Alibaba Group Holding Ltd is building its social network to keep users to the platform and earn more revenue, a strategy much different from Facebook, according to Alibaba vice chairman Joseph Tsai.
An article published by Bloomberg said that the company is mixing e-commerce and social media and entertainment, as well as investing in startups such as Snapchat Inc., to engage users and entice them to buy.
"We're already at the holy grail point where our users have very high desire to buy things and they're very commercially minded," Tsai said. "On Facebook you're friend-ing all of your friends because you already know each other. In our case, we start with strangers but then use data to find a commonality of interest and create a community around that interest."
Alibaba's strategy is different from what Facebook is doing as it continues to look for ways to convince users to shop on the social network such as digital storefronts, birthday gifts and "buy" button. Facebook has also tried a shop section to allow businesses to sell directly using their Facebook page.
Similary, Twitter and Pinterest did the same by introducing their own ways to attract users to buy products from their sites.
On the other hand, Amazon has added lifestyle features to its e-commerce site but it did not prosper. In 2014, it acquired Twitch Interactive Inc. for $970 million. An online forum where users can discuss gaming and play, the platform has a limited integration with its online marketplace.
According to Tsai, users spend more time with the company's Taobao mobile app than visitors to Amazon or Twitter's mobile sites because it allows users to do many things, and more than double the company's revenue in the recent quarter.
"To capture the attention and imagination of young people you have to provide more social features," Tsai said in an interview. "We want to continue the sense of community so that they'll come back and engage with the platform."
Taobao was started by Alibaba in 2003 to enable small businesses and entrepreneurs to sell to consumers directly. The company later added social and entertainment features to keep people to stay longer and increase the chance of buying the products, a strategy that worked.
In the June quarter, Taobao's monthly mobile active users rose by 39 percent to 427 million, while mobile revenue hit $2.6 billion.
Alibaba said that users visit Taobao more than 7 times a day for more than a total of 25 minutes, compared with about 9 minutes on Amazon's mobile app and 16 minutes on Twitter's app.
"Amazon doesn't get people on the website seven times a day,'' Gil Luria, an analyst at Wedbush Securities Inc, said. ''The level of engagement Alibaba was able to create is more than what we'd consider with search companies and social companies. They're investing a lot into making their tools have social engagement like Facebook."
Taobao has nearly 1,000 special interest groups and users can join any of these to chat about topics of their interest. The site also got bloggers and experts to post content last year.
In addition, Alibaba also presented the Taobao news feed with more than 1,300 media outlets participating as well as video-live streaming for bloggers and merchants.
More social features will be added to Taobao to further drive sales, Tsai said.