Alibaba strengthens vulnerable areas ahead of public debut with acquisition: report
Alibaba is trying to shore up its weak areas by going on a shopping spree ahead of its highly-anticipated public offering, the Financial Times reported.
In the past year, the China-based e-commerce firm has undertaken deals worth more than $2 billion as it buys stakes in or acquires outright more than 10 smaller firms. The acquisitions include map makers, social media sites, web browsers, logistics firms and a US-based site that drew its inspiration from Paris flea markets, the report said.
Alibaba's IPO later this year could put the company's equity value at over $100 billion. However, competition and the fact that Alibaba already holds 80% of China's e-commerce has caused the company's growth to slow, the report said.
Alibaba's US General Manager Annie Xu told FT that reaching the US and worldwide is "the direction we want to move in." As of the moment, however, Alibaba is setting its sights on American and Chinese startups that would allow it to deflect domestic rivals like Tencent and Baidu as e-commerce in China increasingly moves to mobile devices, the report said.
One example is the investment of Alibaba into ShopRunner, a US-based e-commerce delivery group. ShopRunner could eventually help Alibaba sell to customers in the US. For now, however, the e-commerce firm intends to utilize its US logistics network to allow consumers in China to make online purchases from the sites of US merchants. ShopRunner will then take care of US logistics while Alibaba will handle customs, delivery and payments. The new service has not yet been rolled out yet, the report said.
Xu told FT that the core competence of Alibaba is still catering to Chinese consumers living in China and ShopRunner will help grow that business. Xu added that "Chinese consumers are crazy about anything not made in China" and a big opportunity exists in being able to fulfill that need.