Alibaba Group Limited

Alibaba limited is a famous Chinese multinational company that mainly deals with e-commerce. Alibaba was founded in the year 1999 by Jack Ma alongside his team of 17 friends (Clark, 2018). Alibaba is a giant online retailer that aims at transforming how businesses operate, market, and sell their products by providing an efficient platform. The company mainly deals with e-commerce, digital media, cloud computing, entertainment, financial services, and innovation initiatives. The company offers its customers with technology infrastructure together with marketing that helps manufacturers, businesses, and brands to leverage the influence of new technology in engaging their customers effectively and efficiently. In the year 2019, Alibaba had a total of $248 billion transactions that were carried out through its online sites, which was more than the transactions of both Amazon and eBay combined. Alibaba operates three core businesses which are Alibaba, Tmall and Taobao. The businesses are operated through e-commerce websites that connect different types of sellers and buyers.

Alibaba.com connects business to business where manufactures in various countries are connected to buyers globally. Taobao.com is similar to Amazon or eBay as the website connects international businesses to consumers and also connects consumer to consumer. The Tmall.com provides a market place that mainly targets China’s middle class and provides large multinational brands on business to consumer model. Alibaba also has Alipay, which is an online payment platform that has no transaction fee. Through Alipay, customers usually pay up-front into a form of escrow, limiting the seller from accessing the funds until a customer is satisfied with items purchased. Alibaba has enabled both small and large businesses to actively compete in global and domestic economies through technology and innovations. The company has a sizeable private consumer database, which ensures that it is information-driven (Wang, et al 2018). Additionally, Alibaba has attracted a large population of users globally and has increased the accessibility of products for the consumers.

Alibaba Live Streaming

Technology has enhanced the multimedia industry by introducing live video broadcasting services, commonly known as live streaming. Live streaming entails broadcasting of events in real-time through the internet. Alibaba has incorporated live streaming in its operations on the Taobao Marketplace, which has generated billions for the company. Through live streaming, Taobao has created a real-time engagement that is centric on a customers’ requirements. The engagement offers customers shopping experiences on three-dimensions in that it is live, interactive, and mobile at the same time. This means that Alibaba users can access the live stream from any location at the given time. Alibaba offers customers the opportunity to make requests, such as checking the product’s specifications. The host of the live stream, in turn, showcases all the specifications of a product to the clients as per their request. More so, live streaming attracts a broad audience and also convinces other users to buy more products.

According to Alibaba, live streaming in their stores is a combination of platforms such as QVC, Facebook live, and e-commerce. The combination has helped boost the company’s revenue, with increasing convincing powers that lured users to purchase a specific product.  Alibaba has utilized live streaming to introduce new international products and brands in the Chinese market. Alibaba hosts carry out background research on products they showcase on a live stream to provide accurate information. The hosts promote their live streaming by putting up teasers for consumers who, in turn, identify things that interest them and, hence, eagerly anticipate the live stream. Also, the company has put in technology whereby the lives are scheduled to start at a particular time, and interested consumers set reminders for them to participate and watch the live stream. There are specifications for essential customers who request for live streaming individually with the hosts. The hosts carry out research on their consumer base are have items that align with their taste and preference, which saves on time as consumers can select quickly. The lives promote sales because customers can purchase items they have seen in the live streaming immediately. Taobao websites offer clients a range of services within the Alibaba app.

Clients who have identified items of their choice from the live stream can make an inquiry of the product on the app, make an order, make the payment, and track their package. The live streaming creates a long-lasting relationship between the Alibaba’s host and customers. Brands that use Alibaba are promoted through live streaming by attracting a large customer base in a fast and efficient manner that is less expensive than commercial advertising. After completion of the live streaming, purchases made are individual drop-shipped internationally to all buyers, which reduces the brand’s expenses.  The downside of the live stream is that they are unpredictable as they heavily rely on technology and the internet. Consumers are also likely to miss the live stream if they don’t put reminders for when Alibaba goes live. Alibaba is focusing on improving efficiency for both its sellers and buyers through live streaming. The company is connecting the social life of users and e-commerce through their live streaming.

Technology’s Impact on Importing/Exporting

Technology has significantly increased the scientific knowledge in various companies leading to enhancement and improvements of the companies. Alibaba has highly utilized technology in its operations in both importing and exporting of products. Alibaba has promoted international trade through its activities, highly dependent on the internet where the sellers enlist their products, and the buyers can purchase. The Alibaba app supports business transactions from the initial process of ordering a product, payment until the last stage of delivery. Alibaba has provided a platform for exporters who are mainly sellers from different countries. The app offers a ready market for the exporters as interested buyers select their items online, thus reaching a broader market. Also, the sellers are providers with an opportunity to promote a wide range of their products which is free marketing. The exporters can customize information on Alibaba to suit their target market. Through the technology agreement, electronic exporters are charged zero tariffs on their products (Qing, 2008). The exporters are given notification of purchases made and delivery products to Alibaba. Alibaba has dramatically reduced the cost of trading for exporters by providing a cost-efficient distribution channel.

Through its technology, Alibaba has created a competitive advantage for exporters as it eases the transactions between the exporter and buyer. The exporters can now reach new destinations through Alibaba, which acts as an intermediary between the two parties. Alibaba has promoted small firms into becoming exporters together will exporting more products. Importers are greatly benefiting from technology offered by Alibaba. The importer across the globe can select items of their choice from the comfort of their homes. The app has reduced costs related to imports because all payments are made through the app. Alibaba also offers the importers with a technology that enables them to track their products from the point of payment up to the delivery point. In reference to the long trail theory, Alibaba uses a recommendation system that enables importers to check other related products that can be delivered together (Anderson, 2006). Through the application, importers can quickly identify their niche, thus making transactions easy. The technology has highly reduced import costs and shipping as Alibaba caters to shipping activities between countries and alerts a client once goods have arrived. The company has reduced delays and red tapes when importing goods through their app.

