Chinese e-commerce giant Alibaba Group Holding Limited (BABA) will reportedly start booking railway tickets during China’s Lunar New Year celebration. Alibaba will work with the state-run train booking website, 12306.cn. However, Alibaba did not comment on the reports.
Shares of Alibaba jumped 3.25%, touching a high of $103.86, before closing a notch lower at $103.29.
12306.cn and Chinese New Year
Every year, billions of Chinese return home for the Spring Festival or “Chunyun” which is the local celebration of the Lunar New Year. The number of people travelling at this time is so huge that it is often referred to as the world’s largest migration.
In the West, during the year-end holiday season there is a slowdown in business and about 10 days off from work. But the Chinese Spring Festival is a bit different. During this festival, millions of people working away from home return for the most important festival of the year by plane, train, automobile, bus, motorized tricycle and any possible conveyance.
This movement of people affects the country’s transportation system, with tickets hard to buy, controversies over ticket sale systems and black-marketeering, among other things.
12306.cn is a China Railway website and was founded in 2011. The most affected modes of transportation during this season are the railway and road networks. 12306.cn was affected during its first year in operation due to heightened traffic load. In addition, it has been charged with revealing users’ personal data and cheating customers.
Alibaba’s Help
Alibaba is an e-commerce giant and it knows how to manage a sudden spurt in traffic on its website, even during the busy holiday season. So per Alibaba, it will only help 12306.cn in managing the web traffic to improve user experience.
Alibaba’s cloud service, Aliyun, has been associated with 12306 for about a year. With its help, 12306.cn is selling train tickets with ease, without much struggle. In 2013, Alibaba’s payment service Alipay won a bid to handle payments on the ticket site.
Due to the failure of the state to handle web traffic, China’s goal of making the world’s most high-tech rail network is crumbling.
May be with Alibaba’s help it can achieve its ambitions. However, we cannot say a lot right now due to Alibaba's refusal to provide details on the reports.
Aliyun- Alibaba’s Cloud Service
Aliyun is Alibaba’s cloud-computing service launched in 2009 to cater to rising data requirements of its e-commerce platforms and serves clients both directly and indirectly. Aliyun has three data centers in mainland China in Hangzhou, Qingdao and Beijing.
In Oct 2014, Alibaba added Royal Philips NV and the provincial Chinese governments of Zhejiang and Guizhou to the list of its cloud customers. This was part of its efforts to expand its cloud service to corporate clients as more and more businesses are shifting their servers and broadband subscriptions to cloud computing technology to streamline costs.
Alibaba currently holds a Zacks Rank #2 (Buy). Investors can also consider Autobytel Inc. (ABTL), Mercadolibre, Inc. (MELI) and Geeknet, Inc. (GKNT), all of which carry the same rank as Alibaba.
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