Founded just before the turn of the millennium in Hangzhou, China, Alibaba Group has to date become the largest online retail website worldwide in the planet, its total transactions surpassing the sum of both Amazon and eBay’s (Erickson, 2013). The report explains its business and operation model and market strategy, before moving to explore the reasons for Alibaba Group’s success such as its established market share in the large market of Mainland China and its efforts to promote the perception of the reliability and security of e-commerce. Comprising of its future plans in logistics improvement, expansion into developing nations, integration with social networks, venture into mobile commerce, and also, industries beyond, the report then ends with suggestions for future possibilities that the Group could explore.
Outline of Alibaba Group
Set in a fast moving, highly pragmatic e-commerce sector, Alibaba Group has never been shy of its ambition which comprises to top Walmart to become the largest retail company worldwide within the next 3 years (Hong, 2013). Alibaba Group has stakes in not only e-commerce platforms but also in cloud computing, group purchasing, payment processing, cloud computing, and even instant messaging. With its strategic position in a developing China, strong presence in the e-commerce sector and far looking management strategies, Alibaba Group might just be able to achieve its ambitious goals.
Business and Operational Model
With a mission to make it easy to do business anywhere, Alibaba Group focuses mostly on providing cheap and efficient e-commerce platforms for Business-to-Business (B2B), Business-to-Customer (B2C) and Customer-to-Customer (C2C) transactions.
Promoting domestic and foreign trading, Alibaba.com (B2B) not only introduces Chinese manufacturers who are known for their low-cost goods to international buyers but also supports the services between international and Chinese businesses.
Tmall, its B2C site allows renowned brands to sell their products directly to consumers, while Alibaba’s major revenue contributor, Taobao provides C2C services, allowing small businesses and individual entrepreneurs to set up online retail stores to reach out to members of public. Customers are both the sellers and the buyers and they are able to post and advertise their products or needs.
For the case of Alibaba.com, suppliers are able to post their products on the site and interested buyers will submit a request for quotation (RFQ). To maintain the standard of its site, Alibaba.com’s industry specialist will ensure that the returned quotations comprises of supplier’s company and contact information, quality and production details and more if applicable to ensure quality leads. Buyers also undergo the same workflow. Posting requests can also be made through AliSourcePro with convenience, where the company’s industry specialists will match relevant quotes to the interested buyer based on their specified RFQ. Taobao, on the other hand, comprises of smaller sellers, and customers will pay via Alipay, Alibaba Group’s online payment platform. Purchases will be sent to a forwarding agent’s warehouse before being sent to the buyer.
In order to survive the international crisis and adjust to the world trend, Alibaba Group also employ a concept of “One Company” that combines its subsidiaries together (Zhao, 2013), focusing on the collaboration among consumers, channel distributors, producers and e-commerce providers.
It is important to note that while Alibaba.com is often compared to Amazon, there is a marked difference between the two companies where Alibaba Group is still largely confined within the e-commerce box and its platforms. Most of its revenue comes from paid advertisements from sellers to stand out on sites such as Taobao and Tmall, while its secondary revenue comes from the charging of value-added services such as listing fees, subscriptions fees and...
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