Alibaba Or $2 Billion Acquisition Of Netease Koala Details Failed To Confirm

On the afternoon of August 15th, reporters learned from authoritative sources that the Alibaba confirmed that the acquisition of NetEase koala for $2 billion is currently in the negotiating stage, and details are still not confirmed.

Alibaba and NetEase still remain silent about the news. It is reported that before that, NetEase also launched a round of negotiations with the electronic commerce platform, and finally spent Alibaba.

Undoubtedly, Alibaba will change the pattern of cross-border electricity supplier. Perhaps, for Ding Lei, timely stop loss is one of the directions, and the market share of cross-border electricity providers will further concentrate on giants. Alibaba's latest financial report shows that in the first quarter of fiscal year 2020, Tmall's physical payment GMV grew by 34% over the same period last year, far exceeding the average growth rate of the industry, and also led by the national growth rate of 21.6% of the online retail sales of physical commodities released by the National Bureau of statistics.

In the past ten quarters, Tmall has maintained a growth rate of around 30% and higher, with a growth rate of more than 40% in some quarters, continuing to be higher than the industry average. In the future, cross-border electricity providers and international businesses will continue to be the engine of growth.

　　 Ding Lei's subtraction

Ding Lei, chairman and CEO of NetEase's board of directors, has devoted great efforts to the electricity business.

NetEase announced the first performance of the electricity supplier in 2017. All year round, NetEase's business grew rapidly in 2017. In 2017, its online game revenue was 36 billion 282 million yuan and 27 billion 980 million yuan in 2016. In 2017, the overall electricity business revenue was 11 billion 670 million yuan and 4 billion 542 million yuan in 2016.

This year, the NetEase electricity supplier, which was highly regarded as expected, accounted for about 22% of the total net income in 2017 and further increased its share. Its NetEase koala sea purchase and NetEase's strict election growth rate are obvious.

However, the problem of fake goods has pushed the electronic business platform to the cusp of the waves several times. In February 7, 2017, the Consumer Association of China informed the consumer association about the experience of 2017's "double 11" online shopping survey: "Hai Tao" merchandise is suspected of counterfeiting more. Jumei.com, NetEase koala shopping, honey bud net, many spells, Bei Bei networks, Gome online, Jingdong and Taobao related stores were found to be suspected of selling fake goods, and some of them were also sold by self operated shops.

Although NetEase koala has clarified many questions about counterfeit goods since then, its weakness in supply chain control is the short board. At that time, for the growth and competition of electricity providers, Ding Lei said, "NetEase's electricity supplier is mainly cross-border electricity providers, compared with other types of e-commerce companies, ranking first. We will not compete with other platforms. Foreign things are difficult to buy on other platforms, or the quality is not high. We are based on the policy of government cross-border electricity providers. "

In early 2018, Ding Lei also concluded that the focus of NetEase's electricity providers over the past two years is to enhance users' awareness and satisfaction with the platform, which will have an impact on profits. But as the scale of operations increases, the cost of technology will be lower and lower, and we will have more advantages in the procurement Association and have confidence in profits.

Difficulties in cross-border electricity providers

After the integration, the cross-border electricity supplier industry will inevitably enter the oligarchy era. Core factors such as channel, supply chain and logistics become the key to competition in the second half. Alibaba's acquisition of koala is aimed at further integrating Tmall's international cross-border business and its demand and exploration for supply chain channels.

According to the data released by the General Administration of customs, the total retail import and export commodities of the customs cross-border e-commerce management platform in 2018 totaled 134 billion 700 million yuan, an increase of 50%, of which 56 billion 120 million yuan was exported, an increase of 67%, and imports of 78 billion 580 million yuan, an increase of 39.8%.

The market is still a blue ocean. NetEase koala needs to find new exports. Foreign terminals, honey buds and other platforms are actively looking for profit models to achieve self hematopoiesis.

Roland Begg, global senior partner and vice president of Greater China, Chen Ke, told reporters in an interview with the economic news reporters in twenty-first Century that there are three strategies for competition in the development of an enterprise, and that the scale effect, differentiation and differentiation will win. "Koalas like Tmall international and NetEase can be said to be a large-scale development path, and the wharf chooses the path of differentiation."

