Alibaba, now the world's biggest ecommerce company by gross merchandise volume, is one of China's most impressive business success stories. Founded in 1999 by former English teacher Jack Ma, it has grown to become the country's most valuable internet company, and one of China's few major commercial enterprises not controlled by the state. The Alibaba corporate name is used mainly for the group's international wholesale trading portal. Its biggest single business is now domestic ecommerce site Taobao.com, the Chinese equivalent to eBay and Amazon, linking individual sellers and buyers, while counterpart Tmall.com is a shopfront for more established brands and outlets, and Juhuasan.com offers time-limited flash sales. In 2009, the group launched promotional shopping festival "Singles Day" for the first time. Held on 11th November each year across all group sites, it has grown to become the world's biggest retail event. Alibaba now has more than 720m monthly active users; gross sales for Singles Day 2018 set a new record of $30.8bn in 24 hours. Alibaba has also launched its own traditional bricks and mortar supermarket chain Hema, which allows shoppers to pay using their online account. A separate part-owned group subsidiary, Ant Financial Services, runs payment platform Alipay and online bank MYbank. The group also controls various local digital media and entertainment assets, including South East Asia's biggest ecommerce operator Lazada, and acquired famed regional newspaper the South China Morning Post at the end of 2015. In 2017 Alibaba signed up to a 10-year sponsorship of the Olympics. A key milestone in Alibaba's development was the creation in 2005 of a strategic share-swap with Yahoo Inc, and acquisition of the US company's local operations in China. By the mid-2010s, Yahoo Inc's single most valuable asset was its minority shareholding in Alibaba. Founder Ma remains executive chairman of Alibaba, but plans to step down in 2019. Daniel Yong Zhang is CEO. Revenues have almost quadrupled over three years, reaching RMB 377bn (approx $56.2bn) for the year to March 2019. Gross sales volumes through group-owned sites were over RMB 5.7 trillion ($853bn) that year, higher than any other ecommerce company. Japanese group Softbank controls around 29% of Alibaba's equity, while Altaba - the rump of the old Yahoo Inc business following the sale of the Yahoo online operations - has 15%.
Capsule checked 20th September 2018
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Adbrands Weekly Update 15th Nov 2018: Alibaba's annual "Singles Day" televised online shopping festival broke new records on Sunday night. Gross sales surpassed last year's total mid-afternoon, eventually reaching a grand total by midnight of approx $30.8bn in local currency. That was an increase of 27% on 2017. No fewer than 237 separate brands raked in sales of over RMB 100m ($14.4m) each, among them international brands including Apple, Nike and Lancome. There were concerns nonetheless: this year's 27% increase is actually the lowest year-on-year lift since the event began a decade ago, no doubt the impact from China's slowing economic growth. Many smaller brands also complain that they are being squeezed out of competition by bigger companies with deeper pockets able to afford the vast sums necessary to ensure top rankings on the event's shopping directory. One e-commerce agency told Campaign China "We even decided not to have one of our new clients participate in any big way. Costs would blow through their quarterly budget in one hour." The trainers and footwear category, for example, was dominated by branded results from Nike and Skechers and other top brands. "So the cycle of winners is reinforced every year."
Adbrands Weekly Update 20th Sep 2018: Chinese internet giant Alibaba forged a strategic partnership with its Russian equivalent Mail.ru Group, whose subsidiaries include that country's most popular social media service Vkontakte. Alibaba is buying a 10% stake in Mail.ru for around $484m, and the two companies will team up to launch ecommerce platform AliExpress, which is designed to connect Alibaba's 600m online merchants with Vkontakte's 100m users. It could be among the last big ventures signed off by Alibaba founder and executive chairman Jack Ma, who announced plans to step down from the group next year to focus on education and philanthropy. "The world is big, and I am still young," he told Alibaba's users. "So I want to try new things - because what if new dreams can be realised? The one thing I can promise everyone is this: Alibaba was never about Jack Ma, but Jack Ma will forever belong to Alibaba." His successor as chairman will be current CEO Daniel Zhang.
Adbrands Weekly Update 21st Jun 2018: Google has agreed to invest $550m in China's second largest ecommerce company JD.com, whose other backers include social media giant Tencent and Walmart. Google also works with Walmart in the US to offer online shopping via the voice-controlled Google Assistant AI system. Google's investment is equivalent to less than 1% of JD.com's equity but it cements an important alliance against local leader Alibaba. Of particular interest to Google is JD.com's tech-based delivery systems. It is the first company anywhere in the world to operate a drone delivery system, with a fleet of 40 machines already serving 100 villages in rural China. Amazon plans to use drones for deliveries as well, but that service is not expected to launch until 2020. Separately, JD.com reported record sales of $24.7bn in its 6.18 shopping festival, a rival to the 11.11 festival organised each year by Alibaba. That total was only narrowly behind the $25bn that Alibaba reported last November, but spread over an 18-day period.
Adbrands Weekly Update 31st May 2018: Technology brands continued to dominate in the 2018 edition of WPP's annual Brandz ranking, compiled by Kantar Millward Brown. Google still holds the top spot with a valuation of $302bn, up 23%, but Apple is closing fast with a 28% rise to just under $301bn. Amazon overtook Microsoft for the #3 spot, but both are still around $100bn behind the two leading brands by valuation, while Facebook was #6 on $162bn. The biggest change among the Top Ten was the arrival of of China's twin internet giants Tencent and Alibaba, ranked #5 and #9 respectively for 2018. Another Chinese brand, ecommerce company JD.com was the single biggest riser among the full Top 100 with an increase in valuation of 94%, though it remains for now way down the overall ranking at #59. There was also a big increase for Chinese alcoholic spirit Moutai, as well as the more familiar Paypal, Netflix and Gucci. New additions to the Top 100 included US cable company Spectrum, Uber, Instagram and another Chinese brand, courier company SF Express. The combined value of the Top 100 brands jumped by an astonishing 21% - its biggest ever increase - to $4,400bn. Download the full report at Brandz.com.
Adbrands Social Media 30th Jan 2018: Chinese ecommerce giant Alibaba launched its global Olympics sponsorship campaign this week with three lavishly produced films from BBDO China. The underlying concept is "the greatness of small", illustrating the ways in which small actions have a big impact on the global stage. Here's the best, telling the unlikely story of the national ice hockey team of Kenya, who had never even seen ice when they began playing. Sadly, they didn't qualify this time around, but Alibaba is bringing them to the Games as guests. Maybe 2022, Kenya?
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