A peek into the cave
Alibaba's big reveal: high growth, odd governance
THERE are two things to know about Alibaba, which filed for an initial public offering in New York on May 6. First, China's dominant e-commerce company is huge, and could be even bigger. Second, new investors will have little say in how it is run - the founders are keeping a firm grip.
Last year, Alibaba processed 11.3 billion orders with a value of US$248 billion through its main sites, Taobao and Tmall. That's two-thirds more than Amazon and Ebay combined, and a staggering 84 per cent of China's total online shopping haul. Unlike most online retailers, Alibaba doesn't sell or deliver goods itself. Instead, it acts as a shop-front, charging sellers for advertising and taking some commissions.
Growth will come from two sources: increased online shopping, and Alibaba extracting more money from sellers. Its revenue of US$7.8 billion in calendar year 2013 amounted to just 3 per cent of goods sold. By comparison, Ebay's take is 10 per cent. Alibaba's orders tend to be small - averaging around US$22 apiece versus US$64 for rival online retailer JD.com. But its dominance should enable it to keep a bigger share.
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
New Articles
Singapore top recipient of Q1 cross-border investments in Apac: Knight Frank
Dasin Retail Trust’s trustee-manager chairman, directors deny allegations of misconduct
Keppel Infrastructure Trust posts 29.1% lower Q1 distributable income
Bitcoin faces worst month since FTX crash with ETF demand cooling
AIA launches wealth centre targeting high-net-worth clients
Prudential’s Q1 new business profit down 2% at S$743 million