Alibaba aims high in global market with possible ties with rival eBay

Updated: 2010-09-11 15:04
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HANGZHOU - Alibaba and eBay are longstanding rivals in the world of e-commerce. Their opposition dates back to the last decade when Alibaba squeezed eBay out of the Chinese market in 2006 by undercutting its commission fees in order to snatch a bigger share of the market.

The red-hot contest further intensified after Alibaba took over two eBay-related companies early this year.

The heads of the two IT heavyweights, however, sitting in a conference hall near the West Lake in the eastern city of Hangzhou, capital of Zhejiang province, showed interest in cooperating in the near future.

"Everybody knows we are competitors. But we have one thing in common, that is to provide services for small business, which is the basis of our cooperation," Jack Ma, founder and chairman of Alibaba Group, China's largest e-commerce company, said at an industry forum organized by his company Friday.

"We can use a better way by cooperation rather than competition," John Donahoe, Chief Executive Officer of eBay, noted.

Ma said eBay could help vendors at, a site for small and medium-sized exporters to display product online to buyers around the world, sell goods to business-to-business enterprises as eBay has established wide sales network in the United States and Europe. In addition, eBay users could also become Alibaba' s consumers.

Ma's words were echoed by Donahoe, as he explained that eBay is the largest online marketplace outside of China, as some 25 million vendors and 92 million buyers are doing business online everyday.

"And cross-border is an important part of ebay mission," Donahoe said, and he believed eBay could help Alibaba's users expand sales worldwide.

In fact, many eBay users have already begun to buy from and We should make more efforts to make their purchasing easier, Donahoe said.

"We do not talk about zero-sum competition; we talk about how we take our capability and create opportunity to make the pie bigger. That's the future of internet," Donahoe told more than 200,000 e-businessmen and women attending the forum.

Analysts said discussions on cooperation between the two IT heavyweights indicated they both have plans to end their decade-long rivalry with a win-win solution.

Ebay and Alibaba have just signed a pact for collaboration.

At the end of April, Alibaba launched AliExpress, an online platform that allows buyers to directly purchase goods from exporters in small quantities. AliExpress will accept users of eBay Inc.'s PayPal service on its new online wholesale platform.

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This will let clients at Alibaba's new site sell goods to nearly 100 million users of PayPal, and will also give PayPal users a vast new selection of products.

Also this year, Alibaba acquired Auctiva, a company that develops eBay auction management software, and Vendio, which also provides services for eBay.

Alibaba said Auctiva's platform will be integrated with Alibaba's online marketplace. Since AliExpress will allow users to list product on eBay as well, the merger will bring more than 250,000 new customers to the

David Wei, Alibaba's chief executive officer said annual sales by these 250,000 new customers have exceeded $7 billion, or one-third of eBay's annual new product sales.

"That is expected to make a difference in the global e-commerce pattern," he said at the end of August when the two mergers were finalized.

But analysts said the acquisition's potential benefits go far beyond that, as Alibaba could get more knowledge of consumer habits in order to adapt to their unique demands.

David Wei added that Alibaba's overseas acquisition has just begun. "Over the next 10 years, we aim to make Alibaba not only a place for exporters in China, but also around the world," he said.