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E-retailers: Alibaba

How Alibaba provides value to customers

Alibaba provides value to consumers in several ways. The company dominates the

market and replaces the traditional shopping culture with online shopping which Chinese have

chosen to adopt the same with the rest of the world. The sets of values that are unique to the

Chinese market include that the company offers value by promoting patriotic relations through

its leader Ma who is considered visionary by helping producers grow by matching their products

with viable markets to take their goods. Additionally, the company uses the widely adopted

internet to make it possible for trade to occur thus the 80% of the Chinese population that

purchases goods through the company do not need to incur extra costs because they already love

technology and can access it. Alibaba also has some product differentiation to cater to the

customers’ varying needs. This is done through the adoption of other online sites such as

Taobao.com to cater for upcoming or small enterprises. Such a step was meant to ensure that

every seller is presented with an opportunity to grow and reach the customer (Kotler, and

Armstrong 538).

Factors that the Company had to develop to succeed

Alibaba is not the producer of the products that it sells which means that it had to put

several considerations in place. One is that there is little need to employ many people so that

profitability grows up whereby the company has 36000 employees who are not close to what its
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competitors such as Amazon have. Also, the company ensures that there is a variety of products

that the customers need so that there are suppliers to many products who use the site. By the use

of large brands such as Tmall, the company is assured of continuous revenue generation in all

seasons because Tmall can attract trusted brands. Still, the company ensures that it has nothing to

do with the setting of prices for the products which mean fewer risks and more profits because

there is no need to lower costs of commodities when income is low (Kotler, and Armstrong 538).

Alibaba’s business model

Alibaba’s business model is unique in the way it serves as a middleman bringing products

from different producers to the customers thus the B2C model contrary to its competitor’s

adoption of the B2B models (Kotler, and Armstrong 539). Alibaba’s goal is to grow small

businesses into big ones through the networks that it provides. Also, the company gains revenues

for advertising whereby companies pay to appear on the top of the search engines on Alibaba’s

website. Additionally, the company obtains more revenues from the fees that retailers pay to

operate on the sites which are sometimes given as deposits. Notably, Alibaba focuses more on

the sellers than the buyers by helping them to be better traders.

Whether Alibaba can succeed in countries outside China

Alibaba has slim chances of succeeding in other countries apart from China because other

countries have its competitors such as Amazon taking control. Additionally, Alibaba will have to

increase the number of employees to serve different markets outside the USA. Alibaba can also

only succeed in developing countries where internet penetration is not as high as the USA

because in such regions there might be little knowledge of the company’s competitors.

Therefore, Alibaba has to go to countries with a low percentage of internet penetration like was

the case in China where it has succeeded. It is also important to note that the company’s success
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is closely associated with Jack Ma’s personality and it might not be the case in all other countries

that the company seeks to expand (Kotler, and Armstrong 539).

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Works Cited

Kotler, Philip, and Gary Armstrong. "Direct, Online, Social media and mobile marketing."

Principles of Marketing, 17th ed., Pearson, 2008, pp. 538-539.