A couple of news bits in the crowded e-commerce space indicate that a previously rumored tie-up between leading portal Sina (Nasdaq: SINA) and e-commerce leader Alibaba is officially dead, while search leader Baidu (Nasdaq: BIDU) may have finally found a potent new partner in leading global retailer Walmart (NYSE: WMT). The 2 developments once again show how non e-commerce firms are all scrambling to get a piece of a market that could easily overtake traditional businesses like advertising and search to become China’s most lucrative online sector.In Sina’s case, media are reporting the company will enter the electronic payments business with a new service called WeiboPay, which will be linked to its popular Weibo microblogging service. The reports say WeiboPay will officially launch in April, but a visit to www.weibopay.com shows a site already exists and appears to be doing business.
The service is part of Sina’s bigger initiative to commercialize Weibo, which has 500 million registered users but doesn’t earn any profits. In this case, WeiboPay is part of a broader Weibo-linked e-commerce initiative, which has Sina allowing third-party merchants to sell their products to Weibo users.
These latest moves appear to show that Sina wants to develop e-commerce services by itself, rather than in partnership with a more established player. That’s significant because late last year rumors emerged that Sina was talking with Alibaba about a partnership that would have seen the pair form a strategic partnership allowing Sina Weibo users to buy products on one of Alibaba’s existing e-commerce platforms.
But those talks stalled when the 2 sides failed to agree on a price, and this latest move by Sina appears to indicate the deal is permanently dead. (previous post) From Sina’s perspective, this new initiative looks interesting and is a good way to leverage its huge Weibo user base. But I do think its chances of success would have been much higher if it launched its e-commerce service with an experience partner rather than trying to do it alone.
From Sina, let’s move on to the e-commerce news involving Baidu, which has made several unsuccessful attempts to enter the e-commerce space. The latest development will see Baidu form a strategic partnership with Yihaodian, the online store operator purchased last year by Walmart. The tie-up will see the 2 sides explore joint projects in areas where they have overlapping and complementary strengths, such as data sharing, ad placement and mobile e-commerce. (English article)
A Baidu executive said the 2 companies previously had a partnership in advertising, but that this new tie-up goes much further and will involve communication and planning at the top executive level. This kind of tie-up looks like an exploratory one that could easily result in close cooperation and even an equity investment if the 2 sides decide they can work well together.
Baidu’s 2 previous e-commerce initiatives, including a joint venture with Japan’s Rakuten (Tokyo: 4755), both failed after neither gained much traction in the highly competitive space. This new tie-up looks more interesting since Yihaodian is already a major player, and Baidu could potentially provide valuable new traffic through its popular search engine, including a recently launched e-commerce search site. All in all, I’d say this kind of tie-up looks like one of Baidu’s better conceived plans to enter e-commerce, and could result in a profitable partnership for both itself and Yihaodian if the 2 sides find they work well together.
Bottom line: Sina’s development of its own e-commerce services shows its talks for a Alibaba tie-up are dead, while Baidu’s tie-up with Walmart’s Yihaodian looks smart if the 2 sides work well together.
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