Revolution in Chinese cross-border e-commerce sector. Is Alibaba acquiring Kaola? Rumors say that Alibaba might pay about $2bn for the operation
Both Hangzhou based e-commerce giant and NetEase’s Kaola declined to comment. But rumors say that Alibaba is ready to pay about $2bn for Kaola. Once the two agree on final details, Kaola would merge with Alibaba’s cross-border arm Tmall. Such great revolution in PRC cross-border e-commerce sector. A merger between the China’s top two cross-border e-commerce platforms would create a dominant market giant.
According to data, Tmall International supported by Alibaba took up 32.3% of China’s cross-border e-commerce market in the first quarter this year, followed by NetEase Kaola with 24.8%. Easy to understand that after the acquisition completed, the total market share would reach 57.1%, securing them a leading position in the industry.
Launched in 2015, NetEase’s Kaola is one of the largest cross-border e-commerce platform in China.
Experts agree that this deal could not only increase Alibaba’s competitiveness in terms of cross-border e-commerce, but also fend off its rival Pinduoduo, the new merging Chinese e-commerce platform that already intended acquire Kaola. Although both parties involved in the deal declined to comment on the matter, NetEase has been trying to sell its online shopping unit to focus on gaming and music operations.
NetEase’s Kaola currently cooperates with more than 5,000 brands from 80 countries covering apparel, maternity and infant care, household appliances, personal care, health care and other major categories of products. The business model of Kaola is direct purchasing with self-operated, or operated by third-party merchants on the platform and in 2016, the platform was ranked first in the survey on users’ satisfaction of China cross-border e-commerce self-operating platforms.
“China is world leader in e-commerce, New Retail and innovation”: eMarketer
Kaola’s competitive edge lies in its unique model. It establishes strong relationships with international brands and directly purchases most of its inventory from brands overseas, bypassing intermediaries and local distributors to lower costs, the benefit of which is passed down to consumers. In addition, Kaola provides a one-stop solution for foreign manufacturers to enter the China’s complex market.
China’s $1.94 trillion e-commerce is the largest in the world, and more than three times that of the number two U.S. market, according to a newly released eMarketer report. And the rise of New Retail there, which blends the best of online and offline commerce to drive higher levels of engagement between brands and consumers, is inspiring innovations in retail across the globe, eMarketer noted. Mobile commerce, mobile payments and cross-border e-commerce are the areas in e-commerce where China is leading.
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