Tencent to Work Around ECommerce, with Express Delivery Service?

Let’s be frank, Tencent has been on an investment spree since last year with a swath of cases in ecommerce storefront, to name a few, Gaopeng in last February (probably the most notorious one), OKBuy in last May, Kela.cn in last June, 51buy.com (formerly known as Icson.com) and so forth. See chart 1 for more on Tencent’s investment moves in last year.

chart 1, Tencent Investments in 2011

The Tencent’s Way of Doing Ecommerce

Listed above are disclosed investments, there’re some undisclosed cases out there. And don’t forget Tencent’s own C2C (paipai) and B2C businesses (QQ Mall and QQ Wanggou). However, it seems that these efforts and investments haven’t brought any big return to the company yet.

According to a Morgan Stanley report out last March, Tencent mainly engaged in ecommerce business through two ways:

a) Launches ecommerce open platform such as paipai platform, tenpay platform, and group buying platform initiative in an aim to maximize Tencent’s value as an ecommerce open platform,

b) Invests into a disparate set of ecommerce companies to capitalize on the e-business trends in China to gain most value from these portfolio companies.

On top of the aforementioned reason, Tencent invested a bunch of companies that eventually formed the first few suppliers of QQ Wanggou, Tencent’s effort to compete with Taobao Mall and 360buy/Dangdang’s open initiatives.

Both 360buy and Dangdang are opening their doors to 3rd party vertical etailers.

Work Around with Express Delivery Service?

Recently, rumor has it that Tencent is about to launch its own express deliver service QQ Sudi (or QQ Express) to provide Chinese etailers with logistics service. It sounds reasonable since a) Tencent is no lack of money  and b) given Tencent’s large online shopping portfolios, if the company could come up with something like a unified logistics service for all its affiliated etailers, it might help achieve some sort of synergy among them to bring down logistics costs for them. A recent report says that logistics has accounted for a large chunk of Chinese etailers’ operational costs.

Suffering from high logistics cost, Dangdang’s net income stood at about 1% in the last quarter.

Two weeks ago, 360buy.com was said to acquire express service provider CCES after realizing the logistics conundrum in China’s ecommerce space. Due to insufficient infrastructure, lots of Chinese etailers chose to set up their own deliver force, such as VANCL, Amazon China, 360buy, Dangdang, OKBuy, Mecox Lane, etc.

However, don’t read too much into the launch of sudi.qq.com, as of now, the site just looks like a metasearch of 3rd party express delivery services, you can use it to track the delivery status of your package – has it been delivered yet, where is it now, which is convenient for online buy-holics. And Tencent also denied the rumor claiming “we have no interests in stepping our toes into logistics market. ”

Not for now.