Alibaba Buys Stake in Sina Weibo

On recent Taobao's tenth anniversary, May 10, Alibaba CEO Jack Ma officially announced his retirement, and then appointed chief data officer Lu Zhao-xi as the new CEO of Alibaba group.

Just weeks before Jack Ma's retirement. Chinese e-commerce giant Alibaba inked a $568 million deal to purchase an 18% stake in Sina’s Weibo platform. According to Sina, this cooperation will create about $380 million in advertising and e-commerce services for Sina Weibo within next three years.

Some benefits of this investment are easily apparent. Sina gains a partnership with Alibaba’s, China’s largest consumer-oriented e-commerce site, and, the nation’s largest

B2B commerce platform. The benefit to Alibaba is also clear, as it gives the company a solid mobile Internet strategy ahead of its anticipated initial public offering.

Just when the battle between Tencent WeChat and Sina Weibo has becoming the focus of the market attention, and competition trends incandesce, here we have Alibaba joined and stand by Sina's side. This has brought a heated discussion around the industry.

1. The rise of another "mobile giant"

According their official expressing, Sina Weibo, Taobao and Alipay will share their accounts in the near future, in other words users can login to Sina Weibo with Taobao's account. Sina has over 500 million user (47 million active user, and 75% of the users usually log with mobile platform).

Taobao's mobile user have reached 150 million at the beginning of this year and Alipay has over 800 million registered accounts. When all this mixed together, we have another giant who can challenging WeChat in the mobile world.

2. Giants face each other in App market

Among China's top 10 Apps, Tencent owns 4 which are WeChat, QQ mobile, QQ browser and QQ zone. Alibaba had 2, Taobao and Alipay, but after buying Moji and alliance with Sina, Alibaba can also be considered as having 4. For the rest, 360 mobile seems don't like anyone touching their business. UC browser, more than once, Baidu has show its interests in buying their stake, and there are rumours that Baidu has already investing share in UC. In app market, it seems that Alibaba has already kept up with Tencent, another intense battle is inevitable.

3. Online retail market sees a big change

There are about 6 million shops on Taobao, 50 thousand on Tmall. There are over 300 thousand enterprises have "V account" on Sina Weibo. Before the alliance, sellers will have to use Weibo as marketing tools to do products promotion and advertising, and attracts their customers to Taobao achieving sales and payment.

Now with the data base sharing between Taobao and Sina Weibo, it means that enterprise on both platforms, are no longer need to arrange, coordinate the information from both sides. Even better, if the utilization is good enough, the 300 thousand enterprises on Sina Weibo will direct link their bussiness to Taobao or Tmall, and creating a single-stop-type service. By that time Sine Weibo are not merely a CRM platform to enterprises, it will become an integrate industry chain for marketing, communication, sales, payment and after service.

4. WeChat meets challenger

Before, WeChat was always very cautious about its commercialization. On the other hand, maybe because WeChat hasn't facing any real challenges in the mobile market, and Tencent would rather spend more budget on developing its international market, but strengthen the local market's commercialization. Now if Alibaba and sine's alliance will work as they designed, it can doubtlessly be a threaten to Weibo. Tencent have advantages on gaming, and Alibaba has absolute predomination in the e-commerce aspect, to the mobile advertising, it's hard to tell who will be the winner.