Baidu Inc.’s (BIDU) wholly-owned subsidiary, Dianxin, has entered into an agreement with LightInTheBox (LITB), a Beijing-based e-tailer that could help both the companies grow their mobile businesses.
So Who Are They?
LightInTheBox sells consumer products like clothing and other general merchandise at affordable prices that are generally made in China to customers across 200 countries. It does this via its own website, mobile website and mobile apps in 27 different languages.
Baidu Dianxin is into app design and has created an array of mobile apps for consumers worldwide. Its most popular apps include the power-saving app, DU Battery Saver and mobile boosting app, DU Speed Booster. These have been downloaded by over 350 million users in China alone and by 200 million users worldwide.
Benefits of the Alliance
Baidu Dianxin will get to monetize its apps better. Apps are generally monetized through advertisements, so the “alliance” likely means that LightInTheBox has agreed to place its ads inside Baidu Dianxin’s apps. This of course gets it publicity and has the potential to generate higher traffic to its sites and thereby leading to higher sales for the company.
Baidu against Alibaba
The deal also increases Baidu's ability to compete with rival Alibaba Holdings (BABA).
Recently, Alibaba revealed that U.S.-based membership-warehouse club chain Costco Wholesale (COST) will sell food and merchandise on Alibaba's Tmall Global.
Tmall Global is a business-to-business customer platform that enables retailers from abroad to sell products on Alibaba without having a physical presence in China.
Earlier this year, Baidu had invested $10 million in IndoorAtlas, which brought on board magnetic positioning technology for indoor location-tracking (like beacon). This kind of technology is gaining popularity amongst retailers because it helps them push promos and offers to customers while in the store. This was after Alibaba revealed its plans to acquire digital map company AutoNavi Holdings. Mapping technology is gaining importance for mobile search providers because it can make search results and ads more contextual and relevant. It’s not known if the two are thinking of entering each other’s turf, but these acquisitions certainly seem to indicate that they are moving in that direction.
The High Potential of Mobile e-commerce
LightInTheBox CEO Alan Guo termed the partnership as a great example of two Chinese players collaborating to expand globally. The global Internet market is huge with more than 2.8 billion users and with even greater potential in mobile. eMarketer expects 4.6 billion people globally to use a smartphone by this year, a number expected to increase to 5.1 billion by 2017. Growing mobile usage is expected to be one of the biggest drivers of e-commerce sales in the next few years.
BIDU currently sports a Zacks Rank #2 (Buy), while LITB has a Zacks Rank #3 (Hold).
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