E-commerce grew 20% for Costco in fiscal 2015—20 times faster than store sales.
Alibaba says set-top boxes with its new TV operating system will go on sale this year.
Like major Internet companies in the West, China’s leading e-commerce player is positioning itself for a central role in what may be the next big trend in online retail: consumers shopping via web-connected TV sets.
Alibaba Group announced this week that it had developed an operating system for web-connected TVs and a deal with Wasu Media Holding Co. to jointly develop a set-top box, the Wasu Rainbow, that will incorporate the new software and go on sale later this year. Wasu holds a license to provide Internet-based TV services in China, and says 8 million households use its service to access movies and TV shows on demand and play online games.
With the new Alibaba operating system, developed by Alibaba subsidiary AliCloud, consumers will be able to use their mobile phones as a TV remote control, stream video from their phones, and pay utility bills and shop from Juhuasuan, a Groupon-like group-buying site operated by Alibaba, making payments with Alipay, Alibaba’s online payment system that is similar to eBay Inc.’s PayPal. Shopping on Alibaba’s two big e-commerce marketplaces, Taobao and Tmall, will not be part of the initial release. Alibaba is No. 1 in the Internet Retailer Asia 500.
Chinese TV manufacturers Skyworth, Haier and Changhong plans to release TVs that incorporate the new operating system soon, Alibaba says. What’s more, Alibaba has formed an alliance with major technology companies to develop features and standards for Internet-enabled TVs. They include Wasu Media, U.S. computer networking gear manufacturer Cisco Systems Inc., and Chinese electronics companies Hisilicon, Skyworth, Haier, Changhong, Konka, Mstar, Amlogic and Allwinner Technology.
“The launch of this operating system allows Alibaba to enter the vast China TV market earlier than other Chinese internet companies,” Zhijiang Dou, deputy research director of TNS China, a consulting company, tells Internet Retailer. “Alibaba already has an OS platform for smart phone, and the OS for Smart TV will be the next battlefield.” Chinese manufacturers shipped 43 million TV sets in 2012, including 26 million “smart TV” units that can connect to the Internet, according to China Market Monitor, a market research firm. Smart TV shipments doubled in 2012 from 2011, the report says.
In moving into TV shopping, Alibaba is moving on a parallel path with several major U.S. technology companies. eBay Inc., for instance, has offered consumers using iPads the ability to buy web products related to TV shows, including the Olympics. While eBay and its PayPal payments units have tried to position themselves as leaders in this area, such heavyweights as Amazon.com Inc. and Google Inc. also have shown signs of wanting to do more with TV and e-commerce.
For Alibaba, this is not the first time it has butted heads with Western technology companies. The Chinese e-commerce giant developed an operating system for mobile phones in 2011, and reached a deal with Acer, a big electronics manufacturer in Taiwan to produce phones with the Aliyun software. However, Acer subsequently backed off under pressure from Google, provider of the Android software that Acer uses in many of the tablets and smartphones it ships.