Why Alibaba Is a Big Deal

From Wall Street Journal
Asia

Why Alibaba Is a Big Deal
By Juro Osawa | Apr 16, 2014

Many consumers in the U.S. go to Amazon.com when they shop online. But for hundreds of millions of Chinese consumers, online shopping is synonymous with Taobao and Tmall, the two marketplaces run by Alibaba Group Holding.

Helped by the sheer size of its domestic market – China has over 600 million Internet users – Alibaba’s business has expanded rapidly over the past decade and its sites already handle more transactions than those for Amazon and eBay combined.

Now, Alibaba is facing a major turning point as it prepares to go public in New York in what could be the largest Internet initial public offering in U.S. history. Analysts and bankers say Alibaba’s IPO could raise $15 billion or more, possibly surpassing Facebook $16 billion IPO in 2012.

Even though there is so much hype over its IPO in the U.S., Alibaba’s actual e-commerce operations are still largely unfamiliar to U.S. investors, let alone U.S. consumers many of whom have never used Alibaba’s services. While some businesses in the U.S. have used Alibaba.com to find Chinese suppliers, that business-to-business website is now a relatively small part of Alibaba’s revenue, compared to its Chinese consumer shopping sites Taobao and Tmall, which together account for the company’s revenue according to analysts.

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