Chapter 17 Case Study
17-18 As a digital retailer, how does Alibaba provide value to Chinese consumers? What sets of values are unique to the Chinese market?
As a digital retailer, Alibaba has transformed the way they operate their business, setting them apart from the world of eBay and Amazon in the United States. Starting off in their home country, China does not have the traditional retail business that companies in the U.S can easily transition their e-commerce business too. The CEO of Alibaba Jack Ma states that “E-commerce in the U.S. is like a dessert. It’s just supplementary to your main business. In China, because the infrastructure of [traditional retail] commerce is [so] bad, e-commerce becomes the main course” (Alibaba Case Study). Alibaba uses this to its advantage by being the middle man for businesses to consumers. By allowing a range of small to big companies, consumers have various high-quality products to choose from.
Besides, Alibaba has utilized its resources by meeting various needs in their various online sites, from small business products to large business products to investment opportunities as well. These customs are outstanding to the Chinese market in the sense that Alibaba covers various options to cater to your needs. In contrast, companies like Amazon and eBay have very little in comparison. Another value to the Chinese market is the provision of lower prices for the commodities produced in China, translating to more population being served.
17-19 Given that Alibaba does not own or distribute any of the merchandise exchanged on its sites, describe what factors had to develop for the company to succeed.
Ma states that “Alibaba helps others to do e-commerce. We do not sell things.” Alibaba’s success lies in the fact that the companies who worked in joint with Alibaba may have had to work harmoniously. With how substantially significant Alibaba had become today, sellers may see this as one huge opportunity to work through Alibaba if they want to sell their products successfully. Thus, this brings in more sellers, helping Alibaba multiply while also assisting individual businesses to make profits. The mindset behind Alibaba’s success is that it does not control its distribution centers or the products that are being sold on it. Instead, it is a middle ground that allows all of this to happen based on the businesses that are on there.
For instance, Alibaba does not do the work for the sellers; it must have a process of “trust.” It needs to have good relationships in order to continue to grow. They need to make sure that their sellers need to provide high-quality products; consumers will always come. A significant factor is also the CEO. The CEO is providing a way for sellers to get into the e-commerce business. Above all, it has a good location considering geographic-wise, which is also surrounded by other Asian countries. Actual physical software needed software to develop and make it easy for people to purchase things on the market.
17-20 Analyze Alibaba’s business model relative to all the different forms of digital and online marketing covered in this chapter.
The business model of Alibaba differs much from leading e-commerce businesses such as Amazon and eBay. While Amazon is a house under one entire roof, Alibaba is separated into three businesses: Alibaba, Taobao, and Tmall. These three businesses help to connect numerous types of consumers and sellers. Alibaba is ultimately a business-to-business website that allows for manufacturers from around the world to do business with customers. On the other hand, Taobao is a business-to-consumer operation that enables small businesses to open their stores on the internet. Unlike eBay, sellers of Taobao “pay only for the advertised promotion.” Tmall is much more similar to Amazon, which pairs customers with big named corporations, including global corporations such as “Nike, P&G, Apple, and even retailers like Costco” (Alibaba Case Study). For instance, all of these sites cater to its business model of catering to the needs and not the product because the product is not Alibaba’s worry.
17-21 Can Alibaba succeed in countries outside of China? Why or why not?
When one considers the large-scale U.S. e-commerce brands such as Amazon dominating the U.S. market with affordable prices on top of Prime benefits and fast shipping, I feel that Alibaba and its divisions may have a hard time breaking its way in and making a name for themselves outside of China. I would think that part of the reason why Alibaba is so successful and popular amongst China has to do with Jack Ma himself. The case study states that he is loved by the people of China because of the prideful fact that this man was a “local underdog” that became a “dominant giant with revenues bigger than Amazon, Facebook, Google, and Apple combined.” So, the fact that a Chinese man who is out scaling U.S. top names may suggest why China is exceptionally supportive of Ma, equating to the success it has brought Alibaba. For Alibaba to come to U.S. markets would mean that it would have to offer the kind of standard Amazon Prime provides to its customers. Many people pay for the benefits of Amazon Prime because of the free 2-day and sometimes even 1-day shipping, on top of low, competitive prices. Alibaba helps other businesses other than themselves to do e-commerce, so it would be challenging to see how it would be for individual companies to compete in terms of fast shipping to countries outside of China.
Works Cited
Armstrong G., Kotler P. (2016). Alibaba: The World’s Largest E-tailer Is Not Amazon. Marketing An Introduction (pp. 573-575). United States: Pearson.