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MAKE MONEY BOLG$~One trillion is a Very Big Number. It happens to be Alibaba Group’s
forecast (in renminbi) for online merchandise sales in 2012. In dollar
terms, we’re talking $160 billion in business-to-consumer e-commerce,
almost all of it from one country, China.
According to Alibaba’s chief strategy officer Zeng Ming, this would exceed the combined throughput of merchandise sold on eBay and Amazon, if you extrapolate from sales data. Recent filings by Yahoo, which owns around 40% of Alibaba, which it has agreed to sell back in stages, show that Alibaba’s net income rose to $220 million in the first quarter of 2012, compared to year-earlier $29.6 million. Compared to Europe and the U.S., that’s heady growth; it pays to operate China’s dominant e-commerce platform. Yet Alibaba isn’t immune to cooling growth in China. Nor can it shrug off the turmoil as other rival online sellers wage (mostly phony) price wars to grab eyeballs. Still, it must feel good to pass the likes of eBay, which tried and failed to seize the high ground in China’s online economy.
Speaking to journalists in Hangzhou for Alibaba’s yearly ‘AliFest’ gathering, Zeng said the company aims to boost sales to RMB3 trillion in the next 5-7 years. He struck a lofty tone at Alibaba’s campus, a sprawl of interconnected buildings completed in 2009. “E-commerce just got started. E-commerce is much, much more than online sales,” he said. Unlike Amazon, which has a minor presence in China, Alibaba Group is strictly a platform operator; it hosts merchants and suppliers but doesn’t stock or deliver products. That means gigabytes of data that can be used to streamline the business of buying and selling online. At its campus, a ‘control room’ offers a visualization of online activity on a floor-to-ceiling panel of monitors. Real-time searches on Alibaba.com, a business-to-business website, are synced to a giant Google Earth map (a buyer in ‘Santiago, Chile’ is searching for ‘Stainless Steel’). On another panel, orders placed on TaoBao – a marketplace for small vendors – are represented by white dots pinging across China, from seller to buyer. It resembles a frenetic game of multiple ping pong, or a jackpot pinball, played mainly between big coastal cities.
The pinging and ponging is increasing, though not quite as rapidly as before. Speaking to FORBES, Zeng says sales are decelerating after doubling in past years, though he declined to give an estimate. However, he says Alibaba, as the leading e-commerce platform, is partly to blame. “We’re not innovating enough over the last few years,” he frets. This is where the data matters. Of the roughly 16 million parcels handled daily in China, over 10 million are generated by clicks on Taobao and TMall, a marketplace for brands and larger vendors. Tracking those orders gives Alibaba a bird’s eye view of Chinese e-commerce, which is rippling outwards to inland areas and minor cities, where retailing is rudimentary. It also underscores what Zeng says is a major obstacle to future growth: logistical bottlenecks. And China’s banks can’t keep up with orders on peak days, complains Zeng. Alibaba has its own payment system, but most customers use their bank accounts.
Alibaba doesn’t own warehouses or delivery trucks (or a banking license, though it has begun offering credit to merchants). Zeng says it wants to spur innovation and upgrading by major vendors and logistic partners. The company has partly backtracked on its platform-only model by acquiring land in major cities to build warehouse space for distributors. But it can only do so much to prod merchants since it doesn’t do delivery. “This is the painful part of being a platform player,” says Zeng. Yet its pain pales into comparison with that felt by the likes of online retailers like Suning, Gome and 360buy.com, which are struggling to clear inventory from their warehouses. Investors in Hong Kong-listed Suning and Gome have run for the exits amid plunging first-half profits. Closely held 360buy is putting on a brave face on its own finances but is reportedly burning through its capital and far from profitability.
