Alibaba won’t last 100 years if…
Alibaba is looking for new avenues to maintain its rapid growth as the Chinese e-commerce market is nearing saturation. More than 90% of Alibaba’s total revenue comes from its domestic marketplaces Tmall and Taobao. But Jack Ma has set an ambitious target of serving over two billion customers worldwide within five years.
The Hangzhou-based company will not only invest in international ventures, but also transform its company culture to “become truly an international company.” In the latest quarter, Alibaba’s China commerce business posted $2.2 billion in revenue, while its international commerce business generated $264 million, accounting for only 9% of the company’s total revenue.
Alibaba needs to undergo image makeover
The company’s overseas initiatives have been low-key so far. It has launched Tmall Global, which lets international businesses sell directly to Chinese consumers; AliExpress for international consumers to buy Chinese goods; and 11 Main in the U.S., a platform that sells luxury goods from small boutiques. Zhang told Alibaba employees that the company won’t be able to last 100 years if it did not globalize.
Alibaba is investing in a variety of sectors abroad. Earlier this month, the Chinese company hiked its stake in Zulily Inc (NASDAQ:ZU) from less than 5% to 9.3%. The online retail behemoth has invested $200 million in Snapchat. In February, Alibaba acquired a 25% stake in Indian mobile commerce platform Paytm for $575 million. Alibaba is also in talks to invest $1.2 billion in Indian smartphone maker Micromax for a 20-25% stake.
Alibaba will have to undergo an image makeover to become a truly international company. Despite the company’s attempt to curb the sales of fake goods, its Tmall platform is notorious for selling counterfeit goods.
Alibaba shares inched up 0.41% to $87.89 in pre-market trading Thursday.