When Chinese e-commerce company Alibaba went public in September 2014, the company's $21.8 billion IPO broke headlines, along with the previous IPO record of $19.2 billion. Four days later, underwriters exercised an option to sell more shares, bringing the total IPO to $25 billion.
Analysts have compared Alibaba to Amazon (AMZN), eBay (EBAY), PayPal (PYPL), and Google (GOOG) — all rolled into one. But the truth is, Alibaba truly has no U.S. counterpart in terms of its domination of the Chinese market (80 percent of all Chinese online retail sales) and its diversity of holdings. With Alibaba's scale and complexity in mind, we have assembled a cheat sheet of the company's major and minor businesses, subsidiaries, and sources of revenue.
Alibaba.com is the company’s original business. The website operates as a trading platform linking Chinese businesses to international businesses that need Chinese inventory or manufacturers. Like Amazon.com, Alibaba.com matches buyers and sellers, but unlike Amazon, the website does not hold inventory or participate in logistics such as sourcing, storage, or shipping. Alibaba.com makes money by receiving a commission from each transaction as well as by charging subscription fees to sellers who maintain storefronts in the marketplace. The site also includes 1688.com, which connects domestic Chinese business, and AliExpress, for smaller international business buyers.
Taobao is Alibaba Group’s largest business. The company is a consumer-to-consumer marketplace similar to eBay.com. Unlike eBay, however, Taobao does not charge a commission on transactions. Rather, Taobao makes money by selling ads. Merchants can pay to place their products higher in priority, to gain visibility for their products, or to reach more customers through search ads.
Tmall.com spun off from Taobao as a premium business-to-consumer marketplace aimed at the growing Chinese middle class. The website features higher-end, international brands and charges its merchants yearly membership fees.
Although Alibaba Group generates its bulk of revenues from Alibaba.com, Taobao, and Tmall.com, the company is also invested in the following businesses.
- Alipay, an online payment system similar PayPal
- Juhuasuan, a flash sale site similar to Groupon (GRPN)
- Alibaba Cloud Computing
- Aliwangwang, an instant messaging service
- Laiwang, a messaging application competing with Tencent Holdings Limited’s WeChat
- Sina Weibo and Youku Tudou, the Chinese equivalents of Twitter and Youtube, respectively
- Alibaba Pictures, a film business
- Guangzhou Evergrande, one of China's top football teams
- Yu’e Bao, a mutual fund whose name translates to “leftover treasure"