Some investments don’t mean the question of “how much?” to be raised but needs to be answered in terms of “from whom?” Such is the investment that had been made by Alibaba in Snapchat. According the latest Alibaba news, the company has invested $200 million in Snapchat which is a part of $500 million funding.
The point here that has to be noticed is the reason why Alibaba is trying to invest in the photo app so much. Alibaba is an e-commerce giant in China and reportedly almost 80% of the people in the country buy goods from this store. Also, the company held the biggest IPO in U.S last year. However, Snapchat is a fleeting messaging app. What value can Alibaba Group Holding provide to Snapchat?
The most notable point among the lost list of speculation will be the fact that the e-commerce giant has missed the messaging app race back in China. Interestingly this is the only and the biggest failure that the company has gone through in terms of business. With so much money to burn, the company had decided to invest a small amount on this photo messaging app. It should be kept in mind that the e-commerce giant invested $215 million last year in Tango.
Also, Alibaba’s interest in messaging apps is connecting to the company’s rival Tencent and it owning WeChat. This app is utterly popular in the company’s native country and is used by numerous amounts of people.
Be it chatting with a friend or group of friends, the answer is WeChat. Also if you wish to post pictures of your recent trip and share it with your friends and don’t want to go through tiresome customization on Facebook then again, WeChat is the forum for you. Even if you want to transfer money or enhance your business contacts, the app comes into play. All in all, what is it that this app doesn’t offer? Therefore, it is a tough competition for Alibaba.
On the other hand, Snapchat is emerging as a prominent player and with time it has become the perfect startup across the globe. It is reported that the messaging app has over 100 million users, majority being in United States.
As per the Alibaba news, Snapchat is blocked in China and WeChat has already made its market there so the major reason of this investment and collaboration must be e-commerce. The Discover factor in Snapchat has turned it into a platform for media purposes.
Snapchat had already been partnered with Tencent too which is an arch rival to Alibaba, that might be a little crucial but lets see what this major investment does to the business and market.