What an Alibaba Group Holding Ltd and Ford Partnership Could Mean

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Just like its U.S. counterpart, Inc. (NASDAQ: AMZN ), never let it be said Alibaba Group Holding Ltd (NYSE :BABA ) is predictable, even if at times confusing. Recently, the company told BABA stock holders it would be teaming up with American automobile icon Ford Motor Company (NYSE: F ) to sell more vehicles in Alibaba's home market, China.

Reading between the lines and taking note of the lack of details offered so far it's relatively clear that not even the companies themselves really know where this is all going to go. On the flipside, it's an interesting prospect as it opens the door to a market Ford hasn't done particularly well in and makes BABA stock even more dynamic.

In the meantime, not only will Alibaba collects some revenue by providing the financing to sell Ford's cars, like Amazon's "everywhere" strategy, such a partnership brings consumers even deeper into the Alibaba ecosystem. It could have a significant impact on BABA stock.

Strange Bedfellows, But Why Not?

Just for perspective, of the $36.5 billion revenue Ford generated last quarter , only $3.7 billion of it came from the Asia-Pacific region. Pre-tax profits for this arm only amounted to $289 million. That's not much and even less impressive given that China is the world's biggest automobile market.

On the other hand, one could argue there's lots of room for growth. How much growth potential is on the table remains in question, though the corporate duo is about to find out, even if in some unusual ways. One of those unusual ways may be the sale of vehicles via what appears to be a giant vending machine .

Buyers would make their selection online using Alibaba's popular ecommerce venue Tmall, make payment arrangements and then take a trip down to the car lot/parking garage/vending machine. Such a process would indeed meet Alibaba's goal of making purchasing a car as easy as buying a can of Coke.

For all the snickering and jokes and tentative plans that have been made though, the two parties themselves may not know exactly where the three-year agreement is going.

Alibaba less-comically said: "The agreement aims to explore new ways to redefine how consumers purchase and own vehicles, as well as how to leverage digital channels to identify new retail opportunities."

While the goal of leveraging each other's strengths may not yet answer the question of how to sell more cars, there's little doubt as to what Ford intends to sell. Ford CEO Jim Hackett made a point of mentioning in a statement that "smart vehicles" would be a focal point in China going forward. That means electric cars and lots of them.

While Hackett didn't explicitly say so with this week's announcement, Ford has spent the past few months forging and strengthening partnerships with Chinese companies like Zotye, which will be making fully-electric vehicles for Ford by late-2019 .

By 2025, Ford aims to offer all of its Chinese makes, at least 15 models in all, in an all-electric version, marketing to a crowd that's been far more interested in EVs thus far than the United States has. It's not all about Ford though.

Alibaba essentially becomes the car dealer with the deal. Plus, the partnership lends itself to financing purchases online, catering to a crowd that's proven to be comfortable with doing financial business online. Car payments can be made through Alibaba's Alipay platform, bringing new consumers into that circle, and deepening ties to Alipay.

And if nothing else, offering vehicles at Tmall draws more traffic to the e-commerce site, prompting purchases that may not have otherwise been made.

Bottom Line for BABA Stock

If the partnership between Alibaba and Ford is the only reason you own or want to own BABA stock, you might want to rethink things. This isn't a game-changer yet, and probably won't be for a while (if it ever is).

Nevertheless, it's an interesting twist simply because it offers Alibaba chance to do a ton of data gathering as well as test ventures with North American companies, as Amazon has been doing for years.

If Alibaba can learn from it and do something with the customer information it gleans from these car-buyers, there actually is something of a bigger-picture upside for BABA stock.

In other words, the core question is, what else can Alibaba do like its partnership with Ford once it figures out how sell Ford cars?

As of this writing, James Brumley did not hold a position in any of the aforementioned securities. You can follow him on Twitter , at @jbrumley.

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The post What an Alibaba Group Holding Ltd and Ford Partnership Could Mean appeared first on InvestorPlace .

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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