Chinese E-commerce Giant to Go Public, by Internet Retailer
The self-described “largest online and mobile commerce company in the world” filed to sell stock on a U.S. stock exchange last week (May 6). The much-anticipated Alibaba Group Holding Ltd. IPO is expected to be valued at well over $100 billion. According to an Internet Retailer article, Alibaba’s e-commerce sites handled $248 billion in transactions in 2013, more than 40 percent greater than those of Amazon and eBay combined.
Alibaba, 24 percent of which is owned by Yahoo, does not sell merchandise itself, but rather provides a platform for other merchants and makes money largely through advertising and commissions. Figures reported in its prospectus indicate that it was more profitable than either Amazon or eBay last year, despite lower revenue. It expects to continue to grow as Chinese retail consumption, as well as online and mobile shopping, increase. China currently is home to 302 million online shoppers and 500 million mobile consumers; Alibaba says that 19.7 percent of the purchases on its web site in the last three months of 2013 came from mobile devices, up from 7.4 percent a year earlier.
Alibaba’s main business comes from three sites that cater to Chinese online consumers: Taobao, “a highly price-competitive marketplace where 8 million entrepreneurs, retailers and individuals sell their wares;” Tmall, a marketplace geared to larger brands; and Juhuasuan, a group buying marketplace. It says that it shipped five billion packages as a result of transactions on those sites; its payment affiliate, Alipay (similar to eBay’s PayPal), processed $519 billion last year.
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