Analysis

Alibaba’s biggest priority is holding its home turf: online shopping in China. The vast majority
of its investments to date have gone to China-based startups, Hongkong (which is a part of China
now) and Taiwan. Its favorite industries to invest in, ecommerce and logistics, have direct
relevance to its existing ecommerce business. Alibaba has effectively dealt with the problems it
faced but as being the market leader it had to. The uncertainties in the B2B industry in China are
still on the rise and Alibaba will have to effectively face it. Alibaba has a great market share in
China and by 2020 more than 700 online shoppers will come in. Consequently, Alibaba has to
focus on improving its logistics network because it current logistic network was built before
1990 and would be inadequate for future operations. This can be done my improving its mobile
commerce. As it is already a fast growing world, Alibaba still has no vision or mission of
expanding to the broader regions of the world and a time will come where expansion would
become a necessity. No doubt China already is a big economy but in order to gain supremacy
Alibaba will have to expand further. Expansion abroad may be the biggest challenge. Ma
pledged that Alibaba would one day generate at least half its revenue from outside China.
Currently it has invested in Pakistan, India, Switzerland, and USA.
As the major problem for Alibaba, it has been the fear that using e-markets is so easy that a
company runs the risk of becoming too lazy and complacent though in the business reality you
have to meet in person for a more authentic deal. At first the Chinese were speculative about the
idea of e-commerce but through proper understanding of their culture they managed to gain a
high end of customers and suppliers though doing business in China is considered like a bird
cage where limitation are always set. This was made possible by induction of Alipay which is a
secure method of payment and develops a trustworthy reputation amongst customers. Alipay
helps Alibaba to come up against giants like the Amazon. The collaboration with the China Post
for a reliable delivery has enabled secure delivery to the customers and even compensation
policies for any loss or broken item. Alibaba also faced the problem of authentication between its
customers and suppliers. The customers merely judged and evaluated the product through a mare
picture. Alibaba can cater this problem by using the 3D image technology or providing a real
time 360 degree image for ensuring credibility for the products.
Alibaba then acquired Yahoo!, China which brought in more insight for Alibaba from their
system softwares. As from the case, Yahoo! hasn’t been as effective as Ma realized it to be but
still believes it will emerge as a beneficial acquisition. Further changes in the search engine and
broadening up the horizon of its database will eventually benefit the e-commerce business. This
is true in a way that each search of a product through keyword bidding can potentially lead to
Alibaba’s website which can potentially lead to a transaction. Additionally, China is a diverse
country in terms of infrastructure, geographic locations, demographics, and economical
differences which leads to different mind sets of the consumers; reconstructing the Yahoo!
system will allow people who are naïve to the internet to have a more human interaction with the
their searches.
The emergence of Taobao to snare away the market share from Ebay further lead to dominance
of the Chinese e-commerce business. Though Taobao is a C2C auction website, no conventional
advertising is done which nullified any revenue as it heavily relied on loans and venture capital.
This patience led Ebay to close down its main system in China. Now Taobao might have more
registered users than Ebay. This was a great move by Ma to empower the Chinese businesses to
create a monopoly of locals businesses which eventually is beneficial for the economy as well.
The exit of Ebay has made China work on further expansion to other countries.
Alibaba’s market-leading e-commerce site charges merchants listing fees where as it competitor
Tencent in China offers a decentralized platform that partners can use to sell their products
independently with no rental free. This might come as a backlash to Alibaba’s future orientation
in China and as well as in the global market but this hasn’t really bothered Alibaba to any extent
because they believe that with subscription charges comes more reliability to the business and
authentication of the member’s identity.
Furthermore, the future of to derive Alibaba’s revenue and ultimately its profits from add-on
features, Shipping, trade financing, on-site inspections, quality control services, and insurance
are few of the services that could earn money and provide supremacy to Alibaba. It can also
provide extra features to its members like advertising and promotions because many believe that
the website merely just provides depth and no services.