September 17, 2014
As giant US IPO nears, Alibaba's China e-commerce crown slips
Alibaba's dominance of online retail in China faces its biggest-ever challenge as the firm founded by Jack Ma in a one-room apartment 15 years ago lines up a US initial public offering that could value the firm at around $140 billion.
In a rare blip, Alibaba Group Holdings lost market share last year while its nearest rivals all grew, according to Euromonitor. The market research firm sees China's internet retail market tripling from 2012 to over $300 billion in 2018 as the country's smartphone-savvy shoppers buy everything from plane tickets to sneakers online.
China's biggest social media company, Tencent Holdings Ltd, is leading the revolt, linking the country's most popular messaging app, WeChat, with the number two e-commerce player, JD.com.
An array of smaller rivals is also clawing away at Alibaba's lead, while household retail names like Nike Inc and Gap Inc are increasingly striking out away from the giant's Tmall electronic platform to set up more distinctive online stores of their own.
"In China shopping is a social activity. You want to tell friends about it, recommend it - it's a smartphone activity, and whoever owns that organizational ability also has a hold over how a person shops," said Frank Lavin, Hong Kong-based chief executive of Export Now. Lavin's company helps global firms set up shop in China through Alibaba's Tmall.
Alibaba's e-commerce prospects at home loom large after Ma's firm said yesterday it was starting plans for a long-awaited listing in the US - potentially the biggest-ever IPO by an Internet company - which could surpass the $16 billion raised by social media giant Facebook Inc in 2012.
Alibaba still held a sturdy 45.1 percent of China's e-commerce market last year, down from 46.1 percent a year earlier, according to Euromonitor, and remains bullish in the face of Tencent, JD.com and others. It is beefing up its mobile services to keep up with China's legions of smartphone users.
Alibaba did not respond to repeated requests for comment for this story, though the firm's executive vice chairman Joe Tsai was upbeat about the firm's e-commerce prospects in an interview with Reuters in Hong Kong last week.