Alibaba is right in that mix, having just planted an 18% stake in Chinese microblogging network Sina Weibo, allowing users to shop on the Taobao Marketplace through a single sign-on with their Weibo IDs.
As Alibaba continues to innovate and ink deals in APAC, “we believe Alibaba platforms are often top of mind for consumers when they are engaging in online shopping,” the J.P. Morgan research note stated. “In turn, we believe many smaller participants are resorting to price competition in order to gain attention and attract traffic.”
“Ecommerce in China is growing very fast, but there are lots of issues still to deal with,” commented Xuehua Shen, cofounder and CTO of iPinYou, a major Chinese DSP that works with a number of ecommerce advertisers. “Big advertisers want to reach more audience, but [sometimes, the goals are] very shortsighted. Ecommerce companies are looking for that traffic that leads to their sites, but their ROI goals can be harder [and in a much more constrained timeframe with less budget] than their US counterparts.”
For this reason, Shen said iPinYou has resorted to educational measures abroad by hosting a Global RTB Summit in China that brings together advertisers, agencies and global exchange players to get the programmatic conversation rolling.
In terms of Alibaba’s key strengths, it’s all about the marketplace model that is one of eBay’s (which is a ShopRunner backer) core tenets, as well as the direct relationship with brands and massive consumer reach.
“Alibaba doesn’t sell products itself,” Shen said. “They monetize their platforms through advertising. At least 80% of revenue at Alibaba comes from their advertising. I think maybe Amazon is learning from Alibaba. Other [ecommerce] websites initially sell products themselves, but over time they [too] learn from Alibaba and want to build an open platform for ecommerce vendors to sell through. They create value by opening the platform and then driving traffic through advertising and other ways.”