Alibaba Denied Weibo Tie-up Rumor, But They’ll Get Together Anyway

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Rumor has it that Chinese ecommerce juggernuant Alibaba was in talks with Sina Weibo on a potential investment which values the latter at US$ 2 – 3 billion. While the industry was already turned on over the ‘presumptive’ tie-up between the largest B2C platform and the most popular social media outlet in China, the two eventually yet unsurprisingly failed to deliver on people’s expectation.

Latest updates on the deal is that Alibaba denied the rumor for the first time on November 22 while Sina Weibo shrugged the rumor with “no comments”.

 

Weibo’s Dilema

One of the reasons why people got high on the rumor, could be found in HitWise’s latest findings. A HitWise report out this week has showed that about 3.7% of Taobao/TMall’s traffic was funneled from Sina Weibo, while the service contributed almost 8.7% of the traffic to Chinese B2C services.

In light of the stats above and thinking of the Pinterest-effect across the Pacific, it makes sense for people to pin much hopes and fancy imagination on the broken deal.

On the other hand, Sina Weibo seriously needs to make money off its offerings after two years of hard plow with a spirit of giving with no consideration of receiving. One Sina Weibo staff once told me that “we all knew some promotional accounts made big bucks by just reposting sponsored information, however, there isn’t too much we can do to take a cut from their proceeds”, he said bittersweetly, I guess that’s also the company’s feeling about the unfertile offering.

While not making money is one problem, spending too much is the other one bothers the Chinese counterpart of Twitter. Weibo’s expenditure was also constantly on the rise as the service has to scale up both the team and system infrastructure to accommodate a huge user pool of more than 400 millions and lots of news users flooded to the service every day. The money hole created by Weibo even derailed the whole company as Sina posted millions of dollars loss over the past financial quarters.

The non-productive issue coupled with extravagant habit gave more sense to the latest rumor of the leadership change in Sina Weibo. The – presumably – new CEO Wang Gaofei was a veteran in China’s SP trade with much experience in monetizing mobile offerings. If we flash back, we’ll see Sina Weibo tried really over the past few years with a bizarre array of attempts – premium accounts, Sina Weihao and promoted feed, to name a few – to grab several pennies from users, however, it’s revenue ride was riddled with failures.

 

Alibaba’s Needs

Alibaba is no charity, Weibo could barely impress it with just a large but untapped user pool. What Alibaba sees in Weibo, is the latter’s potential in bring traffic to and bolstering transactions on its online commercial property.

Hangzhou-headquartered Alibaba launched a flurry of failed attempts on social ecommerce front from the notorious Taojianghu on. After shutting down Taojianghu (2009), the Facebook for online shoppers, the company with a brave and fearless heart moved on quickly to throw a series of similar products, some are on web, some are on mobile, some are on both, the common trait among them, however, is that they all got ditched quickly too.

As social commerce is literally the new commerce – at least to the likes of Alibaba and a bunch of Chinese Pinterests, including Meilishuo and Mogujie – we’ll most likely keep seeing Alibaba’s new actions on this territory as usual. The only not as usual thing will be, Alibaba probably took the buying strategy into consideration.

Tencent was rumored to get involved in Meilishuo’s Series D round of financing, while Alibaba should get its hands on Sina Weibo.

So even though the deal seems to be compromised between them for now, we have every reasons to believe the two would get together down the road. Just a matter of time and the sooner the better for both.