Alibaba Case Study
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The case “Alibaba: Competing in China And Beyond” shows that how Alibaba was started in China and focus on their strategies that Alibaba used to compete with other competitors for more than 10 years.
It is true that the internet is essential thing in our lives in these days. Alibaba is known by one of the most successful e-commerce company in B2B, B2C and C2C businesses in China. Alibaba achieved great success in those areas based on first-mover advantage that makes it very hard for competitors to chip away at their lead in the e-commerce market. In the essay I would like to discuss how Alibaba overcome dotcom bubble crash and how they compete in the dynamic internet market.
When the dotcom bubble crashed in March 2000, lots of dotcom and e-commerce companies end up with bankruptcy. To overcome those problems that Alibaba confronted Alibaba merged with FreeMarket Inc which is a leading B2B in June 2004. But Alibaba was able to fight the dotcom crash since its revenues was not only from internet advertising.
Alibaba renewed its strategies by September 2000. Ordinarily, Alibaba adopted decentralization strateries but to deal with dotcom crash, Alibaba adopted three new B2C strategies. The new strategys keyword was “centralization”. Hence, Alibaba decide to focus on Chinese market rather than global markets so they can focus on their business in China and move their headquarters to Hangzhou. Also, Alibaba concentrated on its business in the coastal areas, where the richest people are live there.
According to the case, Alibaba was lunched at a time when the Chinese internet industry was in its infancy. This means that Alibaba successfully achieved first movers advantages and despite of entering of many new competitors in the Chinese market, Alibaba decided to not to charge any transaction fees to customers. As a result, despite several attempts made by Alibabas competitors, Alibaba dominated in that market. Alibaba was the market leader in the Chinese B2B marketwith a market share of 69.04 percent in 2007.
Because of Alibabas great success in the Chinese e-commerce market this attracts several foreign competitors to China such as e-bay and etc. e-bay also achieved great success and this gives great treat to Alibaba. Therefore, in May 2003, Ma launched Taobao which aimed to create an online trading platform for both B2C and C2c models. Likewise Alibaba, Taobao allow users to free listings on its website. E-bay charged listing fees but Taoboa did not charged any listing fee. To win this competition in the Chinese market, Alibaba aggressively invested $12m for e-commerce business and also launched “Alipay” to solve the trust factor problem in the market.
Alibaba also adopted aggressive promotional strategy for Taobao in order to compete well with eBay and Taobaos easy to use features such as e-mail, chat facilities and call system on the website attracted