|Sun Oct 2 2011 08:29:23|
How Alibaba Could Change Ecommerce with Yahoo Acquisition
By: Ina Steiner
Alibaba's Jack Ma is interested in buying Yahoo, AllThingsD's Kara Swisher reported on Friday. The two firms already have a partial joint ownership and a complicated relationship, but an outright acquisition of Yahoo could have major implications for the ecommerce industry.
Almost 178 million consumers visit Yahoo each month, according to ComScore, which ranks Yahoo the number two web property behind number-one Google (183 million visitors) and ahead of number-three Microsoft Sites (177 million).
Consumers visit Yahoo to read news and content, conduct online searches and read email, but currently it does not have a strong ecommerce presence apart from its Yahoo Stores ecommerce-hosting business. It ceded online marketplaces to eBay in 2002 except in Asia and officially closed its marketplaces in North America in 2007, and shuttered its online payment service in 2004. And in 2010, Yahoo turned over Yahoo Shopping to Experian's PriceGrabber in a partnership arrangement.
In contrast, Alibaba dominates ecommerce in China with its C2C domestic Taobao auction site, B2B global Alibaba marketplace, and its B2C Taobao Mall marketplace for brands, along with its online payment service Alipay. Alibaba also offers a host of services to online merchants and small businesses.
Alibaba has a deep understanding of the small merchant not only in China, but around the globe, thanks to the many merchants using its global product-sourcing services, and it puts together one of the biggest global gatherings of ecommerce entrepreneurs at its AliFest conference in Hangzhou each September.
Alibaba has been courting U.S. marketplace sellers for over 6 years; it acquired two U.S. ecommerce firms last year that power eBay stores, Vendio and Auctiva; and it operates the AliExpress marketplace designed to reach very small merchants but which already reaches consumers in the United States without trying, according to PayPal.
Could Alibaba create a shopping portal under the Yahoo brand that takes advantage of all of its properties, including its Alipay payment service? That would require a CEO who understands U.S. and international marketplaces but doesn't mind taking orders from China. It would also require a decision about whether an Alibaba Yahoo marketplace would simply enable merchants, using the eBay model, or whether it would also compete with merchants, using the Amazon model. Either way, Amazon could be the biggest loser if Alibaba expands into the U.S. market.
The Wall Street Journal reported Friday that Yahoo's board is looking for a CEO who is open to a sale of the company or who could help Yahoo launch new services in order to stay relevant.
Alibaba has the ecommerce expertise, but it needs access to U.S. merchants and consumers, and Yahoo must look mighty tempting to Jack Ma.