What, exactly, Alibaba does
The Chinese e-commerce company Alibaba aims to hit a Wall Street milestone later this month: biggest IPO ever. Today, the company started what Wall Street calls a “road show” — nonstop meetings with potential investors, in an attempt to raise more than $24 billion. Analysts say the company’s likely to raise at least that much.
But all of the hype leaves open a basic question: What is Alibaba? Is this just a version of Amazon from China?
No. Alibaba’s not a retailer. One of its biggest branches is a virtual shopping mall called Tmall, where consumers buy stuff from retailers and directly from commercial brands. Alibaba makes its money there much the way Google and Facebook do: by charging businesses for access to consumer eyeballs.
Jeff Papp, an analyst with Oberweis Asset Management, gives an example: “I go to Tmall, and I’m interested in buying bananas, and there’s 100 vendors of bananas,” he says. “So, [if] you’re a vendor of bananas and I am, too… I may pay more for my product to be listed first.”
Alibaba has two other major arms, one of them an eBay-like site called Taobao. The other, the company’s original site, Alibaba.com, does something that barely exists here: helping businesses find suppliers.
Charlene Li, founder of the tech consultancy Altimeter Group, says she once used Alibaba.com to research laptop manufacturing. “The fact that I could put out a bid, and talk to complete strangers in parts of China… that I had no idea where these people were,” says Li. “You think about: ‘I could actually do this at scale.’”
Alibaba has lots of other, smaller business lines — and recently it has made investments in U.S.companies like ShopRunner.com and the ride-share startup Lyft. The scale of those investments is small for a company that pegs its own value above $150 billion.
“I think what they’re trying to do with some of these investments is to better understand the U.S. markets,” says R.J. Hottovy, a tech analyst for Morningstar, “and the differences between its home market… China… and the U.S.”
In other words, this is R&D spending, not an attempt to take on Amazon directly.
What you could buy (on Alibaba) for $155 billion
As the massive Alibaba IPO approaches later this month, we’ve been trying to wrap our heads around the $155 billion valuation for the Chinese e-commerce company. As it happens, Alibaba lists a number of unique items on its online marketplace that could help put things in perspective. Here’s a list of some interesting items you could buy on Alibaba, and how many of them you could get with $155 billion.
15 million silicone life-size Paul Walker statues
Image courtesy of Alibaba.
Are you still mourning the untimely loss of your favorite movie star? Maybe you could take the edge off by purchasing a silicone model of his exact likeness. You could buy not just one, but enough to populate a small country. If you want to mix things up, you could even throw in some wax models of other celebrities like Pierce Brosnan, Michael Jackson, or even the pope.
375 million pairs of breast implants
Image courtesy of Alibaba.
Alibaba apparently sells all sorts of medical equipment, even down to supplies for specific implants. For the old standby of cosmetic surgery, you are required to make a minimum order of 100 pairs, so you can’t exactly get them on the cheap, but the breast implants probably wouldn’t be much use without a surgeon anyway. With $155 billion, you could buy enough to stock the world’s largest plastic surgery practice.
5 million worm-shaped amusement park trains
Image courtesy of Alibaba.
Planning to open the world’s creepiest amusement park chain, but can’t decide on what rides will best frighten children? Look no further than the “Popular! big worm amusement park electric train.” With $155 billion, you could afford to buy a 300,000-kilometer track for your worm-themed attraction.
3.3 billion packs of human hair
Image courtesy of Alibaba.
We’ve reported before on how you can sell your own hair for a decent amount of money, and it seems Alibaba is the place to go to see the other side of that transaction. You can even pick out varieties like Brazilian, Peruvian or Malaysian for your wigs or extensions.
Image courtesy of Alibaba.
With $155 billion, that bar you’ve always thought about opening could be stocked well enough to serve a glass of whiskey to everyone on the planet for at least of couple of weeks, all thanks to Alibaba’s surprisingly large selection of wholesale alcohol.
56.6 billion kilograms of spandex
Image courtesy of Alibaba.
Need more material for spare “Star Trek” uniforms for you and your friends after the old ones got a bit ripe at the last convention? Alibaba has got you covered, and with $155 billion, you could probably even manage to outfit Starfleet for real.
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