Today Alibaba is a family of ecommerce businesses which The Wall Street Journal

Today alibaba is a family of ecommerce businesses

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Today, Alibaba is a family of ecommerce businesses, which The Wall Street Journal described as “comparable to eBay, Amazon, and PayPal all rolled into one, with a stake in Twitter-like Weibo thrown in to boot.”1 Alibaba’s main trading platforms are Taobao and Tmall. Just like Ali Baba in the folk tale, Alibaba had humble beginnings. In 1999, a former English teacher named Jack Ma started the company with a team of 18 in his apartment in Hangzhou, a city some 100 miles southwest of Shanghai. At this time, China’s explosive growth of Internet users was just beginning (see Exhibit MC 27.1). By 2015, China’s Internet users had grown to 675 million. Alibaba rode this wave of exponential growth to success. In comparison, the United States has some 260 million Internet users (less than 40 percent of Chinese Internet users). The number of Internet users in China seems to be reaching a plateau in recent years. Nonetheless, given the low percentage of online transactions in comparison to China’s total commerce, huge growth in per capita spending online is expected in the future. Initially, Alibaba’s website was a business-to-business (B2B) platform where China’s small and medium-sized businesses could showcase their products to buyers around the world. Alibaba was not the first company to explore opportunities in introducing China’s manufacturing to global demand, but it was the first to do so online. In its first year of operation, Alibaba signed up new members at a rate of 1,200 per day. By 2002, the young startup was already profitable. By 2012, Alibaba facilitated transactions in nearly every country around the world. Alibaba vs. eBay At the same time Alibaba was started, EachNet, another Chinese Internet venture, was launched in Shanghai. EachNet was founded by two Harvard MBAs who wanted to create a Chinese eBay, an auction site for locals to sell and bid for goods. By 2003, EachNet had 2 million users and 85 percent market share in China’s consumer-to-consumer (C2C) transactions. At the time, eBay was actively looking to expand in China and eventually acquired EachNet as its China operation for $180 million in 2003. Fearing eBay would lure small businesses away, Alibaba launched a competing C2C platform Taobao (meaning “digging treasure” in Chinese) as a defensive strategy. Unlike EachNet, which charged listing and transaction fees from sellers, Taobao was free for sellers. But Taobao’s free services did not erode EachNet’s loyal customer base. EachNet’s dominant market position meant more products and more opportunities for both buyers and sellers to trade. Although EachNet was competing head-to-head with Taobao on advertising campaigns, eBay made a decision to terminate EachNet’s homegrown
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technology platform and move all EachNet users to eBay’s U.S. platform in 2004. At eBay, the internal term for this was “migration.” The intent was to create one global trading platform that would allow eBay users to trade with each other, no matter where they located.
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  • Spring '09
  • jhon
  • Yahoo!, Alibaba, Alibaba Group, taobao

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