Alibaba's Software Strategy Could Hurt eBay in China

Any eBay seller can tell you the value of software to manage inventory, schedule listings and streamline customer service. eBay's Chinese competitor is paying attention, and has launched software for its customers. Online auction firm Alibaba launched a new software division, Alisoft, to provide its Chinese customers with ecommerce software to manage inventory, customer relationship management, sales force management, and also provides financial tools and marketing information management.

A critical function of ecommerce software is the ability to sell on multiple channels, something eBay software does not provide (but third-party vendor solutions do provide). Alibaba said it will allow customers to sell on multiple marketplaces through Alisoft, as long as those marketplaces remain open to Alisoft.

eBay would typically be reluctant to allow a competitor access to its API (Application Programming Interface) - the technology that helps third-parties launch listings to eBay, for example. But China is anything but typical, and it will be interesting to see if the new joint venture between eBay and Tom Online will support Alisoft as a developer while its parent remains a competitor. The fact that the joint venture will not be integrated with the eBay global platform may make it easier for eBay to cooperate with Alisoft.

Alibaba's software is a hosted system, making customers more reliant on Alibaba since information resides on Alibaba's servers, not the customer's own computers. While there are other advantages to a web-hosted service for both Alibaba and its customers, it clearly gives Alibaba an advantage over its competitors.