MONEY

Facebook’s Next Battle Is Wrestling Your Credit Card Number from Amazon

Facebook logo with game pieces on top of it
Berliner Verlag/Archiv—AP Images

Advertisers will pay big bucks to get in your Facebook newsfeed. But will you really buy their products?

And they said Facebook couldn’t sell ads. Ha!

In its quarterly earnings report on July 23, the social network posted a blockbuster figure: $2.68 billion from advertising in the second quarter alone, a 67% increase from last year. About 62% of that revenue came from mobile devices.

With numbers like that, Facebook has started breathing down Google’s neck. eMarketer expects Facebook will capture 18.4% of the mobile ad industry this year, with Google holding onto 40% market share.

Facebook is gaining ground in the battle over mobile ads. But the next battle could be on a completely different front, against a completely different player: Amazon. Facebook’s new “buy” button, announced on July 17, will let Facebook users order products simply by clicking a button on a Facebook ad. The feature requires that users give Facebook their credit or debit card information to complete the transaction without ever leaving the social network.

Of course, Facebook has tried e-commerce before. In the past, the social network has asked users to open their wallets for virtual games and gift cards. But as more eyeballs moved to mobile devices, those efforts flopped. Even though advertising revenue has skyrocketed since the company’s IPO, revenue from “payments and other fees” (read: Farmville) has stayed relatively flat.

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But here’s why the “buy” button is different. Facebook doesn’t plan to sell its own products. It plans to sell enhanced advertising. Facebook’s founders are adamant that the buy button is just a way to “streamline” the process of buying from other companies.

“Commerce is really important, and it’s a growing part of our business,” COO Sheryl Sandberg said during yesterday’s earnings call. “But I don’t think people should confuse that with Facebook selling things directly. The more people discover things from a newsfeed and go on to purchase, the more important we are in driving commerce. That doesn’t mean we’re going to, or have to, sell products.”

“Our main business is advertising,” CEO Mark Zuckerberg added. “To the extent that we do payments, it’s related to that.”

When it comes to the “main business,” Facebook has a clear competitive advantage: its 1.32 billion users worldwide. A good proportion of those people are total addicts. Zuckerberg says that on average, users spend 40 minutes a day on Facebook. Even people who claim to dislike Facebook won’t shut down their accounts.

“We believe hundreds of millions of users face switching costs that keep them from leaving Facebook,” Morningstar analyst Rick Summer wrote in a recent report. “People are unlikely to leave unless they can take their network of friends, content, and applications with them.”

Still, Facebook doesn’t have a good track record when it comes to protecting users’ privacy. One poll found that only 5% of people really trust Facebook with their personal information. Why give Facebook your credit card number and purchase history?

“With anything that Facebook does, there are always questions about how people’s privacy is going to be protected and what sort of data and information is shared,” says Debra Aho Williamson, principal analyst at eMarketer. “With e-commerce there’s a lot of potential for questions because people are exchanging their credit card information, their personal information, making Facebook aware of things they’re actually buying – that’s data Facebook can use for advertising or creating other products down the line.”

In a way, Facebook’s greatest asset – detailed information about your likes, dislikes, and all of your social connections – is also its greatest vulnerability. If Facebook could tell you which products your friends like, maybe you’ll be more likely to buy those products within the social network itself (with just two clicks!). Or maybe your friends will be totally freaked out that you know what they’re buying.

“It’s one thing for me to give Big Brother information about every purchase I make,” says Oded Netzer, associate professor at Columbia Business School. “It’s another thing when Big Brother wants to share it explicitly or implicitly with my friends.”

Meanwhile, Facebook’s competitors are also arming themselves for this next fight. Amazon and Twitter recently teamed up on an initiative that lets you add products to your Amazon cart by replying to certain tweets. And just last week Twitter announced that it planned to buy CardSpring, a company that helps developers incorporate payments systems into their apps.

One other piece of news could spell trouble for Facebook. While mobile ad revenue is way up, impressions are down 25%. That’s because users will only put up with so many ads when they’re scrolling through their newsfeeds on their phones – so Facebook has a relatively limited amount of space to sell. (On desktops, the right-hand rail provides more available ad space.) Over the long-term, Facebook plans to ramp up video ads, monetize Instagram, and test the “buy” button. But the question remains: If users primarily use Facebook to interact with their friends, how much e-commerce will they really tolerate?

“This whole idea of making money from social networks has not worked well,” Netzer says. “More and more companies are finding that people interact with each other not for the purpose of talking about products – they’re just interacting with each other. The products are interrupting this discussion.”

