INTERNET: Weibo Takes New Shot at E-Commerce
Bottom line: Weibo’s new micro-showcasing e-commerce initiative looks well-conceived and could stand a good chance of success, but the company needs to move faster if it wants to compete over the longer term with more aggressive rivals.
Weibo & E-Commerce in China
After posting profits in the last 2 quarters, early social networking (SNS) leader Weibo (Nasdaq: WB) is aiming to bolster its longer-term residence in the black with a new drive into the lucrative but also highly competitive e-commerce space. The move looks a bit late, since many were hoping for quicker moves into e-commerce for Weibo 2 years ago after its landmark tie-up with sector gorilla Alibaba (NYSE: BABA).
But the cautious Weibo was never one to move too quickly, and in this case its newest initiative actually looks quite well conceived and customized to fit the usage patterns of its subscribers. That means it could have a good chance of success, perhaps helping to lift the company’s sagging stock. But that said, Weibo will still have to vie with similar services from a faster-moving Tencent (HKEx: 700), which is aggressively rolling out e-commerce services tied to its popular WeChat social networking (SNS) platform.
Personally speaking, I’m probably just one of many Weibo watchers who have been disappointed at the company’s cautious approach that has caused it to lose its early lead in SNS to WeChat and other newcomers like Momo (Nasdaq: MOMO). Such caution is prudent in more mature industries, but can be a big handicap in the fast-moving realm of Internet products and services.
Weibo’s CEO Wang Gaofei detailed the company’s latest e-commerce strategy in a media interview, calling this latest attempt its “version 2.5” in the space. The first attempt was rather crude and simply attempted to sell products by bringing together Alibaba’s online marketplaces with Weibo’s own user base after the pair formed their tie-up 2 years ago. Version 1.5 came last year, when Weibo partnered with Alibaba’s affiliated Alipay to promote the popular electronic payments service.
E-Commerce in China
This latest effort looks more focused than either of those earlier ones, and will see Weibo try to act as a matchmaker between its millions of users and individual products that might suit their interests. (Chinese article) They’re calling the initiative Weibo Showcase, and say it will involve the the use of a micro-sales strategy that complements Weibo’s profile as a micro-blogging platform.
Micro Selling
I went to my own Weibo account today to see if the new service was being displayed, but didn’t see anything yet. Presumably Weibo will scour my various usage patterns, including my own postings, the ones I forward, the comments I make and the people I follow, to create a profile of me and my interests. It would then presumably use that profile to suggest individual products that I might like from its various merchant partners.
This kind of targeted approach would certainly seem good, and is squarely aimed at impulse buying. That contrasts with the more planned-style purchasing that is more common on traditional e-commerce sites. One of the big challenges will be getting Weibo subscribers accustomed to using the platform for buying. But it does have some advantages there due to its ties with Alibaba and Alipay.
Weibo certainly needs some new excitement, as the company has rapidly lost momentum these last few years following its meteoric rise between 2009 and 2012. The company rushed to make an IPO last year as its momentum was fading, and its shares now trade more than 20 percent below their offering price even as the company posted profits in its last 2 quarters. I’m cautiously optimistic about this latest e-commerce push due to the careful planning involved. But that said, Weibo really needs to move more quickly if it wants to survive over the long term against more aggressive rivals.
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