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Jack Ma’s expensive, lowkey strategy to battle Amazon for online shoppers

Chase Purdy
Jack Ma is spending billions to win the globe's online shoppers.

To stay competitive outside China, e-commerce giant Alibaba is flying under the radar and dropping billions.

Since 2010, the company has spent roughly $12 billion on more than 55 outside investments, according to CB Insights, with $9 billion of that spent in 2015 on 20 deals. And it’s lining up money for more. The Wall Street Journal reported Alibaba is in talks with eight banks (paywall) to raise $4 billion, much of that earmarked for e-commerce acquisitions.



Rival Amazon in contrast spent roughly $220 million in 10 outside deals in 2015, including Annapurna Labs, 2lemetry, and ClusterK. The company has poured billions of dollars into its own operations in foreign markets particularly in India, where it’s battling Snapdeal and Flipkart for market share.

 The people in India say it is unlikely that three players will be standing at the end of the game. 

Indeed, India is where the two e-commerce giants will likely go head-to-head. In August 2015, Snapdeal confirmed it had received a generous $500 million investment, naming Alibaba as one of its benefactors. And in February 2016, news reports said Alibaba was in talks with India’s largest e-commerce company, Flipkart, about an investment.



“The people in India say it is unlikely that three players will be standing at the end of the game,” said Harvard Business School professor Sunil Gupta. “With Alibaba getting into the play, the chance is that [Amazon’s chief competition] will be de facto Alibaba.”

In the US, where Amazon reigns supreme online (accounting for nearly one-in-five online sales), the battle is decidedly less intense. Alibaba has invested an undisclosed amount of cash in Jet.com—billed as a challenger (paywall) to Amazon in America—but the Jet’s performance has yet to match its initial hype.

“I don’t think it has got enough legs at this point,” Gupta said of the upstart company.

 

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