Alibaba case study

1. 1. Who is Alibaba.com?
 Online market place for national and international trade(Est: 1999)
 B2B market place for International and Domestic trade
 Manufacturer, trading agents------------export (emarketplace) ------
Global buyers
 Global Suppliers------------Import (emarketplace) ------
Manufacturer, trading agents, Retail Shops
 Typical Sellers- SME’s
 Buyers-Companies of all sizes, Very diverse
 The business model of Alibaba is very simple. It is to help sellers meet
buyers. More specifically, it provides an Internet based business‐to‐
business (B2B) platform where sellers (suppliers / manufactures) can
meet buyers (outsourcers / wholesalers) on a global scale.
 Customers are both the sellers and the buyers, who are able to post
“storefronts” to advertise their products or needs.
the workflow includes:
1. Suppliers and buyers post their listings, matching the inputs from the
company’s strategic perspective.
2. Listings are searched, contacts are made, and information is exchanged
between the suppliers and buyers. This will often include product
specifications and capabilities.
This corresponds to the information manipulation the company’s servers and
software use to generate the value for the customers.
3. Customers then negotiate with each other, which is the “outbound” part of
the workflow.
4. All of the communications for suppliers and buyers is enabled through tools
within Alibaba’s software.

2. Moved beyond its original remit of connecting businesses to each other
to ventures that let companies sell directly to the public (Tmall) and
enable members of the public to sell to each other (Taobao).
In America 76% of online retailing involves people buying from
individual merchants, according to a new report by the McKinsey Global
Institute (MGI), a think-tank. In China, in 2011, that figure was 10%. The
other 90% was sold through marketplaces that simply allow buyers and
sellers to find each other.
The first was that many Chinese are tight-fisted. So Alibaba made all the
basic services it offers free to both buyers and sellers. It earns money
through online advertisements and extra services it offers clients, such
as website design. With 6m vendors Taobao is a cluttered-up
cyberspace. Many sellers think it worthwhile to pay for fancy storefronts
and online advertisements to help them stand out.
The second is that many Chinese are reluctant to trust strangers. So
Alibaba has provided tools to build trust. One is an independent
verification service through which third parties vet the claims made by
sellers; the sellers pay for the process.

3. Another is the Alipay payments system. Unlike PayPal, used by many
Western internet companies, Alipay takes money up front and puts it in
an escrow account.
For three years Alibaba has been making small loans (average size
$8,000) to merchants trading on its platforms, using the data it holds on
them to guide its decisions.
Taobao-C2C-Larger then ebay
Tmall-B2C
eTao-Comprehensive shopping search engine in china
Alipay
Alibaba Cloud Computing-data centric cloud computing service
Alibaba’s biggest shopping site with more than 7 million sellers and 800
million product listings, doesn’t charge any commission fees on
transactions.
Taobao makes money because many merchants pay to advertise on the
site as they try to stand out among several million merchants and attract
consumers.
Alibaba’s model is a modified one reflective of their entirely virtual
service nature.

4. Competitor
1. Global Source
Advantage:
 Has its own fixed base of buyers and customers
 Very Experienced in promoting global sources
 Provide market research reports and organize their own events
Disadvantage:
 Less well known domestic brands than alibaba
 Less number of suppliers than alibaba group
 Alibaba is positioned to service small and medium enterprises. Global
source targets large enterprises.
2. Made in china.com
Advantage:
 Part of focus technology group has financial strength

5.  Prices are cheaper
 The use of agent system
Disadvantage:
 Less well known domestic brands than alibaba
 Less number of suppliers than alibaba group
 Publicity and adv. Less as compared to alibaba
Revenue models:
 Transaction fees
 Fee for Service
 Membership fees
 advertising fees