Alibaba, China’s top e-commerce company continues its expansion in social media. According to a recent story done by Tech In Asia, Alibaba has agreed to buy an 18 percent stake in the Sina Corporation’s Weibo, the most popular of China’s microblogging services, for $586 million. With this stake Alibaba has the right to raise its stake to 30 percent in the Twitter-like microblogging service run by Sina.
According to New York Times DealBook, the deal that values Weibo at about $3.3 billion will see the synergy of ecommerce and social networking. Both Alibaba and Sina have agreed to find out interesting ways to integrate the feature of social networking with e-commerce and continue its popularity. It is also being expected that such projects would bring in about $380 million in revenue from Weibo in the next three years.
Social commerce in mind? With more than 500 million users registered on Sina Weibo, the deal looks lucrative. Shopping is a social phenomenon and the next level of evolution for e-commerce is social commerce. Last year Weibo had carried out a similar experiment by tying up with a startup phone-maker Xiaomi. The small experiment had an amazing response with 1.3 million reservations for the phones. So it is likely that we might see such experiments being carried out by Alibaba but on a long term basis.
However, the micro-blogging site with 46.3 million daily active users has had its own set of challenges such as real time censorship and fixed sustainable revenue streams. In addition to this, a recent study of about 30,000 Sina Weibo users found that about 57 percent of the sampled accounts had no measurable activity or posts.
In spite of this, the growth of social networking and the rapid shift towards smaller screens has led to this tie up. Alibaba which continues to grow and is being valued at more than $55 billion, has clearly indicated that its present focus is to strengthen its mobile strategy and make it a core part of Alibaba’s strategy.