360Buy CEO, Liu Qiangdong, revealed at the company’s annual event that a financial company would be established in 2014. Liu refers to it as a “technology-driven data financial service”.
Mr. Liu reckoned that payments service would only be a small role among all the financial solutions 360Buy would offer then. His company stopped using Alipay in the second half of 2011. To have its own payments service legitimate, the company obtained a needed payments license by acquiring Chinabank Payments, a license holding private company, in 2012. Also in last year the company releaseds its first financial service to fund suppliers.
Alibaba group, 360Buy’s obvious competitor, started offering retailers two financial services from April 2010, one is regular loans — based on operation data of stores’ and applicants’ background, the other is receivables-based loans — retailers who haven’t received the payments after delivering goods are qualified to apply for it. This is based on Taobao mechanism that the platform would hold the payments till consumers acknowledge receipt of the goods. One retailer can apply for the both with a combined limit of one million yuan and up to twelve months to maturity. By the end of 2012, Alibaba had made loans to over 200 thousand small businesses, with an average of 61 thousand yuan per case, according to the official data.
That banks would like to work with Alibaba to fund merchants from the early days was because the company had data of all the stores, transactions in detail, user reviews and so on, that could help with risk control, and, on the other hand, brought them more customers. This is where, Mr. Liu thinks, 360Buy’s B2C model is more advantageous. “360Buy has the best data of real and valid transactions in China. There’s no people cheating on transaction numbers, no fake transactions, no money laundering, no counterfeits, and no inferior goods. The consumption data we have are also of the highest quality. With the data, not only can we provide merchants with loans, but also make loans to consumers”, said Liu. He successfully lets us know he was attacking Taobao.
That said, making loans to individuals is the only difference 360Buy’s financial business will have from Taobao’s. If it’s a goal for 2014, what will 360Buy do in 2013? After having burned so much investors’ money and finished one price war after another, 360Buy plans to make a profit in 2013, by slowing down.
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