Facebook may be winning the advertising war. But if Facebook’s revenue has skyrocketed on the premise that social networks are the best place for businesses to reach new customers, then the “buy” button may finally put that theory to a test.

MONEY Shopping

Amazon Fire Phone Seem Too Pricey? Discounts Bound to Come Soon

Amazon Fire Smartphone with 3D map feature
An Amazon representative shows off the 3D map features of the company's new Fire smartphone at the company's campus in Seattle, Washington June 18, 2014. Jason Redmond—Reuters

If you think the brand-new Amazon phone is too darn expensive, sit tight. Discounts and promotions are bound to pop up within a few months, if not sooner.

Jeff Bezos unveiled the long-awaited Amazon Fire Phone on Wednesday, and the reaction in tech and consumer circles has been near universal: The phone has some very cool features, but at a price point starting at $199, with a two-year AT&T contract required, it simply costs too much to make a big impact on the smartphone market.

The “uninspired price tag is a surprising disappointment,” wrote the New York Times’ influential Farhad Manjoo, pronouncing the Amazon Fire phone a “missed opportunity.” It’s “Just Too Expensive,” a tech column Huffington Post headline declares bluntly.

Sure, the Amazon phone hasn’t even been released for sale yet, but that doesn’t mean it’s too early to start thinking about when it will be discounted. As anyone who follows the consumer electronics world in general—and smartphones and Amazon in particular—might guess, the Fire Phone is not likely to remain in the “too expensive” category forever. It’s not a matter of if but when the discounts and deals appear.

According to Louis Ramirez, senior editor at the deal-tracking site dealnews.com, the typical Android phone experiences a 50% price drop after two months on the market, and what “with better and cheaper Android phones being released every other month,” the pace of markdowns is on the rise. “The Galaxy 5S, for instance, saw multiple 50% discounts just one month after its release.”

Because this is Amazon’s first phone, and because AT&T is the exclusive provider, it’s not likely the phone will be discounted that aggressively in the near future, but experts foresee bundled deals and/or short-term promotional price drops fairly soon. “I think around the holidays is definitely a safe bet,” Sucharita Mulpuru-Kodali, a leading analyst in e-commerce for Forrester Research said via e-mail. (A note “Sent from my iPhone,” btw.)

Ramirez says that Amazon regularly hosts a “Penny Pincher” smartphone sale around Black Friday, when popular Android phones are sold for 1¢ when signing a two-year contract. “Now that they have their own phone,” Ramirez says of Amazon, “it’s very likely that phone will join their Black Friday sale. They may not cut it down to a penny, but you can expect it to see steep discounts come November.”

(MORE: Four Theories on What Amazon and Jeff Bezos Are Really Up To)

Forrester’s Mulpuru-Kodali agrees with the consensus take that the current Amazon Fire Phone price point is too high. But she stressed there was solid reasoning for why it wasn’t set cheaper. “That’s so they have room to bring the price down if units don’t move,” she said.

By putting an initial price on the Fire phone of $199 (with a two-year AT&T service plan) or $649 (with no contract), Amazon is also locking in the idea that this is how much the device is truly worth. The concept is called “price anchoring,” and it allows the seller to create the perception of an amazing, can’t-pass-up deal when the price is suddenly marked down. The J.C. Penneys and Kohl’s of the world make a regular habit of utilizing the tactic, in order to make their “sales” seem all the more impressive.

Smart consumers know to tune out these never-ending sales and just assume it’s unnecessary to buy anything at “full price.” Amazon generally doesn’t discount its devices left and right in this manner. On the other hand, Amazon doesn’t go the full Apple route either by offering discounts only on older gadgets—and only when a newer version is about to hit the market or has already been released. What Amazon tends to do instead is roll out deals here and there, somewhat randomly but regularly, so that consumers don’t think of the full price as a total joke, and so the discounts seem truly special.

(MORE: It Doesn’t Matter That Amazon’s Streaming Services Are Lame)

The folks at dealnews noted that the recently released Amazon Fire TV streaming device is likely to remain priced at $99 for quite some time, but that Amazon has already discounted it by including it in bundles packaged with an HDX tablet. They also say it’s all but guaranteed that the streaming device will be marked down during one or more holiday season promotions.

Complicating matters for Amazon is the fact that, as the (Jeff Bezos-owned) Washington Post pointed out, this is an especially difficult time to jump into the smartphone market. Pretty much everyone who wants a smartphone already has one—likely one that they’re pretty happy with too, after switching and upgrading a few times. While many of the Amazon Fire phone’s features are indeed cool, it’s unclear how many people will summarily dump their Apple or Samsung phones for a device from Amazon, a company that has had some glitches when launching new products, as Bezos mentioned during Wednesday’s unveiling. “I’m a little skeptical that what they’re bringing to the table is enough to make people put down their current phone and change to a new device,” Gartner analyst Tuong Nguyen told the Washington Post.

