Alright, let's get one thing straight: Alibaba throwing $281 million at turning local convenience stores into Taobao-branded outlets sounds less like innovation and more like rearranging deck chairs on the Titanic. They're losing e-commerce market share, and suddenly, 24-hour delivery of questionable snacks is gonna save them? Give me a break.
The official line is that these upgraded stores will offer "one-stop, 24-hour and 30-minute delivery" using Alibaba's "digital infrastructure." Translation: they're gonna track your every purchase, bombard you with targeted ads, and probably sell your data to the highest bidder. "Digital infrastructure" my ass.
And this whole "instant commerce market" being projected to hit 2 trillion yuan? Who's making these projections, Alibaba's PR department? Because I'm not buying it. Sure, people want convenience, but are they really gonna pay a premium for a lukewarm soda delivered by a drone at 3 AM? I seriously doubt it.
The fact that Alibaba stock is supposedly "rallying" while Meituan's shares are tanking is interesting, I'll give them that. Julia Pan from UOB Kay Hian Holdings is all in on Alibaba, citing their "deep cash reserves" that allow them to "sustain subsidies and flexibly adjust strategies." Okay, so basically, they can afford to lose money longer than Meituan can. That's not a strategy; that's just deep pockets. What happens when the cash runs out?
Xin-Yao Ng from Aberdeen Investments is at least being somewhat reasonable, acknowledging that Alibaba will need to keep throwing money at this thing just to maintain its position. But is maintaining a position worth that much cash?
And let's not forget the elephant in the room: This whole thing is a direct shot at Meituan's turf. On-demand delivery is their bread and butter, and Alibaba is basically saying, "We're coming for you." It's like watching two aging boxers slug it out in the twelfth round – painful and slightly pathetic.
Maybe I'm being too harsh. Maybe Alibaba actually sees something here that I don't. Maybe turning every corner store into a mini-distribution center for Taobao is actually a stroke of genius.
Nah, who am I kidding?
This whole thing feels like a knee-jerk reaction to Amazon's dominance in the West. They see Amazon's logistics network and think, "We need that, but… like, MORE convenient!" But China isn't the West, and Chinese consumers aren't Western consumers. What works in Seattle doesn't necessarily work in Shanghai.
What is interesting is how this move might affect baba stock price. Will this investment actually boost the alibaba stock? Or will it just be another drain on their resources? Only time will tell, offcourse. As some analysts have noted, it remains to be seen if Can Alibaba (BABA) Sustain Its Rally as E-Commerce Competition Intensifies? - Yahoo Finance.
