Ali Next Stop: Globalization Challenges Amazon

Beijing time at 23:53 on September 19th, after nearly 2.5 hours of waiting, Alibaba officially welcomed the first deal, opening price of $92.7.

The closing price on the first day of the listing was $93.89, an increase of $25.89, or 38.07%, over the issue price of $68.

As a founder, Ma Yun now enjoys a market share of $14 billion 900 million with a 8.9% stake, becoming the richest man in the mainland with a total net assets of 21 billion 200 million dollars. He sold about 0.5% dollars in IPO and sold about $867 million.

Although Ma only said, "never considered becoming the richest person, and even the richest people in the district do not want to do it."

Since the listing is just the beginning, what is the next starting point for Ali?

After the official landing of the Alibaba on the New York stock exchange, its globalized ambition has already been self-evident. After that, its competitors will not only be the local electricity supplier website, but also include the eBay and Amazon, the originator of the electricity supplier.

Internationalization is not an unfamiliar proposition for Alibaba.

Early in the early days of Alibaba, Ma positioned it as a global B2B service.

In September 15th, Ma pointed out at the Alibaba Hongkong road show that the goal of the company is to become an international company and then develop vigorously in Europe and the United States.

In September 19th, Alibaba CEO Lu Zhaoxi also told reporters that the first thing to do after the listing of Alibaba is to expand the wireless business and e-commerce business.

"And then enter some new areas, including expanding the market.

In addition, there will be some strategic landing related to internationalization.

In fact, in recent years, Alibaba has been expanding its international market, and has signed a series of agreements with local governments and logistics providers in France, Australia, Singapore and Italy.

However, how to integrate these resources and make them produce chemical reactions has become the biggest problem before Alibaba.

In an interview with reporters in New York, reporters learned that the local people did not know much about the specific business of Alibaba.

A Chinese student told reporters that in the past, many domestic websites, including Youku and Taobao, were inaccessible, so most of the time they would buy goods on some local websites in the United States.

But this does not affect Alibaba's popularity in the capital market.

In September 19th, Alibaba listed first day closed at $93.89, up 38.07% from the issue price. At this closing price, its market value reached $231 billion 400 million, becoming the world's second largest market value Internet Co after Google.

At this point, Alibaba and Tencent from China accounted for two seats in the four Internet Co with the highest market value in the world.

However, the two giants face similar problems, namely, how to go out.

Alibaba stakeholders said in an interview with reporters, Alibaba has a total of two cross-border platforms, one is Alibaba international station; the other is known as the "international version of Taobao" global express.

"Tmall is also developing towards internationalization, which is an inevitable trend."

It is not difficult to find that in the process of frequent cooperation with overseas governments and businesses, Tmall is importing more overseas businesses.

In addition, B2B, as a Alibaba's initial business, including international wholesaling and wholesaling, has been leveling off after years of rapid growth.

Referring to Alibaba's two quarterly report in 2014, Alibaba found that international wholesale and international retail business accounted for 9.31% of total revenue, while China's retail business accounted for 80.14%.

This means that Alibaba's core assets listed are still retail platforms such as Taobao and Tmall.

At the same time, Alibaba is also expanding its cloud computing, big data, O2O, cultural and entertainment fields.

This business development model is quite different from Amazon's strategy of focusing on retail platforms.

Zhang Ying, executive director of Analysys business solutions, pointed out in an interview with reporters that the direct result of Alibaba diversification is more profit points. Although Taobao is "free", it can sell advertising or data services to sellers.

In addition, Tmall and Alibaba websites charge businesses, while Alipay and Juhuasuan seem to be free, and in fact, they get a lot of revenue.

"Amazon still focuses on retail business," he said.

Public data showed that in the 2013 fiscal year, Amazon's total revenue was $74 billion 400 million and net profit was $274 million, while Alibaba's total revenue in 2013 was $7 billion 952 million and net profit was $3 billion 561 million.

Even so, Amazon, founded in 1995, is now the largest e-commerce website in the United States and the largest online retailing site in the European and Japanese markets.

From this point of view, Alibaba still has a long way to go in terms of geographical coverage.

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Hao Zhiwei, an observer, believes that e-commerce needs more support for offline markets than other Internet formats.

From the earnings report, Alibaba's gross profit margin is 75%, and its operating profit margin is close to 55%. This figure is a good support.

"Ali is still in the trial stage in the overseas market, but the international electricity business chain is too long, including entry, tax, payment, logistics, customs clearance and warehousing. Alibaba needs time to get through and accumulate resources, which is difficult to solve in the short term."

However, Ma told reporters in the daily economic news at the IPO of NYSE that internationalization is by no means equivalent to having businesses and factories abroad, but rather having international ideas and strategies.

"As an old saying, I hope (ALI) will not only serve China's small and micro enterprises, but also serve the small and micro enterprises all over the world."

According to the view of the industry, the listing of Alibaba indicates that it has really started the exploration of globalization. Next, it will expand strongly in the developed countries such as the United States and Brazil.

In contrast, after 20 years of accumulation, Amazon has established a complete logistics and warehousing system in the world, which makes its retail business relatively smooth.

Alibaba is also in the layout, domestic, Alibaba layout of rookie logistics; international, Alibaba in May this year to spend $249 million acquisition of Singapore Post 10.35% shares, which is Ali in expanding its overseas foothold point of the latest major initiatives.

In addition, Alibaba is actively carrying out strategic cooperation with other countries.

The Ministry of economic development of Italy and the French government have signed a memorandum with Alibaba, which will sell products to Chinese consumers through Tmall, Tmall international and other retail platforms.

In June this year, Alibaba launched the online boutique marketplace 11Main in the United States, officially entering the US online retail market, and directly competed with Amazon and eBay.

However,

The business model is closer to the B2C platform, with self built logistics, and products are also responsible for the platform.

Alibaba only provides platform for sellers, and does not involve direct sales and logistics.

Therefore, Zhang Ying believes that in the process of internationalization, Alibaba is facing a test of how to integrate effectively with local resources.

At present, there are some urgent problems to be solved in international e-commerce business, including logistics, credit, payment, customs duties and exchange rate settlement.

The matching mechanism of international small trade has not been effectively established.

Alibaba's layout of an overseas market depends on the strategic importance of the region.

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It is necessary to find core categories that have their own advantages, do large-scale operation, and open up green channels in various fields.

Associating Amazon's performance in ten years since its entry into China and the frustrating experience of eBay curve entering China, the internationalization of the electricity supplier company is bound to not be smooth. I believe this is also an important issue for Ali to ponder next.