Of course, one way to encourage people to switch phones is a substantial discount on the purchase price. Such a discount won’t bother AT&T, which makes its money via monthly subscriber bills. And it may not be anathema to Amazon, which in the long run makes its money not by selling devices but by getting consumers to do more and more of their shopping on its site. That’s the purpose of services like Amazon Prime, of course.

It’s no coincidence that Prime is included for a year at no charge with Amazon Fire Phone purchases. “Think of the Amazon Fire as a Prime subscription-selling machine that also happens to make phone calls and send text messages,” New York magazine observed. The phone’s Firefly feature, which allows the owner to scan almost anything imaginable and soon be able to purchase it via Amazon, was also obviously created with the idea of boosting Amazon sales into the next stratosphere.

If the tradeoff for such sales increases is that Amazon has to sell its phone at cost or take a loss during promotional sales, that’s a trade Amazon can probably live with. Anyway, for consumers, the moral is: If you like shopping at Amazon and like Amazon’s new phone but think it’s too expensive, don’t preorder it, and don’t pull the trigger within the first couple weeks it’s officially for sale. Wait a bit, and you’re sure to be rewarded with a better deal.

TIME Business

Amazon Launches Online Payment System To Rival Paypal

The e-commerce company’s new feature will allow users to pay using their Amazon accounts

Amazon debuted an online payment system on Monday in an effort to expand into money transfer services, Reuters reported.

The new service will allow over 240 million active monthly users of Amazon to use their stored credit and debit card information to pay for outside subscriptions such as cellphone payments or music subscriptions, for which Amazon will charge a fee.

This subscription billing system is an extension of Amazon’s previous efforts to compete with PayPal and other online payment service companies, such as Braintree, Stripe and Google Wallet. Last October, Amazon announced the “Login and Pay with Amazon” feature, in which partner websites allowed customers the option of paying using information stored on their Amazon accounts.

“[The new service] opens up Login and Pay with Amazon to other types of subscription-based business models, companies who want to make Amazon customers their customers, back payments with the A to Z guarantee and use transparent and low payment processing,” Amazon spokeswoman Julie Law told TIME.

Amazon has gauged the online payment system’s potential by testing the feature on various start-ups that charge recurring payments. Users of mobile phone company Ting that paid with Amazon’s new service spent 30% more on the Ting website, Ting product manager Justen Burdette told Reuters.

[Reuters]

MONEY online shopping

Boycotting Amazon: A Brief History

140603_EM_Amazon_Grinch_1
Amazon employees in Germany staged a strike over wages and working conditions during the holiday shopping season of 2013. UWE ZUCCHI—AFP/Getty Images

Throughout its history, Amazon has been the target of attempts to get you not to shop there. Here's a look at past boycott efforts against the retailer, and how they fared.

The recent rallying cry for a boycott of Amazon.com is hardly the first of its kind. It’s also not the first time the world’s largest e-retailer has been accused of using bullying, unfair, tone-deaf business practices.

To put the current “boycott Amazon” campaign—as promoted by The Stranger, Reuters, Gawker, and others—in perspective, here’s a brief retrospective of previous efforts to put Amazon in place by not giving it any of your money.

1999
The Free Software Foundation urged a boycott of Amazon because the site claimed a patent on one-click purchasing—something of a novelty at the time—and was suing other e-commerce companies (including BarnesandNoble.com) that used a one-click purchasing process. “Amazon has sued to block the use of this simple idea, showing that they truly intend to monopolize it,” a widely circulated e-mail that called for the boycott stated. “This is an attack against the World Wide Web and against e-commerce in general.” A couple years later, Amazon seemed less inclined to bother using its patent to threaten competitors, and the boycott was dropped.

2007
Around 2007—the year that NFL quarterback Michael Vick was suspended and sent to jail for running an illegal dogfighting ring—animal lovers began loudly calling for a boycott of Amazon because the site sold videos, magazines, and books about dogfighting and cockfighting. At least two of the titles described as “torture guides” by the People for the Ethical Treatment of Animals (PETA) are still available for purchase on Amazon.

2010
In late October 2010, a self-published e-book went on sale at Amazon with extremely disturbing subject matter, summed up in the title: The Pedophile’s Guide to Love and Pleasure: a Child-lover’s Code of Conduct.

