What is Alibaba?
In a very short time, Alibaba has positioned itself as the largest company of commerce and mobile in the world. The company has been able to provide opportunities for small businesses and large businesses alike who are able to benefit from the advantage to reach consumers locally and globally. This topic also involves discussing the marketing strategies used by Alibaba founder Jack Ma to expand the business.
The Beginning of Alibaba
Jack Ma claims very often the name of the company as easy to write and speak in many languages but it also referred to the character’s name Alibaba’s famous tale “One Thousand and One Nights.”
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Alibaba at the center of the topics of the moment in becoming one of the largest b2b worldwide. It has facilitated the purchase of any product in any place of the world. In 1999, Ma had an idea of making the internet accessible, reliable, and useful to all. Alibaba then had only 18 employees and their office was in the apartment of Jack Ma. In comparison, last year it rose to 117,000 employees including several offices worldwide.
Alibaba becomes an internet Giant
Alibaba Group now controls 13 major subsidiary companies. The Alibaba Group brings together both corporate functions, mobile, e-commerce leader, the retail and wholesale market. It also provides services such as a platform for consumers and merchants to trade. Overall, the market is composed of more than 902 million active users in over 240 countries worldwide.
Jack Ma was once a teacher but the success of Alibaba makes him the richest man in China. According to Forbes, Jack Ma would is the first Chinese entrepreneur who manages to be on their magazine cover.
Alibaba’s success is based on market segmentation, consisting of factors such as product, price, location, and promotions.
The Initial Growth of Alibaba in 5 phases
The Alibaba enhancement can be seen under 5 steps in the past 13 years.
1 – 1998 – 2001: Alibaba pushes the circulation of trades information
In the first Alibaba brought free information to suppliers entering the market. At that time, the Chinese trade market made little progress and the information was circulating on the Internet.
Jack Ma was addressing the needs of SMEs in China who want to enter the electronic market by allowing them to access online services for free and information according to industry characteristics. In 2000, Jack Ma hires Porter Erisman a foreign expert to guide the company towards globalization. Porter is now the vice president of Alibaba.
2- 2002: The TrustPass Certification
The second step comes in the years 2002 when Alibaba invented a reliable credit certification called TrustPass. This invention guarantee consumers to make purchases without fraud and deceit. This was a recurring problem throughout the e-commerce development process in China. Alipay has generated more profits since using it, SMEs, therefore, have a secure business environment.
With the strong growth in Internet penetration in China, the number of export has also increased significantly. Worldwide, the buyers were on the lookout for cheap products.
3- 2004: Looking to enter foreign market
The third step happens around 2004 when Alibaba seeking to develop foreign markets to develop the e-commerce market. Alibaba created Tabao which has become the largest market of online purchases, exceeding US eBay but Alimama the largest online advertising platform for Commercial purposes.
4- 2005-2007: Alibaba eCommerce search engine
Between 2005 and 2007, Yahoo China was taken over by Alibaba. This marks the 4th stage in the development of the company. Indeed, the possession enables it to monitor all transaction operations. Then it creates a new e-commerce search engine for Alibaba after establishing its own www.yahoo.com.cn system. From there, the company started to gain ground and was then able to secure a wider communication space for e-commerce companies in the world. Alibaba has established itself as a revolutionary business that decade. It has established itself as one of the largest IPO in US history (the company is valued at $ 167.6 billion). Alibaba has two main shareholders including Softbank Corp., a Japanese mobile company that owns 36.7% of shares, and Yahoo Inc. holds a 24% stake.
5- 2008: B2C & C2C
In 2008, Alibaba opens the Taiwan office and in Switzerland, this is where the 5th stage begins. Alibaba reviews its strategy to encourage B2C, increasing its total number of registered users significantly.
How Alibaba Continues to Grow & Innovate?
It is obvious that the main function of Alibaba was meant to be a simple platform to do business worldwide. In China, sales channels were very inadequate for local SMEs before the arrival of Alibaba.
With an exploding economic growth and economic reforms experienced by the country, many SMEs were looking for opportunities to enrich themselves and this is what brought Alibaba. According to the BBC, the total value of goods sold on Alibaba in 2020 was higher than Amazon and eBay combined.
Alibaba Goods & Services
As we mentioned quickly early, Alibaba is not only famous for trades goods but has plenty of services other than eCommerce:
- Wealth Management: Zhima credit, Antsure etc
- Hello Bike – shared bicycle service
- Fliggy – OTA
The group has invested or bought out several big apps to integrate them into its eco-system
- Weibo – microblogging
- Kaola – cross-border eCommerce
- Lazada – South-East Asia eCommerce
- South China Morning Post (SCMP)
- Intime Department Store (New retail)
Alibaba’s Ecommerce Platforms
The major eCommerce platforms that Alibaba markets under its umbrella in China are as follows:
Taobao is the main C2C platform in China, similar to Ebay in the US, and is an excellent platform for small businesses and entrepreneurs that want to quickly enter the market. There are major benefits for selling on Taobao such as reaching a large audience, ease of payment, and relative ease of business operations.
Alibaba has also been incredibly innovative in the way that they continue to introduce new features within Taobao to increase engagement with consumers. Features such as Weitao (social media within Taobao) and Taobao Live (a live-video feature) are new ways in which businesses can increase ROI and engagement.
Taobao is also a Kol app. A few years back, Taoabo looking to rebrand itself, launched its own KOls platform (accessible from within Taobao) with influencers working directly for Taobao.
In 2020, Taobao and weibo launch their live streaming program working hand in hand to offer the smoothest online shopping experience to their users – also allowing Weibo verified account to open store within the app that were link to taobao.
Tmall is China’s largest B2C platform with tens of thousands of companies using the platform to sell products directly to Chinese consumers. Tmall Global is a solution for foreign (non-Chinese) brands to sell directly to Alibaba’s incredibly large audience of consumers.
To succeed as a seller on these platforms, it is critical to understand the requirements for a business to begin selling their products (i.e. registration, partnerships, etc.).
Success is also dependent upon further marketing and advertising and understanding the behaviors and needs of Chinese consumers. Consulting with a professional before launching a business on one of these websites can save a great amount of resources in time spent figuring out the market and can increase conversions dramatically. More important than anything, building an e-reputation is paramount for long-term success in the Chinese market.
To conclude on our review of Alibaba’s journey & growth strategy
Alibaba may be considered a “collective entrepreneurship”: it provides a platform to merchants while they provide products. It is a model based on profit sharing. The larger the network is more great benefits for the company and traders increase. In addition, Alibaba has a good relationship with the Chinese Governement which is very important because the government is a major player in the Chinese economy.