ZEITGUIDE “RETAIL” IMAGE BY KRISTOFER PORTER

Wall Street appears primed to go gaga for BABA.

That’s the future stock ticker for Alibaba Group, the Chinese e-commerce behemoth founded 15 years ago by Jack Ma. Ma and two teams of executives have been conducting a worldwide roadshow for potential investors, leading up to what could become the largest IPO  in history around Sept. 19—valuing the company at around $160+ billion.

Many continue to compare Alibaba to Amazon, but that comparison isn’t entirely helpful. Why? As big as Amazon is, Alibaba is bigger. It claims to have more active users than Amazon and eBay combined. It sold $5.75 billion in goods in a single day last year. It accounts for 54% of all package deliveries in China and 80% of all e-commerce there. Alibaba’s sites, Taobao and Tmall, which bring in the majority of the company’s revenue, are Ebay-ish and Amazon-ish marketplaces, but Alibaba is also the Dropbox of China, PayPal of China, Hulu of China, Uber of China, and more. So, Alibaba is pretty much a VC’s ideal portfolio representing the Chinese-equivalent of the best Silicon Valley startups.

But given recent talk of tech bubbles and the mystery of how the free market will sustain in China, is Alibaba worth $160 billion? That is to say, as much as eBay, Nefltix, Yahoo! and LinkedIn combined?

Well, what is reaching 279 million active buyers worth? A lot, if you are a Western retailer on the wrong side of America’s $318 billion trade gap. If Alibaba succeeds, David Gelles of The New York Times reports, “it will make everything from culinary delicacies to flashy luxury goods available with a few keystrokes” to consumers in China.

Western brands also have reason to be wary. Alibaba has been accused of enabling the sale of counterfeit luxury goods, though it recently has taken steps to protect brands that open stores on their platforms. Meantime Alibaba’s entry into the U.S. side of e-commerce, a multi-merchant hub called 11 Main, has gotten decidedly tepid reviews to date.

Jack Ma, however, knows that “China is the ‘main course,’ while developed markets like the U.S. are merely ‘dessert.’” With 1.3 billion people in China and sales of $248 billion in 2013, investors aren’t clamoring for Alibaba to expand into North America or Europe. But they will expect for it to keep up with rising regional competitors like Japan’s Rakuten, and India’s Flipkart. The battles could be epic, as Asia-Pacific is now the largest region for consumer e-commerce in the world.

Yet with global e-commerce surpassing $1.5 trillion, there need not be just one winner. There are slices in this growing pie for Apple, which just announced Apple Pay, and Twitter, with its new “Buy” button. Alibaba, with its many platforms, is just another link in the growing omnichannel universe.

Keep learning,

Brad Grossman

Creator, ZEITGUIDE
Founder, Grossman & Partners

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P.S. Alibaba does NOT yet have the Kindle and paperback versions of ZEITGUIDE 2014. But Amazon does, and this weekend only, click here to download a free Kindle version. Reviews are appreciated!

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