTailer, Private Shopping etc.) or different models which are surrounding ecommerce like price or product comparison sites and apps. With their size and financial possibilities, everything is possible. And whichever area they enter, they will establish a Chinese way to execute the businesses – this will be very exciting to see.
Secondly, Alibaba will enter all other countries. All countries but the USA you might say. I think all countries with an internet penetration rate higher than 25% and especially the USA. In smaller countries Alibaba might enter the markets organically but in the big markets and especially in the USA, I would think of entering by acquisition.
In case of the USA, the right question might even be “When will Alibaba acquire eBay?” Sounds strange right? Usually strong US companies acquire. But after the sepatation of Paypal from Ebay, the remaining marketplace business will be quite small. Even if eBay would preserve its actual marketcap of 68 B USD, Alibaba is almost 4 times bigger. Lets assume eBay marketplace is worth 10 b USD…. This is 5% of Alibaba’s marketcap. With a bet of 5% of their current value, Alibaba could easily acquire eBay.
Thirdly, Alibaba’s acquisition would be the symbol of the changing global leadership in the online world. The virtual Chinese flag would be planted in the center of the US internet.
Years ago, a great documentary movie was finished about the Alibaba story: “The crocodile on the Yangtzse”. And also years ago, Jack Ma said to Meg Whitman (former CEO of eBay) “eBay is the big fish in the ocean. We are a crocodile in the river“.
It looks like that the crocodile left the river and likes salty water.
This article is based on a panel discussion started at the inspiring DLD 15 in Munich. Many thanks to the panelist but especially to Ms Aslaug Magnusdottir for her comments.