Alibaba's (BABA) Copycat Business Model Might Not Work Well for International Expansion - Analyst
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Rating Summary:
33 Buy, 8 Hold, 1 Sell
Rating Trend: Up
Today's Overall Ratings:
Up: 20 | Down: 14 | New: 22
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With Alibaba's (NYSE: BABA) IPO just a few days away and excitement at an all time high, Global Equities Research analyst Trip Chowdhry offered some cautious commentary for investors to consider. Chowdhry essentially called Alibaba a copycat. And while this strategy might work well in China it likely won't work for international expansion.
He highlights:
- Alibaba's success has been widely attributed to "C2C" i.e "Copy to China" Strategy, and this is the recipe for success of all Chinese Internet Companies, and works extremely well.
- However, the imitation strategy completely fails in the fast pace, completely open competitive International markets, where Innovation supersedes Imitation
- Alibaba has been widely successful in China by Imitating successful global companies like Amazon.com, Google, PayPal and their offerings
- Alibaba has also benefited from Chinese protected Internet business environment
- For Alibaba to be successful outside China, Alibaba has to out-innovate Amazon.com, Google, Facebook, Twitter and other Global companies - and so far we have not seen innovation from Alibaba
- Alibaba has no offering in the emerging world of Social amplification and Social Commerce
- Alibaba's International expansion is uncertain, as Alibaba has not demonstrated that it can out-innovate the Global Internet Industry players.
- Further, Alibaba has not demonstrated that it can replicate success it has in China, where indigenous companies are favored over International Companies (Google, Facebook, Twitter are all banned in China).
- Our research currently indicates that Alibaba will very likely struggle with its International expansion, as in International markets the rate and pace of innovation is an order of magnitude different from that in China. The recipe of success in International markets is Innovation and not Imitation
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