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Alibaba Says To Amazon, Ebay: Our Sales Are Greater

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Alibaba Says To Amazon, Ebay: Our Sales Are Greater

Alibaba.com Limited (HKG:1688), the Chinese e-commerce site, said this past weekend that it will process greater sales in 2012 than its competitors of Amazon.com, Inc. (NASDAQ:AMZN) and eBay Inc (NASDAQ:EBAY) combined.

Zeng Ming, Alibaba’s chief strategy officer, made the declaration to reporters at AliFest, reported Reuters and noted that, “From their annual reports we did a rough calculation and we were similar last year but we are growing faster than them this year, so this year we are probably larger than them.”

He added, “The gap is just going to get bigger and bigger when we grow faster.”

The executive didn’t disclose 2012 total sales projects but he did say the goal for Taobao Marketplace, the company’s major sales growth source, is to produce almost half a trillion dollars in annual sales for the next five to seven years.

How does this compare to Amazon.com, Inc. (NASDAQ:AMZN)? Its net sales for this year’s first six months came to $26 billion, according to a July press release. In addition, the company’s net sales are expected to hit between $12.9 billion and $14.3 billion, or to increase between 19% and 31% as compared to 2011’s third quarter.

For Alibaba.com Limited (HKG:1688), its success comes with the rising purchasing power of China’s Internet community and its dominance in e-commerce for China. According to Mashable.com, the most recent estimates has Internet users in China at more than half a billion.

The U.S. comes in behind at No. 2 with 245.2 billion users.

Alibaba’s growth story has been outstanding. The company started in 1999 by Jack Ma and now 13 years later, it has 29.4 million registered users from 240 countries; it has 2.5 million supplier storefronts.

Ming noted that the Alibaba group comprises up to 5 percent of China’s gross retailing market; this compares to Wal-Mart’s Stores, Inc. (NYSE:WMT) 8 percent share of the U.S.’s gross retailing market.

Competition is high from the other e-commerce websites such as those in mobile e-commerce (m-commerce) and customer-driven, made-to-order websites.

Alibaba.com Limited (HKG:1688) has responded by changing its business model to a C2B (customer to business) from a B2C (business to customer). It has also worked on mass customization to meet users’ needs.

In the last two years, the company has also been tweaking its mobile platform and according to Ming, it looks to be as strong as Google’s (NASDAQ:GOOG) Android platform in this space.

Change is also coming for Alibaba.com Limited (HKG:1688) with the conclusion of two-plus years of negotiations with Yahoo! Inc. (NASDAQ:YHOO) to purchase back most of the stake held by the company. It also cut the voting power of foreign stakeholders such as Yahoo! Inc. (NASDAQ:YHOO) and Japan’s Softbank Corp.

In the Yahoo deal, Alibaba.com Limited (HKG:1688) has incentives to list its shares by December 2015 but it hasn’t disclosed a timetable for it. In 2012, Alibaba had Alibaba.com go private.

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Sheeraz Raza

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