The deal was announced in Chinese only, and media in the country pegged it at around $200 million. (Alibaba declined to comment on that price when we asked.) That’s a significant amount, for sure, but it is nothing compared to the $1.9 billion that Baidu parted with to acquire 91 Wireless, China’s top Android app store, three years ago. Nonetheless, this purchase is notable for another reason: the rise and fall of valuations.
Wandoujia was reportedly valued at more than $1 billion in January 2014 when it landed a $120 million funding round led by SoftBank, however increased competition from carrier-run app stores and rivals like 91 Wireless and Qihoo 360, not to mention reports of internal conflict, appear to have impacted its development over the past two years.
Currently, Wandoujia comes in as China’s fifth largest app store, according to data from Analysys International, with around six percent marketshare. The startup was founded in 2009 by former Google China-er Junyu Wang and telecoms engineer Jack Feng, and it claimed 300 million users at the time of that SoftBank investment. Beyond apps, Wandoujia also offers mobile content and search products.
Independent app stores have flourished in China thanks to the blockage of Google services. While the U.S. company’s search engine is perhaps the most famous Google product not available in China, the Play Store is another critical Google pillar that is missing from the country, the world’s largest mobile market. Without the core Play Store, independent app stores took its place and have been hugely important points of contact for any international developer or startup wanting to get into China.
Now, Wandoujia will be made part of Alibaba’s mobile division, which includes browser-maker UC Web, which the company acquired two years ago.
It’s clear why Alibaba wants Wandoujia: an app store makes a useful addition to its existing ecosystem of mobile businesses and services. Beyond its e-commerce services — which are principally brand-focused TMall and Taobao marketplace, and sister payments service Alipay — Alibaba owns UC Web, China’s top video service Youku Tudou, and analytics service Umeng and more. Wandoujia has the potential to be a major distribution platform and channel through which it can engage and interact with Chinese consumers.
As is the case with Youku Tudou, which Alibaba bought for $3.5 billion, the company is aware that different kinds of media — such as entertainment, video and apps — can unlock commercial opportunities for its e-commerce business.