Chinese e-Commerce Site Alibaba Buys Auctiva

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Continuing its U.S. invasion, Chinese e-commerce site Alibaba just announced the acquisition of eBay auction management provider Auctiva. Financial terms of the deal were not disclosed.

In June, Hangzhou, China-based Alibaba bought another eBay auction manager named Vendio for an undisclosed sum.

Boasting over 170,000 active users, Auctiva provides listing, marketing and management tools, as well as image hosting and online storefronts to help small businesses conduct e-commerce on sites like eBay.

The combination of both the Auctiva and Vendio acquisitions brings more than 250,000 new customers to the Alibaba.com family of products. It significantly expands the size of Alibaba.com's U.S. operations, according to the company.

"Small online retailers are just starting to see how they can use international sourcing to their advantage, and we have seen the significant opportunity through customer reaction to our initial integration with Vendio," said David Wei, CEO of Alibaba.com.

"Many small-business owners never even thought they would be able to source their products from overseas, as they didn't have the staff or technological resources to do so," he added.

The acquisitions are part of Alibaba's larger plans to invest $100 million in its AliExpress unit, a wholesale unit aimed at small- and mid-size businesses in the United States.

In March, Alibaba.com reported that net profit for 2009 fell 12.3%. The company pointed to adverse business conditions in the first half of the year, investments in new technology and losses in its business management software division.

Last year, the company embarked on a $30 million international marketing campaign, which included efforts to break into the U.S. market. The company timed its marketing push to coincide with the economic crisis, and its steady rebound.

"Our prediction that the economic crisis would be a catalyst for greater penetration ... proved to be prescient and the strategic moves taken since late 2008 to prepare our customers and ourselves for further growth are paying off," Chairman Wei said at the time.

The company is partially owned by Yahoo, which gives the struggling Web portal a presence in China's search and advertising marketing.

Apparently bearish on China's B-to-B Web marketplace industry, Yahoo late last year sold its entire 1.14% stake in Alibaba.com for about $150 million. Yahoo still holds a roughly 40% stake in the unlisted parent company, Alibaba Group.

Yahoo paid more than $1 billion in 2005 as part of its investment into Alibaba Group. In late 2007, Alibaba.com raised $1.49 billion in its IPO in Hong Kong, with Yahoo buying a portion of the offering at the time. Amid company restructuring, tensions apparently emerged between Alibaba Group and Yahoo. They became more strained when word leaked that Yahoo's new CEO Carol Bartz wasn't happy with the way Alibaba has handled its Chinese portal.

Auctiva will operate as a new business unit within Alibaba.com and will retain its own brand name and operations.

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