At first, despite massive protests online and calls for a broad boycott of Amazon, the e-retailer refused to remove the item from the site. The company released a statement with its justification to keeping the e-book for sale, explaining, “Amazon.com believes it is censorship not to sell certain titles because we believe their message is objectionable.” Within a few days, however, Amazon relented and stopped selling the pedophilia book.

2010
After U.S. political leaders pressured Amazon to block Wikileaks, the whistle-blowing website known for leaking classified security documents, Amazon relented, and stopped hosting the site. Free speech advocates including Daniel Ellsberg, who leaked the Pentagon Papers to the press in 1971 leak of the Pentagon Papers, promptly called for a consumer boycott of Amazon.

2011
For several years, Amazon was in the habit of spending millions of dollars lobbying various states to cut off local efforts to start charging sales tax on online purchases. To small business owners, the fact that sales tax was not automatically charged for e-commerce purchases gave e-retailers such as Amazon an unfair advantage—customers could easily save 7% or whatever the local sales tax rate was simply by purchasing online. (Sure, those consumers were later supposed to pay the sales tax they owed to the state, but almost no one did that.) In 2011, while California approved the installation of a sales tax on online purchases but hadn’t yet put the policy in practice, Amazon was actively trying to get the law overturned. The company’s efforts were met with a call to (surprise, surprise) boycott Amazon.

The boycott never really gained steam, and as of mid-September 2012, the campaign was totally moot, as Amazon began charging sales tax in California. Amazon customers in many other states who once could skip out on sales tax are now automatically charged sales tax on e-commerce purchases as well.

2011
In the fall of 2011, reports spread about deplorable worker conditions at Amazon warehouses and shipping centers around the country. An investigation by the Pennsylvania Morning Call showed employees at the Amazon warehouse in the Lehigh Valley enduring sweatshop-like conditions, including indoor temperatures so hot (over 100 degrees during summer heat waves) that the company arranged for ambulances to parked outside, waiting to treat workers for dehydration or other heat-related issues.

“Workers said they were forced to endure brutal heat inside the sprawling warehouse and were pushed to work at a pace many could not sustain,” the Morning Call reported. “Employees were frequently reprimanded regarding their productivity and threatened with termination, workers said.”

After consumer and worker groups got wind of Amazon worker complaints, a boycott was called for during the 2011 winter holiday shopping season. Some 12,600 consumers pledged to boycott Amazon for the holidays, if not indefinitely. If nothing else, Amazon stated that it has since installed much-need air-conditioners in warehouses, when appropriate.

The U.S. isn’t the only country where Amazon workers have voiced gripes against the company. In late 2013, for instance, Germany’s Amazon.com workers went on strike and staged protests outside the company’s Seattle headquarters due to “low wages, permanent performance pressure and short-term contracts.” Many have called for a boycott of Amazon among German consumers because of the company’s treatment of workers.

2012
Calls for a consumer boycott Amazon, as well as Starbucks and Google, throughout the UK started spreading in 2012, continued through 2013, and gained more traction in spring of 2014, with Margaret Hodge, chair of the public accounts committee in the UK, personally calling for consumers to avoid doing business with these companies.

Why? Due to a range of strategies employed by the companies, they pay relatively little in corporate taxes. Amazon, for instance, paid £4.2m in UK taxes in 2013, or 0.1% of its UK revenues. “It is an outrage and Amazon should pay their fair share of tax,” said Hodge. “They are making money out of not paying taxes. I no longer use Amazon. We should shop elsewhere.”

2013
In September, Boston-based author Jaime Clarke launched an odd website to help sell his new novel, Vernon Downs. The site’s url was PleaseDontBuyMyBookonAmazon.com. Clark said he was motivated to create the site because he wanted help independent publishers such as Roundabout Press, which published Clarke’s book.

“Most indie publishers rely on Amazon to sell their books, and to quote F. Scott Fitzgerald, the price is high,” Clarke said in a Q&A with CNET. “Indie publishers realize a fraction of the purchase price and are at the mercy of Amazon’s discounting policies.”

What’s more, Clarke just so happens to be the co-owner of Newtonville Books, which just so happens to be an independent bookstore—the ranks of which have been depleted during Amazon’s rise to power. “Independent bookstore owners loathe Amazon and its bald-pated founder, Jeff Bezos,” a Boston Globe story on Clarke explained.

2014
The most recent boycott Amazon push is related to the company’s ongoing battle with the Hachette Book Group. Essentially, Amazon wants to sell Hachette e-books at a lower price than the publisher wants, and to get its way, Amazon has stopped selling preorders of Hachette books, and it has slowed down the process of customers buying and shipping other Hachette books. For many, this clash epitomized the view that Amazon has too much power, is verging on a monopoly, and is perhaps just plain evil. And for many, this clash is what finally makes them feel that it is time to buy stuff elsewhere.

