Alibaba has long enjoyed a lucrative return from its massive online shopping network. But their extraordinary profitability is no longer a foregone conclusion as the Chinese e-commerce giant re-invests huge sums of money on new initiatives in the face of intensifying competition.
Chinese e-commerce giant Alibaba is expanding its business into the digital area. The company plans to invest a billion yuan ($145 million) into mobile game distribution.
Unlike U.S. rival Amazon, which operates a direct sales model that relies on owning its own goods and logistics service, Alibaba became a $500 billion behemoth by building asset-light marketplaces. It matches sellers and buyers online, earning billions of dollars annually from associated advertising and commission fees. But it doesn’t have to spend heavily to manage products or logistics.
Alibaba Digital Media and Entertainment Group, one of the company’s subsidiaries, has gone into partnership with the Russian Mail.ru Group, Dutch TFJoy, Chinese ONEMT and Efun to establish the Global Strategic Alliance of Game Distribution, according to the unit’s president Simon Shi.
The group aims to work with mobile gaming firms to distribute games developed in China to the international market.
However, the ambitious goal might become a challenge even for Alibaba, CNBC reports. Under Chinese law, local game developers must get state censors’ approval before releasing their products. State regulations also restrict media and information, blocking news and social media sites online.
The step is part of the company’s recent attempt to diversify beyond its original offering as an e-trading platform. Earlier, the group turned to making movies as well as providing mobile payments.
Alibaba also plans to use big data to recommend users which games they should download. The group seeks to take on developing markets such as India and Indonesia, where mobile internet users are growing by millions.
In May, Alibaba Group announced annual revenues had gone up 56 percent to almost $23 billion and in June investors litreally grasped as it upped its growth forecast for 2017 from 45 percent to 49 percent. Its 2014 initial public offering (IPO) was the largest in history, raising $25 billion on the New York stock exchange.
At the head of it all is Ma Yun, the 53-year-old entrepreneur known as Jack Ma, who started the company with 17 others and $50,000 in his apartment in Hangzhou, a mid-sized city near China’s east coast, known for its green hills and West Lake.
Just like Steve Jobs (who pushed the Apple brand with his face), Ma relied on the power of his personality to convince people to invest.
While others gave detailed business plans, Erisman said Ma simply talked about his story and vision. This got him the $40 million-dollar investment offer from Softbank shortly after Alibaba was established.
By injecting your personality into your company, you’re able to humanize your brand into more than just an entity, which often leads to more opportunities.