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Alibaba throws billions at figuring out how to turn mobile into money

Chinese e-commerce giant Alibaba may have dominated online retail on personal computers, but is some way from replicating that leadership in shopping by smartphone and other mobile devices. Reports ITWeb

Alibaba, which is heading towards a bumper New York IPO later this year, is throwing billions of dollars at figuring out how to thrive as half a billion people, 80% of China’s 618 million Internet users, go online via mobile.

The Hangzhou-based firm said last month that mobile has become an increasing source of transactions, now accounting for more than a quarter of the value of goods sold across its online marketplaces. But Alibaba’s shift to wireless commerce is a double-edged sword: mobile commerce brings in significantly less revenue than traditional e-commerce.

The quick-hit impulse buys commonly seen on mobile generate less money for merchants, and advertising on smartphones is a challenge few Internet companies have overcome. Both problems threaten to squeeze future profitability.

Making life tougher, rival Tencent has already planted its flag on smartphone screens with WeChat, the nearly ubiquitous app that has gone from a mobile messaging tool to a digital Swiss Army knife.

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“They’re not just competing with other e-commerce companies; they’re going against messaging apps. It completely changes how competitive they can be,” said Sameer Singh, an analyst who writes about technology at Tech-Thoughts.net. “I don’t think the same margins are realistic.”

Alibaba has spent more than $3 billion this year on mobile-focused investments. In its latest IPO prospectus, filed in the US last month, “mobile” was mentioned 304 times – well ahead of “online” (264) and “Internet” (144), while “computer” figured just 36 times. Read more here ITWeb

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July 1st, 2014



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