DID ALIBABA KILL ITS KOALA?

Ten years ago, when we discussed cross-border e-commerce in relation to China, it was always about goods being sent to China, not coming from China. Alibaba had Tmall Global, JD had JD Worldwide, and Netease had Kaola. They all imported maternal and childcare, beauty, and healthcare products at a time when the Chinese did not trust local brands.

Kaola, launched in 2015, was one of the market leaders by 2019, with 27% market share and was acquired by Alibaba for $2 billion. Kaola was loss-making for Netease, which primarily focused on games, and faced issues with counterfeit products sold by third parties when it launched a marketplace on top of its self-operated business. With all the antitrust crackdowns, it always amazed me that this takeover was never an issue (at least not publicly), as it gave Alibaba a market share of more than 60% in the inbound cross-border market by 2020.

During the recent Aliday at Alibaba, someone noticed the Koala mascot of Kaola was missing. Kaola had not updated its WeChat account since June 2024, its Weibo account since November, and the app had been removed from app stores on March 31st. Its website now redirects to its Tmall store, which has not seen new products since 2021.

Alibaba had differentiated Kaola from Tmall Global by adding a membership model to Kaola. However, by 2021, Tmall Global had achieved RMB 60 billion in sales, while Kaola had reached only RMB 3 billion. By 2022, the Kaola team had shrunk from 400 to 20 people, and the logo disappeared from Alibaba’s annual report.

Kaola is one in a range of independent cross-border platforms that have disappeared in recent years. It seems Alibaba considered Kaola unnecessary duplication in its ecosystem, which raises the question of whether it bought the platform, its biggest competitor at the time, to kill it slowly.

Or maybe it was the difficulty of cross-border during the pandemic, or the costs of running a self-operated business, the ‘consumption downgrade’ towards more rational consumption, or domestic competition? Whatever the reason, there seems to have been a lack of proper integration into the Alibaba ecosystem.

Back in 2019, I visited several offline Kaola stores in Hangzhou (see pictures). These stores have long since disappeared, but now the entire platform is history.

Source: Paidai

-Ed