Buy.qq Said to Be Merged by 51buy
SHANGHAI, Nov 23, 2012 (SinoCast Daily Business Beat via COMTEX) --
Buy.qq.com, an online shopping platform of Chinese Internet service provider Tencent Holdings Ltd. (SEHK: 0700), may be merged into its sister firm 51buy.com.
An insider with Tencent disclosed in an interview recently that ECC, a holding firm taking charge of ecommerce business at it, would merge Buy.qq.com and 51buy.com in March next year and the newborn would operate with the brand of 51buy.com.
A list of moves taken by ECC from May this year, including adjusting organization architecture and entering into a partnership with Alipay.com, indicates that Tencent, an Internet giant that fails to own a sharp edge in ecommerce, has been ready to establish a leading position in the domestic ecommerce market. According to financial results it released for the first quarter of this year, revenue of ECC exceeded CNY 750 million, accounting for 7.8 percent of the total. And of the revenue, CNY 690 million was contributed by 51buy.com. It released financial results for the third quarter of this year not long ago and according to the results, revenue of ECC surged up by 32.2 percent from a quarter ago to about CNY 1.13 billion, accounting for 9.8 percent of the total. That is to say, the contribution of ECC to it had been almost at a similar level with that of network advertising business. It mainly attributed this to increased trading volume of self-run businesses.
People in the circle revealed that gross margin of 51buy.com reached about 3.5 percent. The insider denied the saying, stating that the figure stood at only 1.5 percent to three percent. No matter what, the platform contributed more to Tencent in the past quarter.
Previous sources said that ECC held a majority stake in 51buy.com previously and had controlled a 100 percent stake in the latter. Song Yang, assistant to general manager of ECC, said in an interview that this was totally a rumor, but 51buy.com would be a major business for it to develop and one of the most important tasks of it next year was to complete the consolidation of self-run open business platforms including 51buy.com and Buy.qq.com. The insider reiterated that he known little about this, but did not rule out the possibility.
In line with industry observers, Tencent expended slowly in the domestic ecommerce market in the past few years due to shortages in sales, talents and execution and it is reasonable for it to focus on self-run business and open platforms currently. However, it is unwise for it to take a 3C-oriented vertical ecommerce website such as 51buy.com as a breakthrough point.
(USD 1 = CNY 6.23)
Source: www.nf.nfdaily.cn (November 23, 2012)
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