However, under the test of the traffic dividend and the shortage of supply chain, the scale of NetEase koala is facing a dilemma. "Cross-border electricity providers are not a low threshold business. After policy regulation, capital is no longer in. In 2015, there were 20 companies engaged in cross-border electricity business, and more than 10000 after more than a year. Now there may be only a few hundred. Ultimately, only a few giants can survive. " An insider from NetEase koala expressed confidence in the twenty-first Century economic report reporter. The koala was undoubtedly one of the last ones to survive.

For the loss, NetEase's internal view is "controlling the scale of losses, and finding the profit time node is no problem." But no one in the market knows when the losses will last.

According to Analysys International data, in the fourth quarter of 2018, the scale of China's cross-border import retail e-commerce market was 114 billion 560 million yuan, up 36%. Tmall international ranked first in 31.7% share. NetEase koala ranked second in 24.5% shares, ranking third in the world from the Jingdong global renamed sea hoarding, with a share of 11.5%, ranking fourth and fifth respectively, respectively, and 9.7% shares and 6% shares respectively.

After the withdrawal of the Amazon and NetEase koala, the pattern of cross-border electricity providers will further change. However, as the market tends to be rational, the pattern of large subsidies to seize the market has long been out of date.

According to incomplete statistics of the twenty-first Century economic report, in 2018, the ten cross-border cross-border electricity providers such as Hai pater, kelp, baoxa global purchase, global time, special and Xiaohong books received more than 3 billion yuan of total financing, of which 5 were in the maternal and infant field.

What is different from the past is that all these companies have chosen a low-key way, not to get users from the "low price" and "preferential" level, and to preserve their strength and store grain for the winter to become the consensus of the industry.

Wang Ruchen, a senior Internet industry observer, said in an interview with the twenty-first Century economic news reporter that NetEase is still a lighter mode of doing business. However, Alibaba has increased investment in Amoy's content mechanism. From this perspective, the value chain provided by NetEase is too short. "Alibaba defines a set of operating systems, Jingdong, a lot of new exploration, also have the platform to do it."

Facts have proved that there are no general victorious generals in the market. Only by returning to reason can we really let the industry enter healthy competition and highlight its value.

　　 NetEase focuses again

From completely independent self - run to the final launch, Ding Lei is facing the challenge of high input from the electricity supplier. In August 8th, NetEase released the 2019 Q2 earnings report, showing that the revenue of its electricity supplier sector increased by 20.2% over the same period, and the gross profit margin was not affected in the big promotion season. It still improved to 10.9%, and profitability continued to rise.

According to the earnings report, the gross profit margin and year-on-year growth of the electricity supplier business were mainly due to the increase in sales volume of koala and strict selection, and the improvement of procurement and operation efficiency. However, from the perspective of growth, this has been the seventh consecutive quarterly decline. From the three quarter of 2018 to the two quarter of 2019, the year-on-year growth rate of e-commerce business was 67.2%, 44%, 28% and 20% respectively.

Is scale growth or profit? Perhaps Ding Lei has found the answer. In response to analysts' questions, Yang Zhaoxuan, NetEase CFO in August 9th's earnings call conference, said that in the short term, the company is still concentrating on improving the scale of the business, expanding the total market volume and the number of users, and enhancing brand awareness and user reputation. So the goal at this stage is not to raise gross margins. "But then, at the same time of increasing scale, we will be very prudent in keeping gross margins at a stable level."

Since last year, NetEase has also been introducing new strategic partners and funds for its subordinate businesses to seek greater room for development. Earlier, there was news that NetEase was planning to go to the United States to list at least $300 million to promote its expansion in online education. In April of last year, Youdao completed the first round of financing, and the valuation was $1 billion 120 million after financing.

NetEase cloud music financing is also accelerating. Last October, NetEase cloud music announced a new round of financing. Investors include Baidu, pan the Atlantic investment group and Bo Yu capital, among which Baidu is a strategic investor. NetEase still enjoys the control of NetEase cloud music alone. This is the second financing announced by the company since its launch in 2013. Earlier in April 2017, Wang Yiyun music also received RMB 750 million yuan invested by SMG China, CICC and mango Wen Chuang foundation.

For these new businesses, Yang Zhaoxuan believes that it is still in the relatively early stage of investment. "Their focus is not just on commercialization. In the second half of this year and next year, the primary focus of these product lines is to increase their scale so as to maintain their reputation and popularity in the market, because we have great confidence in the growth potential of these products, and we hope to develop these businesses in the right way in order to ensure long-term growth."