This article was published on August 8, 2013

Have you heard of 51Buy? It might be the answer to Chinese firm Tencent’s e-commerce ambitions


Have you heard of 51Buy? It might be the answer to Chinese firm Tencent’s e-commerce ambitions

Many people outside of China have heard of e-commerce sites Taobao and Tmall owned by Internet giant Alibaba, but few are in the know of Chinese e-commerce site 51Buy.com (known as Yixun in China), which is owned by Tencent.

Yet today, the site announced it has passed 10 million registered members, according to a report by media outlet DoNews.

This is a growth of 150 percent from the same time last year, DoNews notes, and it is also 10 times the 1 million members that the site reached back in 2011.

These latest figures are a clear indication that despite a long way to go to make its mark on China’s e-commerce sector, Tencent has been quietly building up its base as it seeks to boost its e-commerce offerings. The Internet giant is seeking to diversify its businesses and tap on the extremely lucrative e-commerce market in China, which saw a whopping RMB1.3 trillion ($190 billion) worth of transactions in 2012.

This also adds on to the case that war has started between Tencent and e-commerce giant Alibaba.

Tencent has much to catch up with in e-commerce

A China Economic Net report in April this year noted that Tencent CEO Ma Huateng mentioned before that the company has experienced many setbacks trying to beef up its e-commerce offerings.

Tencent’s e-commerce revenue for the whole of 2012 stood at a mere RMB 4.428 billion ($723.9 million). In comparison, Alibaba topped RMB 1 trillion (circa $157 billion) in combined sales volume on its Taobao and Tmall websites for the first 11 months of 2012. Taobao alone has more than 800 million product listings and more than 500 million registered users as of June 2012.

taobao ad

For Tencent to be able to catch up with Alibaba, it still has a long way to go, and this is where 51buy.com comes in. Or does it?

Hopes for 51buy.com

Despite also developing its own e-commerce site QQ Wanggou, Tencent seems to have pinned more of its hopes on 51Buy — a self-operated platform focusing on consumer electronics (although it does sell other consumer products as well) with its own logistics network, which as everyone knows is the key to unlock e-commerce potential.

Earlier this year, Alibaba launched a logistics network project with a first stage of investment at $16.3 billion to boost the delivery of products purchased online.

In May this year, a report from Marbridge Consulting said a source at 51Buy said that the site will start offering expedited delivery services, including two-hour guaranteed delivery to customers, in the future.

The e-commerce site was also reported to be building more than 10 logistics bases this year in cities across China, and working with third-party logistics partners to offer collect-on-delivery services in 1,000 cities across the country.

Tying up with brands may attract more customers

As part of its strategy, 51Buy has been pushing for links with brand names (including Tencent-owned services) to attract more users. The site has set August 8 as its Members’ Day and is rolling out special discounts for its users in collaboration with four brands — Samsung, Logitech, Lenovo and Proctor & Gamble.

51Buy-Screenshot

A Marbridge Consulting report in June also noted that 51Buy will be the first e-commerce business to utilize the payment feature launched by Tencent’s messaging service Weixin (what WeChat is known as in China). How it works: orders placed on 51Buy will generate a QR code that Weixin users can scan to make a direct payment through their TenPay account.

This week, Tencent rolled out an iOS update to Weixin that incorporates payment services, a game center and a sticker store, as the company seeks to add other services in a bid to monetize the free app.

Restructuring to boost its sales

In March this year, an internal email from 51Buy CEO Bu Guangqi said the company would be carrying out restructuring to reach a sales target of RMB15 billion ($2.45 billion) – RMB20 billion ($3.27 billion) in 2013, according to a report from ZDNet.

Bu reportedly said 51Buy will focus on fast delivery and low prices, while expanding its line of products and improving its service. The site also had plans to set up an e-commerce operations department to focus on procurement and operations, as well as a business development department to focus on long-term growth.

tencent

Whether or not 51Buy is on track to achieve its target right now will likely determine Tencent’s fate in e-commerce — as it is obvious that the sole reason why Tencent invested in 51Buy was to take a stake in an already-established site as it seeks a quick solution to all the setbacks in e-commerce it has been facing.

A more complete integration with its QQ Wanggou site will be the next step to take, and by then Tencent would be much more ready to take on the e-commerce sector. The only way to find out if Tencent’s strategy is bearing fruit is to look to its 2013 full-year earnings to see how much e-commerce will contribute to its revenue.

Headline image via Thinkstock, Tencent image via faykwong/ Flickr

Get the TNW newsletter

Get the most important tech news in your inbox each week.