eBay’s China Competitor Alibaba Launches Ecommerce Software

Alibaba Group has launched Alisoft, an online business-software provider serving small and medium sized enterprises (SMEs) in China. Alibaba named Oliver Wang General Manager of the new company and said Alisoft will also assume responsibility for Alibaba’s instant messaging services.

Alibaba competes with eBay and PayPal in China with its TaoBao online auction site and Alipay, its online-payment service. Alibaba also operates Alibaba.com, an online B2B marketplace for global and domestic China trade, and Yahoo China, a leading search engine and portal acquired from Yahoo Inc. in October 2005.

Alisoft came out of a project founded in 2004 to create products tailored to SMEs engaged in ecommerce, and will initially target Alibaba’s reported 18 million SME customers. Jack Ma, CEO of the Alibaba Group, said in a press releae, “E-commerce is changing the way companies do business, from communications, to customer relationship management, to after sales services. Alisoft will provide easy solutions for customers to integrate e-commerce with their back-end systems.” The Wall Street Journal reported that Alibaba plans to expand overseas and more than triple the size of its staff beyond mainland China (paid subscription required to view: http://online.wsj.com/article/SB116826159650470136.html).

Alisoft’s online, on-demand business services can be accessed through its website (Alisoft.com). It is currently offering five different on-demand applications:

• Customer relationship management (CRM)
• Inventory management
• Sales force management
• Financial tools
• Marketing information management

Alisoft’s business software services come in three editions: global trade, domestic China trade and individual (C2C) trade. The company said that in less than one year of free testing, Alisoft’s web based software services have attracted more than 500,000 active users and more than three million registered users. Alisoft will begin to charge a fee for some of its business software services in the first half of 2007.

In the U.S., many eBay sellers have relied for years on software – often custom-built or provided by third-party vendors – to manage their eBay listings. Some have migrated to sophisticated multi-channel software solutions. By providing Chinese companies with ecommerce software to improve efficiencies, Alibaba could potentially increase listings on its B2B and C2C websites.

And by controlling inventory management through a web-hosted solution, it may also give Alibaba influence over selling channels. Alibaba’s Vice President of International Marketing Porter Erisman said the company will be make Alisoft available for use on multiple channels – Alisoft customers will not be locked into Alibaba and Taobao. When asked if that specifically includes eBay’s new Chinese venture with Tom Online, Erisman said yes, “so long as their platform remains open for services like ours.”

Alisoft will also assume responsibility for the Alibaba Group’s real-time business communications tools. The Group’s B2B and C2C instant messaging services will be merged into one service, under the name “Ali Wang Wang.”

Alibaba estimates that among China’s more than 40 million SMEs, less than 10 percent have adopted advanced software applications, far lower than the average of 60 percent in more mature western markets. Alibaba said Alisoft’s web-based software model overcomes the challenges of software piracy, providing a sustainable business model while fostering innovation in the business software industry.

http://www.auctionbytes.com/cab/abn/y07/m01/i09/s03

Alibaba’s Software Strategy Could Hurt eBay in China

Any eBay seller can tell you the value of software to manage inventory, schedule listings and streamline customer service. eBay’s Chinese competitor is paying attention, and has launched software for its customers. Online auction firm Alibaba launched a new software division, Alisoft, to provide its Chinese customers with ecommerce software to manage inventory, customer relationship management, sales force management, and also provides financial tools and marketing information management.

A critical function of ecommerce software is the ability to sell on multiple channels, something eBay software does not provide (but third-party vendor solutions do provide). Alibaba said it will allow customers to sell on multiple marketplaces through Alisoft, as long as those marketplaces remain open to Alisoft.

eBay would typically be reluctant to allow a competitor access to its API (Application Programming Interface) – the technology that helps third-parties launch listings to eBay, for example. But China is anything but typical, and it will be interesting to see if the new joint venture between eBay and Tom Online will support Alisoft as a developer while its parent remains a competitor. The fact that the joint venture will not be integrated with the eBay global platform may make it easier for eBay to cooperate with Alisoft.

Alibaba’s software is a hosted system, making customers more reliant on Alibaba since information resides on Alibaba’s servers, not the customer’s own computers. While there are other advantages to a web-hosted service for both Alibaba and its customers, it clearly gives Alibaba an advantage over its competitors.