A blog post by Kevin Kelleher called “US investors still don’t know what to make of Alibaba,” on the blog site Pando Daily caught my interest because it discusses how Alibaba does not need America to be successful. A large portion of North Americans had never heard of Alibaba before their historic IPO (me included) and a large portion still doesn’t understand Alibaba yet (if you are still one of those people that don’t know what Alibaba is click here). In this blog Kevin Kelleher talks about how even Wall Street has difficulties projecting their revenue and profit figures of Alibaba by underestimating their profit and revenue.
To put Alibaba in perspective it has similar growing revenue as Facebook, it has a larger market value then Facebook (see picture below), and it is also trading at a lower P/E ratio than Facebook. Alibaba is growing at an extremely fast rate and is investing a great amount of money trying to grow its company. None of those plans, according to this blog, include expanding into America. This point makes sense when thinking about Jack Trout positioning theory because Amazon and eBay are already established in consumer’s minds as the go to e-commerce companies in North America. Alibaba would end up having to use a lot of resources in order to squeezes themselves into consumer minds. It is better to stick to the foreign e-commerce markets because they are already extremely successful there. As of today Alibaba controls 80% of all online shopping in China and the China e-commerce market is estimated to grow by more than 2.4 times by 2017 (see picture below).
Wall Street Journal. Web. 5 Nov. 2014. <http://projects.wsj.com/alibaba/>.
Kelleher, Kevin. “US investors still don’t know what to make of Alibaba.” Pando Daily, 4 Nov. 2014. Web. 5 Nov. 2014. <http://pando.com/2014/11/04/us-investors-still-dont-know-what-to-make-of-alibaba/>.