INTERNET: Alibaba Eyes Boxed, Buys Youku, Spats with JD

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Bottom line: Alibaba’s Youku Tudou purchase, its investment in a US online grocery store and its spat with JD mark a return to the headlines for the company following a quiet period, as it regains confidence following a piracy scandal early this year.

Alibaba invests in US online grocer

E-commerce leader Alibaba (NYSE: BABA) may have briefly gone into headline hibernation over the summer when its stock was in free-fall, but it’s quickly returning to a more familiar hyperactive mode as its Singles Day shopping extravaganza approaches this week. The company is in at least 2 M&A headlines as we head into the new week, announcing its signing of a formal deal to buy leading online video site Youku Tudou (NYSE: YOKU) and reportedly nearing a deal to make a relatively big investment in a US online grocery site called Boxed.

Meantime, a recent spat between Alibaba and archrival JD.com (Nasdaq: JD) continues to make headlines just 2 days before Singles Day, which falls on November 11 and has rapidly grown to become the world’s busiest online shopping day. That spat burst into headlines last week and revolves around anti-competitive accusations made by JD, which has now also sued Alibaba for allegedly making inflated claims about its delivery service.

In all fairness, only one of these 3 headlines is coming directly from Alibaba, the one where it officially announced its signing of a formal deal to purchase the remaining shares of Youku Tudou that it doesn’t already own. It’s possible the Boxed deal was also leaked by Alibaba. But it’s safe to say that news of JD’s new lawsuit came from JD itself, which has been quite public in a recent attack against its much larger rival.

The big backdrop for all this, of course, is Singles Day, which Alibaba has turned into a major shopping event complete with a parallel media extravaganza this year at the company’s recently established second headquarters in Beijing. Alibaba logged $9 billion in transaction volume over its platforms during last year’s Singles Day, and this year will be under pressure to show strong double-digit growth from that figure.

Youku Tudou Deal Signed

All that said, let’s quickly review the 3 latest headlines buzzing around Alibaba, starting with the largest that is also the least surprising. That headline has Alibaba announcing it  has formally signed a deal to buy the shares it doesn’t already own of Youku Tudou for about $3.7 billion. (company announcement; Chinese article)

Alibaba already owns nearly 20 percent of Youku Tudou, and made much bigger headlines when it first announced the deal last month. (previous post) Aside from signing a formal deal, the only real news in the latest announcement is that Alibaba slightly increased its offer price to $27.60 for each Youku Tudou American Depositary Share (ADS) from an original price of $26.60. That indicates Youku CEO Victor Koo was advocating for his company until the very end, even as he will retain his position under Alibaba’s ownership.

Next there’s the grocery deal, which has Alibaba reportedly set to invest up to $80 million in US-based Boxed Wholesale. (English article; Chinese article) Boxed is an online version of US giant Costco (Nasdaq: COST), which offers cheap groceries to shoppers who buy items in bulk. The only other noteworthy thing about this news is Box’s Asian connections, as most of its founders are of Asian ancestry and its founder Chien Huang is the son of Taiwanese who emigrated to the US. That could hint that Alibaba might be hoping to eventually bring Boxed to Asia, and China in particular.

Last but not least there’s the headline that has JD suing Alibaba for allegedly exaggerating its ability to make same day deliveries. (English article) The suit involves one of JD’s biggest advantages over Alibaba, namely its ability to quickly deliver goods shipped from its own online store. By comparison, Alibaba has more difficulty controlling delivery times because all of its goods are sold by third-party merchants that operate on its online malls.

This particular lawsuit is likely to have little or no consequence for Alibaba financially, though the negative publicity could pour some rain on Alibaba’s Singles Day parade. JD’s earlier allegations last week accusing Alibaba of unfair competition (previous post) could have a similar effect, perhaps wiping some shine off the company’s image as it heads into its most important shopping day of the year.

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