Alibaba IPO biggest in history

E-commerce giant Alibaba is bigger than Amazon and eBay combined. But until now, the Chinese powerhouse has been flying under the radar in North America. That all changed today when the company made its historic debut on the New York Stock Exchange. Within minutes, shares quickly surged to 98 dollars from an initial public offering of 68 dollars a share.

It’s no wonder Alibaba founder Jack Ma is all smiles. His company already controls 80 percent of e-commerce in China. And after today’s IPO, Alibaba is well on its way to making a mark in North America.

Khaled Hassanein, DeGroote School of Business: “So far it has been obscure here, but the North American consumer is going to be introduced to these much cheaper goods in China.”

A professor of information systems at the DeGroote School of Business, Khaled Hassanein says Alibaba has seen major growth over the last 15 years because of how its services were able to overcome obstacles. For example, the website qualifies Chinese manufacturers with a trust rating — giving buyers overseas confidence in their purchases.

Khaled Hassanein: “Which wouldn’t be feasible otherwise. The trust factor would be too much to overcome.”

In the past, consumers would be wary of buying things like a pair of Nike shoes online from China for fear of purchasing knockoffs. Alibaba has an answer for that as well.

Khaled Hassanein: “They started a payment service called Ali-Pay and they’d withhold a payment in escrow until they would see ‘Okay’, this is a genuine pair of Nike shoes and therefore release the money and the vendor would get the money after the customer was satisfied.”

Hassanein says the IPO not only means more money for Alibaba to produce more innovative services. But it’s also huge publicity: “And that’s what they were lacking to penetrate the North American markets.”

Meaning even more people in North America will begin to put their trust in Alibaba.

On its first day of trading, Alibaba closed up more than 38 percent at $93.89 a share. The company has more than 20 billion dollars worth of stock now available in the market.