In August 2007, Alibaba launched its online advertising platform, Alimama.com, marking its entry into online advertising. The business model of Alimama is similar to that of Taobao, Alibaba's C2C/B2C online auction site, though with online advertising space being sold. Once a price is decided upon, advertisers can make payment through Alipay, Alibaba's payment arm.
Alimama is not the only evidence of Alibaba's interest in advertising. On Alibaba.cn, there is a link to a "Media Supermarket" (媒体超市) on its home page. The Media Supermarket is a platform where media providers -- grouped as magazine/newspaper, TV, radio, outdoor advertisement, or new media/internet -- seek out advertisers and sponsors. (See the screen capture below; the picture, along with those of all the major Chinese websites, is in gray and white in honor of the victims of the recent earthquake in Sichuan.) Unlike Alimama and Taobao, there is no charge for this Craigslist-style service; perhaps the company intends to again follow Craiglist's example and eventually start charging for the postings.
Recently, Alibaba CEO Jack Ma stated that he wants his company not to be a purely internet company but to be a "service company" targeting small and medium-sized businesses. The "Online Supermarket" may offer an example of how Alibaba plans to use its online auction and sales expertise to enter the world of offline advertising.
Click here to read the second part of this two-part series.
Compared to last year's event, the conference focused less on new payment solutions and more on upgrades and improvement to more traditional systems. Fraud protection, for example, was a popular themes, with presentations from China Minsheng Bank and Retail Decisions, among others.
Some of the attendees who had flown in from outside China complained that there were too many people and presentations that discussed specific markets or global issues but without any connection to China.
We met quite a few more attendees from India, than one usually sees at conferences in China--perhaps further evidence that these two markets are increasingly probing for opportunities in each other's market.
We noticed fewer Chinese payment startups in attendance, perhaps because of the higher prices compared to last year.
We have more posts planned on the actual content of the event, but the overall mood seemed to be that not much had changed in the past year.
On May 5, Eachnet, which just a few years ago controlled 90% of China's C2C online auction market, announced a permanent shift to free services for its users. One of the main reasons Taobao overtook Eachnet several years ago was by offering no-fee auctions. Eachnet has been charging for its services since 2001. Interestingly, it was only last month that Taobao launched a B2C platform and started charging fees to some merchant B2C sellers on it.
Will Eachnet regain its market share through the no-fee services? I think it's unlikely. When Alibaba came on the scene several years ago, the main need was to build up the habit of online shopping in consumers and ensure a wide selection of products online. These days, China's e-commerce sector continues to show strong growth, and trust and security have become key concerns for the tens of millions of Chinese netizens who already shop online. The success of C2C auction sites depends largely on how well they can keep consumers' trust.
With such a strong position in the market, Taobao should be able to hold onto its lead. Eachnet's announcement may produce marginal gains in users, but the company is unlikely to regain its previous position.
Recently, mobile payment and mobile commerce pundnits worldwide added two industry giants to their list of supporters - Citibank and Amazon.com.
Citibank announced a partnership with m-payment upstart, Obopay , to offer a mobile P2P (person-to-person) payment service. According to their press release , the trial is set to begin this summer and will be made available to checking account holders in the US. This is pretty big news for m-payments m-commerce supporters as one of the largest banks in the world and one of the largest m-payment startups are teaming up. Citibank may have enough coverage in the US to jumpstart the industry as a whole, in the US at least, and perhaps later in other countries.
Amazon.com, has recently launched its "TextBuyIt " service which allows its customers to shop on items listed on its website via SMS. The service is available to all Amazon Payment users who have mobile accounts with one of nine mobile operators. Along with its "TextPayMe " service, which offers mobile P2P transfer, Amazon.com is showing that it is now only leading the way with internet-based e-commerce, they are also positioning themselves to be a major player in the developing mobile commerce sphere.
In China, this news would be comparable to ICBC and Taobao.com announcing their commitment to mobile payments and mobile commerce services. Given the current flux in the market with unclear government regulations, the lack of competition in the mobile space, and a overall emphasis on online payments and online commerce instead, it seems that we are at least a few years away for any similar types of movement in China's mobile payments and mobile commerce market.
For further analysis on the current state of mobile payments in China, check out the presentation I recently gave at a mobile payments forum in Beijing.
As recently reported by Chinatechnews.com , the Chinese central government will finally be re-vamping their telecoms supervisory bureau, the Ministry of Information Industry (or MII), in the second quarter of this year. While preliminary indications are not very clear as to the exact changes regarding the bureau's governing jurisdiction over China's telecoms and internet markets, many of us following the TMT industry will surely be keeping a close watch on this development.
In recent years, China's outdated organization of its industry-specific regulatory bodies have resulted in confusion and power struggles concerning the issues of convergence in telecoms, media, internet, and banking industries in China. A prime example is the on-going battle between the MII and SARFT (State Administration of Radio, Film, and Television) regarding IPTV and DTV services in China, where telecoms and broadcast television converge.
If the Chinese central government can clarify their stance and jurisdiction regarding these coverging industries, that would be great news for all those involved in developing the industry. Even so, we certainly won't be holding our collective breaths for the "new MII" to bring a resolution to these issues regarding industry convergence.
