Sunday, September 28, 2014

Alibaba , A Giant in Online Commerce

Alibaba is China’s largest e-commerce company, and by some measurements, it’s world’s largest company. With its recent successful IPO in the United States, the dominating IT company is facing a larger online commerce market in the world.

What’s Alibaba? It contains three parts: Taobao: China’s biggest shopping site; Tmall: specialise on online sales of branded goods and focuses on China’s fast-growing middle class; connect Chinese exporters with companies elsewhere in the world. Alibaba runs such a successful business and it mainly depends on the rapid growth of Internet with over 600 million Internet users in China.

For Alibaba, it provides free marketing by giving customers opportunities to easily share and express their individualization experiences, they have Taobao and Tmall for merchants to sell products and they pay Alibaba for advertisement to stand out among all the competitors. For customers, it’s totally free with hundreds of millions of choices while considering buying a single product.
It offers simple and fun online configurators to gather preferences. For instance, when customers need a bag, they can easily search the perfect product by identifying different colors, sizes, utility, texture etc. Meanwhile, the sellers are able to collect customers’ preference to adjust their product and prices.
Alibaba has a unique vendor rating system. After consumer gets their products, they can easily evaluate the quality of the product and rate for the quality of service. According to their impression, they usually rate stars on the store as well as the product itself. Their ratings are very influential since it is an important factor for other customers to decide on which product to buy. Customers are more likely to buy products from the stores with higher ratings and positive comments.
Alibaba has an effective paying system called Ali-pay; it protects buyers from paying and gives confidence to small merchants to do business. Ali-pay is a payment system that links to a person’s bank account. It has an escort and the buyers don’t get money until the buyer is satisfied. The merchants are responsible for getting their products delivered. Alibaba is trying to work on the delivery service and build a better logistic network.
However, it’s now facing a big challenge: mobile payment. As internet users are migrating to smartphone and Alibaba is threatened by its rival Tencent, as Wechat—the mobile messaging application—is spending billions of dollars to invest in online payment.

It seems Alibaba is in a dilemma, what’s the next step? Perhaps one of options is to cooperate with its rival Tencent to develop an online operation system that covers both Internet and smartphone users so that the two giant IT companies can share the online commerce market together and gain much more profit than before.  

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