Why Did Alibaba Invest $586 Million In Sina Weibo?
We all heard the news that Alibaba agreed to buy a stake of about 18 percent in Sina Corp. (Sina)’ s Weibo for $586 million. This is a massive step for China’s largest social platform and the nation’s biggest e-commerce company in terms of multichannel integration and cash flow. First of all Alibaba has been interested in becoming more social by investing in chat app Momo and by acquiring the music service Xiami. Now the e-commerce company is pushing everything to the next level, using the Weibo’s massive databases that can offer information about the demographics, consumer behaviors and trends. Alibaba is not interested in the number of Weibo’s users but on how they spend their time and attract those who didn’t plan to buy something but ran accross to a product while browsing Weibo and decide to purchase it. Doing the maths Alibaba’s investment in Weibo can only mean one thing optimize marketing and maximize sales.
On the other hand we can’t forget that this is the clash of the titans: Alibaba and Tencent. Alibaba leads the Chinese e-commerce through its platforms (Taobao,Tmall) and AliPay, China’s largest e-payment provider.Tencent gained its notoriety ten years ago with its popular QQ messaging service that meanwhile has become a massive games and messaging platform. Tencent launched WeChat, the Chinese copycat of WhatsApp, but the difference between those two is that WeChat grew from 0 to 200 million users in 2 years. No wonder that Alibaba wants to see Sina Weibo succeed and slow down some of the success of Tencent’s WeChat. And the fact that Tencent is moving more competively into e-commerce, this is just the sound of the bell before the boxing match.