TIME Retail

These 2 Charts Show How Enormously Powerful Alibaba Is

As Chinese e-commerce giant Alibaba prepares for its initial public offering in the U.S., these two charts show how it has become so enormously successful, and why its IPO is expected to raise as much as $20 billion.

Correction appended, May 7

Get ready to hear a lot about Alibaba in the coming weeks. The Chinese e-commerce giant filed for its initial public offering in the United States Tuesday, and the hype machine is quickly heating up for what could be the largest tech IPO ever. Though Alibaba’s filing indicates that the company plans to raise just $1 billion, that number is only a placeholder — the company is expected to raise as much as $20 billion in its offering, leading to an overall valuation as high as $250 billion.

What is it about Alibaba that’s causing such a furor on Wall Street? The uproar is most easily explained through these two charts:

Alibaba sales volume

 

Massive volume: Alibaba says it’s the largest e-commerce company in the world. The company operates a wide number of businesses, but the most lucrative are Taobao Marketplace, a large, eBay-like commerce site; Tmall, an online marketplace for name-brand retailers like Apple; and Juhuasuan, a daily deals site similar to Groupon. These sites and their 8 million vendors generated a massive $248 billion in retail transactions in 2013 between them, dwarfing both eBay and Amazon.

Alibaba processed 254 million orders on a single day last year. Amazon, by comparison, sold 36.8 million items on Cyber Monday in December. With China’s online population expected to grow to 800 million by next year, Alibaba will soon have even more customers to serve.

graph (6)

 

A low-expense business model: The key to Alibaba’s financial success—and a significant differentiator from Amazon—is that the company doesn’t actually sell any products. Instead, Alibaba operates vast marketplaces for third-party sellers who either pay a commission for sales or pay an advertising fee to have their wares displayed more prominently on Alibaba’s sites. Amazon spent $8.6 billion on its fulfillment centers in 2013, a cost that never dings Alibaba’s bottom line. Alibaba also has less than 21,000 full-time employees and 4,500 part-time customer representatives, compared to 33,500 total employees for eBay and 117,300 for Amazon. In short, the company doesn’t have to spend more to make more to the same extent that Amazon does.

Before you call your broker to bet the farm on Alibaba’s IPO, though, there are some caveats to consider. The company has a troubled history with counterfeit items, for example. There were once so many knockoff goods on Alibaba’s shopping sites that it was on the U.S. government’s list of notorious markets, but the company says it has since cleaned up its act. It’s also worth learning about the company’s odd governance structure that makes it nearly impossible to remove chairman Jack Ma from power. And even if Alibaba continues flying high, it’s possible the Wall Street hype machine could over-inflate its stock. That’s what happened to Facebook, the last heavily-sought tech stock, which didn’t reach its IPO price for its first 14 months as a public company.

Correction: The original version of this story misstated the number of vendors for Alibaba’s websites. Taobao Marketplace, Tmall and Juhuasuan have 8 million vendors between them.

TIME Shopping

People Are Ignoring Store Assistants Because Their Phones Are More Helpful

"Find everything okay?" "Yep, no thanks to you."

If you’re out shopping and would rather get help from your smartphone than an actual person, you’re now in the majority.

A new study by Deloitte found that more than half of in-store shoppers prefer to look up prices, get product information and check item availability using their own smartphones. By comparison, less than a quarter of shoppers prefer to talk to a sales associate. Given the option, 48 percent of shoppers would also rather check out using their own devices, instead of dealing with a cashier.

This isn’t a huge surprise. If you look up prices or product reviews on your phone, you know you’re getting unbiased facts about the product in question. Store associates probably won’t tell you if a product is cheaper elsewhere. They can also be hard to trust for buying advice, especially in the electronics business, where they may be trained to push one brand over another. (Do you really think that “Samsung Experience Consultant” at Best Buy is going to give you an even-handed view of the Galaxy S5 vs. the iPhone 5s?)

Deloitte says retailers should respond by creating mobile applications that focus on making the in-store shopping experience better, rather than just giving them another digital storefront to wade through. That includes providing simple in-store checkout tools and even providing price comparisons to other stores.

“If you stop trying to sell to her, she will buy more,” Deloitte says.