Experience as an Exporter of A B2B Product on Alibaba

Alibaba limited carries out business to business transaction through Alibaba.com. The company connects exporters globally and products and sells them in bulk to buyers who are looking for inventory and suppliers to produce their products. From the website there is a range of products to choose from with product prices and specifications indicated (Wang, et al 2018). An added feature is the comparison button that allows one to selected similar products from different suppliers. The app provides information on the selected products on the same display page so buyers can compare the specifications and prices to make more informed decisions. Items supplied by exporters in the site are in large quantities hence one can select as many items as one requires. Also, the app indicates the minimum number of products a business can purchase from the other. Alibaba provides exporters with a platform to examine the market and the size of the target audience. The website has a section where the manufacturer and buyer can discuss discounts and customization of products directly. Alibaba provides a list of countries that export products hence an interested buyer can select a country of their choice. The app also offers the estimated time for product delivery from the exporter. The website provides a very seamless, efficient, and interactive experience making purchases and imports easy.

Advantages of an Importing Through Alibaba

Alibaba offers low prices for wholesale products, thus allowing importers to make high profits on bulk goods for resale. Importers have a wide range of products to choose from and also have the option of selecting their preferred source country. The app offers buyers the ability to customized their products from the manufacturer hence saving on costs. Importers can source products from reliable suppliers as they can assess reputable suppliers from the website through reviews, the number of transactions, and response time. Alibaba ensures that importers have control over how their products are packed and also, they can track the transit of their products. Importing through Alibaba is safe and secure as the company uses reliable distribution channels. Alibaba is fast and efficient, minimizing delays that importers experience.

Disadvantages of Importing Through Alibaba

Importing through Alibaba is limited by issues such as minimum orders, which limits the buyer and requires high upfront costs. Alibaba sells branded products, and importers may face legal actions for selling branded products that they are not officially licensed for. Product images on Alibaba are often misleading to importers because they do not resemble the actual merchandise. Importers face issues related to market niches as various suppliers on Alibaba sell products per particularly their local markets such as clothing sizes (Fan, Tang, Zhu, & Zou, 2018). Some products arrive at importers when faulty, which incurs additional costs on importers in returning the products and placing new orders. Additionally, some sellers offer counterfeit products that importers are unable to verify on the site.

Differences between Amazon’s And Alibaba’s Website

Amazon is a multinational conglomerate American technology company that mainly deals with online retail. Amazon is a significant competitor of Alibaba but has different business models. Alibaba is considered as a market place that connects sellers and buyers hence does own inventory while Amazon owns the inventory and sells directly to consumers (Wu & Gereffi, 2018). Amazon has a subscription-based model, whereas Alibaba does not charge any fee except for sellers who sell in bulk. Alibaba has dominated the Chinese market, while Amazon is dominant in the USA. Alibaba offers three business models, while Amazon only provides a B2C model. Amazon operates under one platform while Alibaba operates under Taobao, Tmall, and Alibaba. In Amazon, sellers pay advertising fees while in Alibaba, sellers are charged fees to obtain higher rankings.

Alibaba and the 40,000 Thieves

Alibaba has been faced with allegations of selling counterfeit goods and an unprecedented torrent of sham. The allegations have had negative impacts on the company as they are damaging the company’s reputation. Sale of counterfeit has led to mistrust among the buyers and sellers, leading to a decline in the customer base. Also, the allegations contribute to sellers pulling out of the platform, which decreases Alibaba’s productivity. Counterfeit products attract lawsuits for the company, which leads to financial losses. To counter the fake product issues, Alibaba should check and verify the authenticity of products sold on its platform.  Legal action should be taken against sellers who provide counterfeit products. Alibaba should partner with brands to curb and identify sellers of counterfeit. Buyers should report any counterfeit item they identify on the website for legal action to be taken against the vendors. Sale of authentic brands on Alibaba will help in maintaining the company’s reputation and customer base.

 

References

Anderson, C. (2006). The long tail: Why the future of business is selling less of more. Hachette Books.

Clark, D. (2018). Alibaba: the house that Jack Ma built. HarperCollins Publishers.

Fan, J., Tang, L., Zhu, W., & Zou, B. (2018). The Alibaba effect: Spatial consumption inequality and the welfare gains from e-commerce. Journal of International Economics114, 203-220.

https://www.alibaba.com/

https://www.youtube.com/watch?v=elAEoeadhWY

Qing, H. (2008, December). A model for value-added e-market provisioning: Case Study from Alibaba. com. In 2008 Second International Conference on Future Generation Communication and Networking Symposia (Vol. 1, pp. 47-52). IEEE.

Wang, J., Huang, P., Zhao, H., Zhang, Z., Zhao, B., & Lee, D. L. (2018, July). Billion-scale commodity embedding for e-commerce recommendation in alibaba. In Proceedings of the 24th ACM SIGKDD International Conference on Knowledge Discovery & Data Mining (pp. 839-848).

Wu, X., & Gereffi, G. (2018). Amazon and Alibaba: Internet governance, business models, and internationalization strategies. International business in the information and digital age, 327-356.

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