Why Would Alibaba Invest In Snapchat?
The move shouldn't surprise anyone. Remember Rakuten and Viber? Retailers need to expand their reach to acquire more customers. The more contextual the better. The investment is small relative to Snapchat's valuation and Alibaba's worth. I would view it more as an option to make a future, larger play than a clear indication of a new strategy.
Two things matter the most in mobile:
1) Audience. Snapchat offers a new audience to Alibaba – one in the US and one that is described as being younger. Consumers spend more time in communication and social media apps than in retailing apps – in aggregate. Accessing consumers – marketing to consumers, letting consumers engage with brands or letting them make purchases where they already spend their time is an important strategy for brands looking to engage consumers on mobile devices – we call this "borrowing mobile moments." Alibaba's recent moves including products, acquisitions and investments clearly signal that they intend to make a strong play in mobile. They acquired a mobile OS player a few weeks back. An investment in Snapchat is another strategic asset.
2) Data. Insights generated from mobile, social, sensor- etc. data will fuel the next generation of mobile experiences. This data will also give retailers insights into the needs and motivations of their consumers – especially in real time, on the go, what is trending. Consumers love flash sales, for example.
Neither the valuations nor the velocity of deals should surprise anyone. Mobile phones are more akin to islands with limited (valuable) real estate than ever-expanding universes. Smart players like Google, Facebook, Amazon, Apple and Alibaba know this. Expect the trend to continue.