Alibaba started out as alibaba.com which was founded in 1999 by Jack Ma. The website provides an avenue for exporters in China to connect with companies found in more than 190 countries globally. Businesses can find a manufacturer in China where they can have a range of products to be produced and shipped.
Alibaba owns other sites that add up to the traffic in its business page. These include taobao.com which is the largest shopping site in China and tmall.com which caters to the country's emerging middle class with its huge selection of branded products.
The company also runs alipay.com, an online payment system that works akin to PayPal. It owns a large stake in Sina Weibo and Youku Tudou, China's version of Twitter and YouTube respectively. Other ventures include a controlling stake in a film business and 50 percent of Guangzhou Evergrande, the most successful football club in China.
The company also offers logistics operation, cloud computing and online marketing. It even has plans to venture into the banking industry.
Alibaba's revenues came mostly from advertising on its various sites. Compared to eBay, Alibaba has no listing fees. The company simply connects customers and businesses and charge only a small commission. The system works even without spending huge amounts of infrastructure.
What sets Alibaba apart from rivals such as eBay and Amazon is its business model which looked very appealing to a lot of investors. Its operating margin of 57 percent far exceeds the 28 percent of eBay and the 1 percent of Amazon.
In terms of gross merchandise volume which indicates the size of a business, Alibaba leads with $296 billion of items sold. Amazon comes next with $100 billion and followed by eBay with $76.5 billion.
The company's IPO filing of up to $24 billion could just be the largest IPO in history. The latest one so far that's included in the rank of the largest IPOs is Facebook which had an IPO of $16 billion in 2012. Incidentally, it was the same IPO that made Alibaba choose NYSE over Nasdaq.
Alibaba executives are worried about the ability of Nasdaq to handle their IPO after the exchange ruined Facebook's market debut in 2012. Nasdaq tried to convince the e-commerce site that it had fixed the issue. In the company's presentation, they showed Alibaba the detailed steps it had taken to ensure that what happened with Facebook will never happen again.
Alibaba weighed its options and arrived at the conclusion that the possibility of a messed up IPO, even on a small scale, outweighed the possible benefits brought about by being in the index.
"It was a close race, and we wish Alibaba well," said a spokesman for Nasdaq.
