Alibaba.Com.

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C1. Alibaba.com

1. Alibaba.com was an early entrant into the B2B portal market in China. In about 100 words, explain how this might have created a lock-in effect, especially given the types of businesses he site attracts.

Alibaba.com does translation as well as listings for small to mid-sized businesses who want to do business. In so doing there is a lot of time and effort put into this business venture by these businesses. Once they are established and have spent the money to get there they wouldn’t be looking at changing their site unless this one wasn’t working for them. Since this site really concentrates its efforts towards these businesses and it is working they are pretty much a lock-in. Other businesses startups that would try and gain their business would have to provide something they are not already getting in order to lure them away.

2. Alibaba.com currently charges foreign sellers an annual fee of about $400 for a TrustPass membership, but Chinese companies pay $8000 or more for their annual listings as China Gold Suppliers. In about 200 words, explain why the site has different listing charges for the two types of members and critically evaluate this practice.

Foreign sellers are limited to the amount of items they can list on the site. The TrustPass isn’t necessary for them to buy it only pays for a credit check that assures companies wanting to buy for them that they have been checked out. It would be advantageous for companies to pay the fee for a TrustPass in order for the companies wanting to buy from them to know they are someone who can be trusted.

Whereas, the money paid by the Chinese companies is paying for the translation and the listing of all their information on the site as well as marketing. Chinese companies are not limited to the amount of items they can list. Alibaba.com is also connecting small and mid-sized businesses from around the world with those small and mid-sized businesses in China who...
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