big bet when it paid up $1 billion to acquire a 40 percent stake in
Alibaba Group, a Chinese online commerce company then still carving
out a market presence. Three years on and Alibaba has vindicated
Yahoo’s faith in it by delivering robust revenue and profit growth
and a soaring customer base.
Founded in 1999 by Chinese entrepreneur Ma Yun with
backing from, among others, Japanese telecommunications company
SoftBank, Alibaba has grown in phases off the base established by
its first venture, business-to-business (B2B) online service
Alibaba.Com.
Having already achieved profitability by 2002, Alibaba Group
turned its attention to retail commerce, launching what has become
by far China’s largest consumer e-commerce website, Taobao, in
2003.
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Underpinning this development, Alibaba established Alipay, its
online payment service, in 2004.
Alibaba’s B2B operations now comprise three online trading
services: an English-language marketplace for global importers and
exporters; a Chinese language marketplace for domestic trade in
China; and, through a joint venture, a Japanese language
marketplace.
In total the three services had 35.6 million registered users as
at 30 September 2008, a year-on-year increase of 40 percent. Of the
total 6.9 million were registered users of the global marketplaces
and 28.7 million of the China marketplace.
Alipay, now second only to PayPal in the online e-commerce
payments space, has also achieved impressive growth with registered
users passing the 100 million mark at the end of August 2008, up
from 58 million at the end of 2007. According to PayPal it has 153
million registered users and 65 million active users.
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By GlobalDataAlipay is Taobao’s designated online payment service, a tied
relationship which provided it with a substantial registered user
base of 80 million consumers served by almost 1 million online
Chinese retailers as at 30 September 2008.
In the first half of 2008 Taobao recorded a gross merchandise
volume of CNY41.5 billion ($6 billion), almost equal to the total
achieved in 2007 and representing a market share of about 80
percent of online retail spending.
Alipay is also serving a growing number of third party online
retail websites including those of Shenzhen Airlines, Joyo.com
(part of Amazon.com) and US personal computer vendor Dell. In
addition, Alipay has been adopted by some government departments
and public utilities to enable consumers to pay online for services
such as medical insurance and telephone bills.
At the end of August 2008, Alipay was facilitating 2 million
transactions worth a total of CNY450 million daily, the equivalent
of about CNY40 billion per quarter.
According to Chinese research firm iResearch, third-party online
payments (B2B and retail) in China totalled CNY71.8 billion in the
third quarter of 2008, a massive182 percent increase compared with
the third quarter of 2007.
Reflecting strong growth in user numbers and volumes, Alibaba
generated revenue of CNY780.2 million in the third quarter of 2008,
up 37 percent compared with the third quarter of 2007, while net
profit increased by 49 percent to CNY308.6 million.
Global and Chinese marketplaces accounted for 62 percent and 38
percent of revenue, respectively, in the third quarter of 2008.