[Engadget]

TIME alibaba

Alibaba’s Massive U.S. IPO Could Top Facebook’s Debut

Alibaba founder Ma gestures during celebration of 10th anniversary of Taobao Marketplace, China's largest consumer-focused e-commerce website, in Hangzhou
Alibaba founder Jack Ma gestures during a celebration of the 10th anniversary of Taobao Marketplace, China's largest consumer-focused e-commerce website, in Hangzhou, May 10, 2013. China Daily/Reuters

Last year, the Chinese e-commerce business that is part-owned by Yahoo handled $248 billion in transactions, more than Amazon and eBay combined. The company's IPO could be the largest in tech history

Chinese e-commerce behemoth Alibaba has filed documents with the Securities and Exchange Commission to go public in the U.S., setting the stage for what could become the largest technology stock offering in history.

If successful, Alibaba’s IPO could eventually value the company at substantially more than $150 billion, according to Wall Street analysts, in what would amount to a windfall for Yahoo, which owns 22.6% of the e-commerce giant. Alibaba’s public debut would be the largest ever by a Chinese company in the U.S. public markets.

Alibaba, which was founded 15 years ago by English teacher-turned-entrepreneur Jack Ma, dominates the Chinese e-commerce market, powering four-fifths of all online commerce in that country, according to Reuters. Along with its flagship Taobao website, the company also operates a digital payments service and a cloud computing business.

In its filing with the SEC, Alibaba said it aims to raise $1 billion, but that figure is a placeholder amount used to calculate registration fees. Wall Street analysts believe Alibaba could eventually top Facebook’s 2012 $16 billion IPO, which set a record as the largest technology stock offering in history. Alibaba has yet to decide whether to list its shares on the New York Stock Exchange or the Nasdaq.

Alibaba aims to sell a 12% stake to the public, according to Bloomberg, which could generate as much as $20 billion in new capital for the company. In the coming months, Alibaba will embark on a “road show” designed to woo Wall Street investors. Demand for a piece of the IPO is expected to be intense because Western investors are eager to gain exposure to China’s massive and fast-growing e-commerce market.

Alibaba could eventually have a market valuation of between $150 billion and $200 billion, according to Jeffries technology analyst Brian Pitz, who estimates that Alibaba accounts for about 75% of Yahoo’s valuation, along with other Asian assets and cash holdings.

Yahoo owns 22.6% percent of Alibaba, and is expected to sell a 9% stake, which could generate more than $10 billion for the purple-hued Silicon Valley pioneer depending on the final price of the IPO.

At $200 billion, Alibaba would be worth more than U.S. tech titans Facebook and Amazon, but it would still trail Apple and Google, the world’s two most valuable technology companies. Last year, Alibaba handled $248 billion in online transactions, according to the company’s IPO filing, more than Amazon and eBay combined.

Alibaba’s meteoric growth has been powered by economic and demographic trends in China, including the ongoing emergence of a large, tech-savvy middle class. In its IPO filing, Alibaba cited China’s population of 1.35 billion people, including 618 million Internet users. The company said there are 500 million mobile Internet users and 302 million Internet shoppers in China.

Alibaba said its logistics partners delivered 5 billion packages last year, substantially more than UPS, which delivered 4.3 billion packages globally.

“There is less of a retail culture in China, ie. ‘Let’s go shopping on Sunday,'” Paul Sweeney of Bloomberg Industries told PBS Newshour. “They don’t necessarily have that as much, and as a result, e-commerce has actually grown much faster in China than it has in a lot of the Western markets.”

“The Alibaba opportunity there is tremendous,” Sweeney added. “U.S. and Western investors recognize that. There are very few ways for Western investors to invest in this growth story. Alibaba will be by far the largest, most liquid, and arguably safest investment vehicle.”

Last month, Yahoo reported tepid results for its core business, but the company’s stock jumped 8% based on Alibaba’s revenue, which soared 66% from the year before. The company’s net income was $1.6 billion, more than double the previous year. Yahoo shares moved 1% higher in after-hours trading on Tuesday, following Alibaba’s IPO filing.

“The bottom line is that Yahoo’s stock continues to be driven by Alibaba results,” Macquarie tech analyst Ben Schachter wrote in a recent note to clients. “With its reaccelerating revenue growth and high margins, Yahoo will continue to reap the rewards of its Alibaba holdings.”

Investment banking giants Credit Suisse, Deutsche Bank, Goldman Sachs, J.P. Morgan, Morgan Stanley and Citi are listed as underwriters for Alibaba’s stock offering.

TIME E-Commerce

Here’s Target’s Plan to Take on Amazon

A Target Store Ahead Of U.S. Personal Consumption Figures
Victor J. Blue / Bloomberg via Getty Images

For the sake of convenience, low prices, or both, shoppers who used to routinely pick up household items at Target have slowly taken their business over to Amazon. Target wants its customers back in a bad way.

