Matthew Landry

GBA 490-002
CWID: 11661090
Aliexpress Case Questions
1. Identify the strategically relevant factors in the macro-environment of the online
retailing industry. Which of the factors appear the most likely to have the greatest
effect on the online retailing industry? Do the collective forces appear conducive to
good industry profitability?
PESTEL
Political: Political stability is a crucial factor in this industry, especially when doing
online business from one country to another. Businesses in different countries have to

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deal with different tariffs/taxes. This is an obstacle that global online retailers are often

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having to face. With different laws and different tax/tariff policies, the political conditions

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are a big impact on the online retail industry.

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Economical: Economic roles do play a large role in the online retail industry with it being
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global and impacting many countries. Economies are constantly fluctuating. In a bad
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economic period, you could see sales numbers drop, and the opposite in good years.
Currently, the economic roles are favorable to this industry and e-commerce sales are
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growing, especially from mobile devices.

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Social: With internet shopping continuously increasing, the social factors are constantly
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growing too. The social acceptance has been constantly growing over the past few years
for shopping to be done online rather than only in brick-and-mortar stores. It has grown
important for stores to give customers quick access to order products online because of
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these social factors. As more people continue to shop online, it forces more stores to offer
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online options.
Technological: The rapid growth of technology and the use of it worldwide has had a
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large impact and has advanced this industry worldwide. People have the opportunity to
place orders with the use of smartphones in simple ways. The growth of smart devices is
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also shaping the industry. Amazon’s Alexa is just one example of this as you can tell it
what you need to order, and it can be placed. Competitors are adapting to these trends and
devices to keep up. The growth and development of technology has already impacted,
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and will continue to have a large impact, on the online retail industry.
Environmental: The factors that the environment brings to the industry mainly affect
delivery times. Storms and natural disasters can close roads and transportation routes to
deliver products to customers. Many companies offer quick delivery and are great at

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 fulfilling this promise, but the environmental factors can shift this and impact the industry
in this way.
Legal: Each country has different laws and views. One for example is the view of child
labor. Different countries allow different things than other countries and can have direct
impacts on the way businesses conduct business with one another. They also have to
abide by laws like counterfeit laws to ensure the product is real. There are many different
laws between countries that directly impact the industry.
The factor that has the greatest impact on the industry would be the technological factors.
Technology is what drives this industry and is causing stores to offer online options. As
technology continues to adapt, the industry will have to keep developing and continue to
make necessary changes. This factor impact customers directly and is becoming more and
more important. These collective forces are conducive to good industry profitability. Each
factor directly impacts the profitability of the company in this industry.

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2. What are the keys to success in the online retailing industry? Does Amazon or

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Aliexpress have an advantage?

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Some key success factors in this industry user-friendly technological processes, shipping
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costs and times, product selection, and customer service. For Aliexpress and Amazon,
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they have done a great job of implementing new internet capabilities and applications for
the technological processes. They both have easy to use and user-friendly applications
and their websites are easy to use as well. They are continuously growing to set
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themselves apart in this factor. Both companies (Amazon with a PRIME membership)
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offer free shipping, but Amazon sets themselves apart by offering two-day shipping. With
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Aliexpress being in a different country, they cannot offer these quick deliveries for their
products. Amazon has an advantage over Aliexpress due to their ability to offer two-day
shipping since people want their products to arrive quickly and do not want to wait
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multiple days to weeks for their products. Amazon also has 24-hour customer service
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representatives ready to talk through conflicts which helps them develop their advantage.
They have quick deliveries, wide selections, low prices and a great customer image
because of their reliability.
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3. Compare the business strategies of Amazon and Aliexpress. Does either company
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have a strategy that will likely lead to competitive advantage? Is the strategy of
either a winner?
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Aliexpress uses a broad low cost strategy. Aliexpress built the company around providing
great service to all their customers. They became the middleman and found a way to
connect buyers to sellers for products that they want. They allow merchants to do
business by themselves in the B2B market and have expanded to the C2C market. They

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 have an incredible product offering that is offered at a lower cost for the exact same
products that brick-and-mortar stores have. Amazon uses a broad differentiation strategy.
Amazon constantly strives to be innovative and remain ahead of the competition. They
offer a wide selection of products and differentiate themselves from competitors by
offering the option to have a PRIME membership which leads to two-day delivery
options. By doing this, Amazon is likely to have a strategy that leads to a competitive
advantage. Being able to differentiate themselves from Aliexpress and other competition
gives them a major advantage. Amazon has a winning strategy.
4. What does an analysis of Amazon and Alibaba’s most recent three year financial
data suggest about the relative competitiveness of the two companies? Which
appears to have the greatest “staying power” to engage in a long term competitive

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battle?

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When comparing the two companies’ financials, the large difference in spending is easy

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to see. Amazon has much higher revenues than Aliexpress, but their total spend is much
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higher as well. Amazon has a much higher total liabilities than Alibaba does. Amazon
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dominates North America and Alibaba dominates China as expected, but Amazon is
doing much better internationally than Alibaba and has performed better at accumulating
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revenue through web services. For example, in 2017 Amazon accumulated $54,297
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million internationally compared to Alibaba who accumulated $7,286 million in revenue.

Amazon has more staying power to engage in a long term battle because of the fact they
already dominate the international market. Alibaba will continue to dominate China, but
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Amazon has already established itself in North America and throughout the world. This
presence outweighs the fact that Alibaba has more cash on hand than Amazon due to their
lower costs.
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5. What strategic issues confront Amazon?

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Strategic issues that confront Amazon would be the threat of new entrants. Many large
companies, like Walmart for example, are begging to enter the online retail industry and
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will become major competitors. Large companies entering this industry and new threats
could cause issues for Amazon. Another issue would be continuing to expand. Alibaba
services Chine and Russia where Amazon does not market and have the opportunity to
expand. As Alibaba expands, they can infringe on Amazon’s advantages in these other

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 regions. Amazon ahs to be ready to expand to new areas as well as fight off competitors
in the international market to sustain their competitive advantage.
6. What recommendations would you make to Amazon to confront the dangers posed
by Aliexpress in the on-line retailing industry?
I would recommend Amazon to continue to expand their customer base throughout the
world and to reach as many groups of people as possible with two-day shipping. Being
able to offer this quick, two-day shipping worldwide will fight off the dangers posed by
Aliexpress and other players in this industry since it is hard to beat this offer. This gives
Amazon a competitive advantage in these markets since they have express shipping that
Aliexpress can’t offer. Amazon’s convenient offering beats Aliexpress where a customer
may have to wait up to 30 days to receive their product. Amazon continuing to expand

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internationally will fight off these dangers.

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