Alibaba moves to shore up lead in mobile e-commerce

As more Internet users move from desktop computers to mobile devices, e-commerce giant Alibaba Group Holding Ltd faces a challenge: how to defend its leading position in online commerce.

The company made its latest move on Tuesday, announcing in a press release that it will invest heavily to help e-retailers better manage their business via mobile devices.

Alibaba will launch an online platform especially designed for mobile e-commerce. The platform will be integrated into Ali OS mobile phones, which will be given free to e-retailers who buy service packages from Taobao, one of Alibaba's main online marketplaces.

The service packages are priced from 1,699 yuan ($279) to 2,699 yuan annually.

Using these phones, e-retailers can obtain real-time business data (for example, the ranking of their online shops), transfer larger amounts of money than ordinary e-retailers on Taobao and use a special service team that will process their requests more rapidly.

Alibaba is expected to invest at least 500 million yuan in the project by year-end. The project is part of the company's new strategy called "All In", announced by Alibaba Chief Executive Officer Lu Zhaoxi in October as an attempt to boost the company's wireless sector.

"We hope all of Alibaba's approximately 7 million e-retailers will participate in the campaign and move quickly into the era of the mobile Internet," said Lu.

Lu added that the phones are just the first step, and Alibaba will keep investing in its mobile e-commerce platform.

Alibaba's generosity is motivated by concern about losing its dominant position in China's mobile e-commerce market, said Mao Ajing, an e-commerce analyst at Beijing-based research firm Analysys International.

"It is important for Alibaba to secure as many e-retailers as possible. With the booming mobile shopping market in China comes increasingly intense competition. If not handled properly, e-retailers will move to other online platforms," said Mao.

Analysys said in late October that China's mobile phone shopping market surged 104 percent year-on-year to 34.12 billion yuan in the third quarter.

The surge came amid rapid dissemination of smartphones in China. The nation's smartphone market is now the world's largest; more than 450 million units are expected to be shipped next year, according to a September report by IDC.

But Alibaba doesn't have a monopoly on mobile consumption. Other Internet giants, such as Tencent Holdings Ltd and Baidu Inc, are muscling into the sector by strengthening their e-commerce and mobile capabilities.

Tencent's WeChat, a dominant mobile chatting app with more than 400 million users in China, is seen as Alibaba's largest threat in mobile e-commerce.

Tencent has a large user base, but beyond that, its WeChat 5.0 version also offers payment solutions. That means shoppers can buy directly without using Alipay, China's biggest third-party online payment service - which is owned by Alibaba.

Alibaba needs to do more to cement its hold on mobile e-commerce. But giving free mobile phones to e-retailers doesn't seem like a very practical solution, said Mao.

"Profit-driven e-retailers are only after online platforms that offer them the access to the most potential customers," she said.

mengjing@chinadaily.com.cn