Last fall, Target introduced a subscription service for parents, allowing customers to order diapers and other baby goods on a recurring basis—always with free shipping and often with significant discounts. The new service was widely viewed as a blatant counteroffensive against Amazon, which has a long history of targeting Target and other brick-and-mortar-based retailers by undercutting them on price, which has a very popular Subscribe and Save program that grants discounts on pre-scheduled goods purchased, and which has slowly but surely removed discounts for moms over the years.

Apparently, Target was pleased with how its parent-focused subscription played out, because on Thursday it announced a broad expansion to Target Subscriptions. The original service offered a total of 150 products, all of them essentially aimed at moms—diapers, wipes, formula, etc. The new Subscriptions service allows customers to choose from more than 1,500 products to order on a recurring basis, and the demographic being “Targeted” goes way beyond parents with young kids. Now, all sorts of household staples, from cleaning supplies to printer ink, pet treats to laundry detergent, can be purchased via Target Subscriptions.

Subscribers obviously get to save themselves a trip to the store. That’s one bonus of using the service. They also get free shipping on deliveries and returns. And they get discounts—a flat 5% off on all Subscription orders, plus another 5% off if payment is made via a Target card.

(MORE: Don’t Want to Pay $99 for Amazon Prime? Here are Five Alternatives)

Amazon might quickly point out that its Prime service comes with speedy two-day shipping on most orders, whereas Target’s free shipping might take five or more days to arrive after the time of purchase. But remember, with the Subscriptions service, we’re talking about staple household items needed on a regular basis: The big attraction of this service is that it helps you stock up on items before you run out, not when you’re in desperate need. So expedited delivery, while nice, doesn’t seem essential.

It’s also worth noting that Amazon Prime now costs $99, up from $79, while the Target Subscriptions service—and Amazon’s own Subscribe and Save program, for that matter—is free.

TIME E-Commerce

Amazon’s Prime Price Hike Is Actually Crazy Brilliant

Amazon.com Illustrations Ahead Of Earnings
Andrew Harrer—Getty Images

Amazon raised its Prime membership to $99 in a move that could boost the company's bottom line by hundreds of millions

Amazon’s decision to raise the price of its popular Prime service to $99 was cheered by Wall Street on Thursday, as investors pushed the company’s stock price higher and analysts said the move could boost the online retail giant’s bottom line. Amazon is betting that Prime subscribers will accept the price hike, which the company justified by citing rising shipping costs. It’s the first price increase in Prime’s nine-year history, Amazon said.

Amazon shares increased by 1% in after-hours action Thursday following a bleak day of market trading, with major indices down more than 1%.

Amazon Prime offers free two-day shipping, streaming movies and TV shows, as well as access to the Kindle e-book lending library. The service is credited with helping to drive explosive growth at the world’s largest online retailer. In January, company executives said they were considering a $20-$40 price increase for Prime, and evidently settled on the low-end of that range, possibly because surveys showed that a price hike might cause some customers not to renew the service.

In February, analysts at financial services giant UBS surveyed Amazon customers about a potential Prime price increase and were “negatively surprised by the results.” Although 94% of Amazon Prime customers surveyed said they were likely to renew at the $79 level, “these percentages dropped precipitously when price increases of $20 and $40 were introduced (to 58% and 24%, respectively).”

After the price increase was announced, many Prime subscribers took to Amazon’s discussion forums to vent their frustration. “I have been a Prime member for many years and will not be bullied into paying more!!!” wrote one user. “Not a chance I’m renewing,” wrote another. “First, they start using USPS and missing their 2 day windows and now a $20 price hike.”

(MORE: Don’t Want to Pay $99 for Amazon Prime? Here Are 5 Alternatives)

Following Thursday’s announcement, however, several Wall Street analysts downplayed the possibility of a major customer exodus. Amazon does not disclose exactly how many customers subscribe to the Prime service, although in December the company said Prime has “tens of millions” of subscribers worldwide. The generally positive Wall Street response was not surprising because investors have been pushing Amazon to deliver more robust profits.

“We don’t expect a large number of cancellations as a result of the increase, and think that some published surveys will prove to be over-estimating the negative impact,” Macquarie Securities technology analyst Ben Schachter wrote in a note to clients. Schachter said he was surprised that no additional services were announced as part of the price hike, but noted that Prime’s “value to consumers has risen greatly over the past nine years, as the price has been held flat.”

