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Video Site Youku and Alibaba in E-commerce Tie-up

Online video provider Youku Tudou and ecommerce giant Alibaba’s Baichuan will jointly plough in Rmb1 billion in a start-up accelerator project, allowing content providers to commercialise their contents through Baichuan’s mobile platform.

According to Youku Tuduo’s Chief Executive Officer Victor Koo, the project will support  entrepreneurs in a three-pronged approach, namely, development from content to commerce, including hot e-commerce providers on the web and talent economy; from multi-screen content to screenless content, including the VR (Virtual Reality) and AR (Augmented Reality) content development which has been popular since 2015; from platform to the community by establishing a new platform economy based on short video and personal live broadcast. Alibaba’s Baichuan official Zhuang Zhuoran said that content creators can open Tmall shops in the Youku App, allowing Youku content users to purchase goods while watching the content. Meanwhile, Alibaba also allows the content creators to tap into its database. Without opening an online shop, content creators can promote the products at their choice in their video website, and earn a commission from every sale. 

As the demographic dividend of early e-commerce operators recedes, traditional e-commerce operators are facing problems of a lack of traffic, underinvestment and a dearth of leads. Since the second half of last year, in particular, the start-up craze quickly cooled down, pushing many prospective entrepreneurs to the sidelines. Some analysts said that video advertising has become an important new source of leads for e-commerce operators as advertisers and service providers are coming up with better solution packages. On the other hand, traditional video ads tend to have several drawbacks: uniform ad format, imprecise audience targeting, ineffective user tracking and low conversion rate. The “entertainment + e-commerce” approach is said to allow full tracking of video website and e-commerce website information. Overseas video websites notably YouTube have already adopted this business model of serving ads based on the user preferences through cloud computing and big data analysis. 

Some analysts said that the Youku-Alibaba “entertainment + e-commerce” tie-up is not unexpected. More important is whether it would be welcome by audience. Whether or not content creators can create a "new economy" through this programme hinges on the preference of users.

Content provided by Picture: HKTDC Research
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