Friday, October 30, 2020

What Alibaba Can Learn From Groupon

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An employee is seen behind a glass wall with the logo of Alibaba at the company’s headquarters on the outskirts of Hangzhou, Zhejiang province, in this April 23, 2014 file photo.

Chance Chan/Reuters

Amid the spa discounts, restaurant deals and cut-price tickets on Groupon, Alibaba should be looking for one thing: lessons learned. As WSJ’s Alex Frangos writes:

The Chinese e-commerce giant on Friday disclosed a 5.6% stake in the once-popular, but lately shunned, daily-deals company. Groupon’s shares rose 41% Tuesday, on top of a nearly 30% rise Friday after a positive earnings surprise.

Groupon, which famously spurned a $6 billion takeover offer from Google, has become the poster child for fallen-from-favor tech companies. It had expanded too quickly on a business model that proved harder to execute in reality than in concept. Coupons, it turns out, don’t breed loyal customers. They attract cheapskates.

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That may be what drew in Alibaba. Last week, Groupon’s stock was at its lowest level ever, the company’s market capitalization down to just $1.3 billion—from $16 billion after its 2012 initial public offering.

Alibaba says it wants to “exchange experiences” with Groupon. It has its own venture in the so-called online-to-offline space, Koubei, which Alibaba and affiliate Ant Financial last year committed to pour $1 billion into. Koubei is in a mounting dogfight with rivals Meituan-Dianping, backed by Alibaba rival Tencent, and Baidu’s Nuomi, to dominate coupons, discounts, online ticketing and the like.

Read the full column on WSJ.com.

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The investor looking to put money into China and Asian Markets ought to definitely contemplate the mutual funds supplied by various household of funds. Almost all of the massive fund firms have a fund that’s designed for exposure to the expansion in China.

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