J.P. Morgan technology analyst Doug Anmuth characterized $99 as a “palatable price point,” and said he expects Prime “to remain a strong driver of revenue growth at Amazon in the longer term given Amazon’s large product selection, the shipping benefits of Prime, and continued additions to Prime Instant Video and Kindle Lending Library.” Anmuth believes the price increase will translate into increased annual revenues of $250-$300 million for the company, he wrote in a note to clients.

RBC Capital Markets technology analysts Mark Mahaney is even more bullish on the move. “Assuming a U.S. Prime sub base of approximately 20 million, we believe that the price increase will generate between $300 million and $400 million in incremental annual operating income,” assuming 1% to 5% of Prime subscribers don’t renew the service, Mahaney wrote in a note to clients.

After Amazon’s announcement, at least one of the company’s rivals moved to capitalize on the price increase. ShopRunner, which works with brick-and-mortar retailers like Nieman Marcus to offer two-day shipping, announced a free one-year membership for Amazon Prime subscribers who have not yet renewed their membership at the higher rate. “We heard about the recent price increase and wanted to help,” ShopRunner announced on its website.

TIME E-Commerce

Don’t Want to Pay $99 for Amazon Prime? Here Are 5 Alternatives

Amazon.com Illustrations Ahead Of Earnings
Andrew Harrer—Getty Images

You could just suck it up and pay the freshly hiked rates for Amazon Prime. Or you could get a little creative, save some money, and still enjoy free shipping.

The idea that’s been floated for a few months has become a reality: On Thursday, Amazon announced that the price of its Prime service would rise to $99 annually, up from the $79 rate that’s been charged since the two-day shipping membership program was introduced nearly a decade ago. The Amazon Prime for Students rate—available to those with a .edu email address until graduation, including a six-month free trial—will rise to $49 annually, up from $39.

In Amazon’s note about the changes, Prime members are told that if the date you normally pay for the service before April 17, 2014, the old rate—$79, or $39 for students—will be charged. On the other hand, “If your membership renews on or after April 17, 2014, you’ll be charged at a membership rate of $99.” Or $49 for those in the Amazon Student program.

And if you’d rather not cough up the extra cash now involved in a Prime membership, consider the following alternatives to lower the costs, at least for a while:

Sign Up for Prime Now
New Prime members can lock in existing rates by signing up for the service no later than Wednesday, March 19. Students who sign up by then will get a free six-month trial, and when that period ends, they’ll be charged $39 for that first year of service (and $49 thereafter until graduation). Likewise, anyone signing up for a new regular Prime membership by March 19 would pay the $79 annual rate, after receiving a free one-month trial.

(MORE: Amazon Prime Loses $11 Annually Per Member … And It’s a Huge Success!)

Use a Workaround Hack
In a lively SlickDeals.net forum about the Prime price increase, several commenters suggest the tactic of buying an Amazon Prime Gift Membership for oneself. Purchasers are allowed to specify the starting date of Prime membership up to one year in advance of the date it’s bought. The idea is that you purchase a gift membership—for yourself—that starts the day after your current membership is set to expire. And of course, you make the gift purchase soon, to lock in the cheaper rate.

Get a Credit Card with Free Prime
Certain American Express cards come with an offer of free Prime membership for one year for new members. At least one of the cards (Blue Cash Everyday) has no annual fee itself.

Consider ShopRunner Instead
ShopRunner, the main shipping service competitor of Prime, is still available at the standard rate of $79 annually, after a free 30-day trial. Members get free two-day shipping from dozens of major retailers, including Toys R Us, PetSmart, FTD, eBags, Calvin Klein, and more. Even better, last November, ShopRunner launched a new partnership with American Express, in which members can get its two-day shipping service totally free so long as you register an AmEx card at ShopRunner checkout. By doing so, the annual membership fee is waived—and this is no one-year promotional deal, the fee is waived indefinitely. Of course, if you’re not a Prime member, you don’t get access to the streaming video services included with a subscription.

(MORE: Amazon Prime: Bigger, More Powerful, More Profitable Than Anyone Imagined)

Just Use Amazon’s Free Super Saver Shipping
Last fall, Amazon raised the minimum purchase from $25 to $35 in order for customers to be eligible for free shipping, without the requirement of a Prime membership. Many people grumbled about the change, but the $35 threshold is pretty easy to reach, considering that Amazon sells nearly everything under the sun. And it’s still much cheaper than the typical e-retailer’s minimum purchase requirement, of $75 or $99, in order to qualify for free shipping. Sure, Amazon’s free shipping for non-Prime members is slow—”your order will be delivered 5-8 business days after all of your items are available to ship,” Amazon explains—but hey, it’s free. And it’s truly free-free, not just “free” after you’ve paid $79, err $99, annually.

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