Saturday, May 20, 2006

Mad Jack and Zhaocaijinbao

Two interesting posts today on Alibaba. First, - which I haven't seen for ages - quotes founder and CEO Jack Ma at the Yahoo! analysts' briefing describing himself, apparently, as "Mad Jack". Never one to bore the journos, Jack and CFO Joe Tsai gave a five point plan for e-commerce success in China:

The first one is e-marketplace, which Alibaba has in the form of its Alibaba portal and its TaoBao auction site.

The second element is the trust record, which is something that Ma noted over 160,000 companies have built up on Alibaba and over 15 million individual users.

Payment is also critical. To that end, Alibaba recently launched AliPay, the PayPal equivalent in China.

Alibaba CFO Joe Tsai considers AliPay a key driver of the company's success and e-commerce in China.

"Our own estimate is that the online payment market in China was worth $700 million last year, and AliPay was really the main driver," Tsai said. "We occupy over 40 percent of that market."

Tsai noted that AliPay is different from other payment systems in the market since AliPay is an escrow-based system.

"What that means is that it addresses the issue of settlement risk," Tsai explained. "Settlement risk is someone pays the cash and the other side has to deliver the goods. How do things cross in the middle and get settled?

"This is a true issue for e-commerce in China and it's a very serious issue, which, in the past, has hindered the growth of e-commerce in China."

AliPay solves the settlement risk issue by escrowing the cash until the goods are delivered.

"Through this payment system, we are actually able to increase the liquidity in the TaoBao marketplace."

Beyond pure-play e-commerce, Yahoo is the key to Ma's plans to dominate search in China.

"Today I don't see a real search engine in China," Ma said, discussing the fourth element. "Baidu is good. Google is good. But we have not started to compete yet. We will start in September."

And the fifth element of e-commerce success in China?

"We're probably going to launch No. 5 in the next two years, but today I'm not supposed to tell you about that," the charismatic Ma said.

Then, over at China 2.0 Web Review, a very interesting piece on how search engine concepts are being used at the C2C and B2C site with the Zhaocaijinbao keyword bidding service.

No comments: