360Buy Losing Focus With Travel Plan 京东商城涉足在线旅行服务业偏离核心业务

By newsdoug on February 13, 2012

360Buy tries its hand in travel services China’s Internet companies are famous for straying from their core businesses in pursuit of new growth even though such initiatives seldom work, and now e-commerce specialist 360Buy looks set to joint the club with a new travel services initiative. (English article) Nearly ever major Chinese Internet firm has dabbled in areas outside its core competency, with names like Baidu (Nasdaq: BIDU), Sina (Nasdaq: SINA) and Alibaba all making such initiatives, nearly all of which have ended in abysmal failures. None of these companies seem to have noticed that the big western names like Google (Nasdaq: GOOG), Amazon (Nasdaq: AMZN) and Expedia (Nasdaq: EXPE) have succeeded largely by focusing on their core areas, and only expanding into new ones when they can leverage some of their existing expertise. So that makes the latest move by 360Buy, which also goes by the name Jingdong Mall, look perfectly consistent with what other Chinese companies have done. In this case, 360Buy says it will launch a hotel booking service, and that it has already signed up 20,000 hotels in China, Hong Kong and Macau as partners. A company spokesman said the move is part of the company’s drive to become a more diversified online services company, instead of just an e-commerce specialist. Never mind the fact that the online travel services sector is already quite competitive, dominated by Ctrip (Nasdaq: CTRP) and Expedia-controlled eLong (Nasdaq: LONG), or that Baidu also recently entered the space with its investment in a company called Qunar. (previous post) We should also ignore the fact that 360Buy is currently locked in a series of price wars with rivals like Dangdang (NYSE DANG), and that rival Alibaba has learned its lesson and remains focused on e-commerce after its foray into online search ended in a complete disaster several years ago. In fact, I suspect this latest initiative is probably designed to generate market interest in 360Buy, which wants desperately to make a New York IPO to raise much needed cash. 360Buy launched its IPO process last fall, only to see the offering fall victim to abysmal market sentiment due to a series of accounting scandals at US-listed Chinese companies. This new travel services initiative looks like fantasy to me, and an initiative that’s 95 percent likely to fail. But those kinds of difficult odds never stopped a Chinese company from this kind of initiative before, and I would expect to see a few more strange initiatives coming out of 360Buy before it relaunches its IPO bid, probably sometime in the first half of this year.

Bottom line: 360Buy’s new initiative in the travel services space is almost guaranteed to fail, and could be more designed to generate hype in the run-up to a US IPO later this year.

Enjoy this blog? Please spread the word :)