Alibaba (BABA) IPO
There have only been a few IPO’s in recent years in which I had a strong feeling that the company would be a game changer. These companies were already established even before the IPO, and became even stronger after. Hint: check your wallet and your phone and you’d probably see them:) The companies I’m referring to are Visa (V), Mastercard (MA), and Facebook (FB). Sure FB flopped in the IPO, but it came roaring back from ~$18 to ~$77 (+300%). In the upcoming weeks, there is another established game changing company that is about to go public. This one is a juggernaut, it’s been described as Ebay and Amazon rolled into one. I’m talking about the Alibaba IPO later this month (Sept 2014)
Alibaba is said to be like Ebay plus Amazon, but bigger. One could buy and sell on Alibaba just like other ecommerce platforms. There are two main sites that I have been exposed to: Alibaba.com and AliExpress.com. Alibaba is for larger quantity orders. Whereas AliExpress is for smaller quantities, maybe if you just wanted to try out the product. There are so many products to buy and sell, it could be overwhelming. Note how I have not given exact details, see “The Profitable Unknown.”
Real Life Experience: My First Alibaba Transaction
At this time, I can’t really talk about the exact product that I bought. The niche is quite competitive, thanks for understanding. I will try to give as much detail about it though. I was eyeing this product for a while.
Mobile Friendly Layout – There are actually US suppliers of this, but the Chinese suppliers also looked legit. Having confidence in the technology, I bought my first product from AliExpress.com on a cell phone.
Free Shipping - There are lots of suppliers offering free shipping, and others are not, this depends on the product. On the product that I bought it was free shipping. The shipping could be priced in, done through epacket, or buyer pays for shipping. Make sure to check the terms, buying a $20 item with $30 shipping is not fun @_@.
Delivery and Payment – The item came quicker than expected (about 10 calendar days). After receiving the item, I confirmed with AliExpress that I have receieved the item and it is as described. This confirmation before paying removes three common fears: being scammed (received legit item, then pay), product quality (it was more like a 7/10, hoping for a 9/10), and shipping logistics (product came at a reasonable time…I give ‘em a break since it is being shipped halfway around the world:)
The Profitable Unknown in Ecommerce and Investing in Alibaba
Uncertainty as an ecommerce platform makes Alibaba a profitable site to use. The fears mentioned above are still very real. The uncertainty makes the market inefficient, and thus profitable. For example, FB ads in the beginning were quite profitable, but as ad users became more efficient, it became less profitable. I don’t think we are at that point yet in which soooo many sellers have figured out Alibaba/importing. I have not yet found a foolproof way to source from Alibaba. For those that find real, high quality products, Alibaba will be a gold mine.
Uncertainty as a stock could make this a profitable investment as well. One such uncertainty is the slowing growth in China. But one must think like a contrarian to be profitable;) I usually do not buy IPO, and I won’t be buying BABA on its IPO. Will Alibaba live up to giant expectations? Let’s find out later this month!