All of this is grist to the mill of Alibaba-boosters. With a Yahoo buyback in sight, and full control over the group, founder and CEO Jack Ma can focus on building an even better engine for online trade. He closed the AliFest conference Sunday with a spirited pep talk for entrepreneurs who hung on his every word. “One trillion is just the beginning,” he vowed.
source: forbes.com
please give me comments thanks
According to Alibaba’s chief strategy officer Zeng Ming, this would exceed the combined throughput of merchandise sold on eBay and Amazon, if you extrapolate from sales data. Recent filings by Yahoo, which owns around 40% of Alibaba, which it has agreed to sell back in stages, show that Alibaba’s net income rose to $220 million in the first quarter of 2012, compared to year-earlier $29.6 million. Compared to Europe and the U.S., that’s heady growth; it pays to operate China’s dominant e-commerce platform. Yet Alibaba isn’t immune to cooling growth in China. Nor can it shrug off the turmoil as other rival online sellers wage (mostly phony) price wars to grab eyeballs. Still, it must feel good to pass the likes of eBay, which tried and failed to seize the high ground in China’s online economy.
Speaking to journalists in Hangzhou for Alibaba’s yearly ‘AliFest’ gathering, Zeng said the company aims to boost sales to RMB3 trillion in the next 5-7 years. He struck a lofty tone at Alibaba’s campus, a sprawl of interconnected buildings completed in 2009. “E-commerce just got started. E-commerce is much, much more than online sales,” he said. Unlike Amazon, which has a minor presence in China, Alibaba Group is strictly a platform operator; it hosts merchants and suppliers but doesn’t stock or deliver products. That means gigabytes of data that can be used to streamline the business of buying and selling online. At its campus, a ‘control room’ offers a visualization of online activity on a floor-to-ceiling panel of monitors. Real-time searches on Alibaba.com, a business-to-business website, are synced to a giant Google Earth map (a buyer in ‘Santiago, Chile’ is searching for ‘Stainless Steel’). On another panel, orders placed on TaoBao – a marketplace for small vendors – are represented by white dots pinging across China, from seller to buyer. It resembles a frenetic game of multiple ping pong, or a jackpot pinball, played mainly between big coastal cities.
The pinging and ponging is increasing, though not quite as rapidly as before. Speaking to FORBES, Zeng says sales are decelerating after doubling in past years, though he declined to give an estimate. However, he says Alibaba, as the leading e-commerce platform, is partly to blame. “We’re not innovating enough over the last few years,” he frets. This is where the data matters. Of the roughly 16 million parcels handled daily in China, over 10 million are generated by clicks on Taobao and TMall, a marketplace for brands and larger vendors. Tracking those orders gives Alibaba a bird’s eye view of Chinese e-commerce, which is rippling outwards to inland areas and minor cities, where retailing is rudimentary. It also underscores what Zeng says is a major obstacle to future growth: logistical bottlenecks. And China’s banks can’t keep up with orders on peak days, complains Zeng. Alibaba has its own payment system, but most customers use their bank accounts.
Alibaba doesn’t own warehouses or delivery trucks (or a banking license, though it has begun offering credit to merchants). Zeng says it wants to spur innovation and upgrading by major vendors and logistic partners. The company has partly backtracked on its platform-only model by acquiring land in major cities to build warehouse space for distributors. But it can only do so much to prod merchants since it doesn’t do delivery. “This is the painful part of being a platform player,” says Zeng. Yet its pain pales into comparison with that felt by the likes of online retailers like Suning, Gome and 360buy.com, which are struggling to clear inventory from their warehouses. Investors in Hong Kong-listed Suning and Gome have run for the exits amid plunging first-half profits. Closely held 360buy is putting on a brave face on its own finances but is reportedly burning through its capital and far from profitability.
All of this is grist to the mill of Alibaba-boosters. With a Yahoo buyback in sight, and full control over the group, founder and CEO Jack Ma can focus on building an even better engine for online trade. He closed the AliFest conference Sunday with a spirited pep talk for entrepreneurs who hung on his every word. “One trillion is just the beginning,” he vowed.
source: forbes.com
please give me comments thanks
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