Alibaba's e-commerce app finds success with social networking features

Alibaba Group Holding has tried to shake the perception that it is just the eBay or Amazon.com of China, by pushing into social media and entertainment and actively investing in start-ups like Snapchat.

Chairman Jack Ma Yun’s sprawling pursuits are starting to pay off. Alibaba’s Taobao mobile app is a riot of tiny print and icons that allow users to join a chat group for fishing enthusiasts, book a trip and buy a new rod. The one-stop-shop format has resonated with China’s young users, who are spending longer on the site than visitors to Amazon or Twitter’s mobile sites, and has helped more than double mobile revenue in the most recent quarter. 

“To capture the attention and imagination of young people you have to provide more social features,” Alibaba’s co-founder and vice-chairman Joseph Tsai said. “We want to continue the sense of community so that they’ll come back and engage with the platform.”

Alibaba started Taobao in 2003 as an eBay-like site for small businesses and entrepreneurs to sell directly to consumers. In the last few years, it has added social and entertainment features to keep people on the app longer, increasing the chance they will buy products. The strategy worked. Monthly mobile active users increased 39 per cent to 427 million and mobile revenue jumped to US$2.6 billion in the June quarter. People visit the app more than seven times a day for more than a total of 25 minutes. That compares with about nine minutes on Amazon’s mobile app and 16 minutes on Twitter’s app on days when users visit.

“Amazon doesn’t get people on the website seven times a day,” said Gil Luria , an analyst at Wedbush Securities. “The level of engagement Alibaba’s able to create is more than what we’d consider with search companies and social companies. They’re investing a lot into making their tools have social engagement like Facebook.”

Taobao users can join one of its 1,000 special interest groups to chat about topics from wedding planning, to sports to baby showers. Last year, the site started a programme to get bloggers and experts to post content by offering them a commission for making product recommendations.

Alibaba also recently rolled out the Taobao news feed that has grown to more than 1,300 media outlets that provide content to its 80 million-plus monthly active users. A few months ago, Taobao added video live-streaming for bloggers and merchants to interact with consumers.

Tsai says that more social features will be added to Taobao, but only ones that will lead to more sales. Users may not make a purchase every time they open Taobao, but the activities pique their interest in potential merchants, whether that is watching a live broadcast with a Chinese celebrity testing out new makeup or participating in a special interest group discussing fishing products. 

 “We’re already at the holy grail point where our users have very high desire to buy things and they’re very commercially minded,” Tsai said. “On Facebook you’re friend-ing all of your friends because you already know each other. In our case, we start with strangers but then use data to find a commonality of interest and create a community around that interest.” 

In recent years Facebook has also been searching for ways to convince its users to shop on the social network, trying digital storefronts, birthday gifts and a “buy” button. It too is testing a shop section for businesses to sell directly from their Facebook page. Pinterest and Twitter have introduced ways to buy products from their sites as well.

Amazon has not made any major inroads in adding lifestyle features to its e-commerce site, though the company invests in routine social media promotions. Its biggest social media push was in 2014 with its US$970 million acquisition of Twitch Interactive, an online forum that lets users discuss gaming and watch others while they play. Twitch continues to operate as an independent company under chief executive Emmett Shear with limited integration with Amazon’s online marketplace.

Mixing social media with e-commerce has not really taken off in the US, where consumers are used to separate apps for specific purposes, according to Luria. On the other hand, China has a rapidly growing base of smartphone users that are accustomed to messy interfaces with as many features as possible.

Tencent Holdings has a grip on China’s social messaging space with WeChat, a do-it-all app for booking taxis or buying movie tickets. Alibaba also has added services to Taobao’s main app that include food delivery, travel booking, and on-demand home cleaning. Chinese search giant Baidu allows users to also book hotels and look at real estate.

“For a lot of Chinese companies, distribution is so prized and valuable that if they can add-on other elements to the same user-base, they will consider it,” said Connie Chan, a partner at Andreessen Horowitz. “Most of the Chinese players recognise that having more touch points in a user’s life is probably the main goal.”

Ma has placed his stakes in social media and entertainment by spending billions of dollars buying video website Youku Tudou, web browser UCWeb, and investing in China’s Twitter-like social media platform Weibo. Yet social networking has been a soft-spot for Alibaba: it tried to compete with Wechat a few years ago with a messaging service called Laiwang, which has not gained nearly as much traction. Last year, Alibaba was said to have invested US$200 million in Snapchat. 

“We want to learn and understand how Snapchat is engaging with young users,’’ he said. ”We’re just intrigued by the product and impressed with Evan Spiegel, the founder, and we want to be partners with him.” 

Alibaba is owner of the Post.