After its auspicious trading debut on the New York Stock Exchange last Friday, what would be the next step for Alibaba?
The Chinese e-commerce behemoth has raised more than US$20 billion in its initial public offering.
In a ceremony to celebrate the company’s listing, founder and chairman Jack Ma told US investors that he will spend all the fresh money overseas.
“We have taken your money, we will use it to hire your people and buy your company,” he said. “Alibaba will participate in the global development, providing services to small enterprises that are out of China.”
Ma has clearly pointed out that Alibaba doesn’t have to know everything, and that sometimes it just needs to invest in firms that are good at a particular business.
Forrester Research analyst Kelland Willis agrees with Ma’s strategy, saying it would be hard for Alibaba to crack open the US market on its own without carrying out major acquisitions.
Even before going public, Alibaba had been scanning the overseas horizon for merger and acquisition opportunities. Last year, it invested US$170 million in US e-commerce player Fanatics and US$75 million in logistics firm ShopRunner. This year, Alibaba snapped up instant video call application Tango and invested in Singapore Post.
Given those moves, Alibaba is now well prepared to make its foray into the US. But some market watchers believe the group would hold its horses for a few more years before doing something big.
Indeed, if Alibaba wants to globalize its e-commerce business, it has to resolve key issues such as customs, taxes, payments, logistics and warehouse management overseas.
E-commerce analyst Hao Zhiwei also said Alibaba needs a couple of years more before it could expand its business overseas. Amazon, Alibaba’s most formidable competitor in the US, took around 20 years to build the necessary connections.
So, what will probably be in Alibaba’s shopping cart?
Customer-to-customer auction site eBay may be a target, especially after the site decides to spin off its PayPal in the future. It owns a great online platform and most of its customers are in the US. Acquiring the firm would definitely boost Alibaba’s presence in the country.
Overstock.com may also present a good opportunity for Alibaba. The online shopping site sells beddings and furniture to US customers. Part of its business involves selling handmade goods produced by workers in developing nations. This experience could help Alibaba sell its Chinese products to overseas customers.
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