Social cultural: In 2014, around 642 million populations in China were using Internet, which has kept the fast-growing increasing rate since 2000. (Internet live stats) What’s more, the trend of online shopping in China also develops quickly. In 2014, TAOBAO.com, which is one of Alibaba’s business-to-customer and customer-to-customer platforms, had over 500 million accounts. Everyday, more than 6 million fixed customers would use Taobao.com, 800 million transactions would take place, and 48K products would be transacted per minute. (CCIDNET) Owing to the wireless networking’s popularizing and the smartphone’s adoption soaring in China, the Internet using trend and online shopping trend can be estimated to keep growing in future years. Technological: In the1990s, the application of Internet started to be popularized in China, with which Jack Ma began his entrepreneurial path. He found the information asymmetry problem between business entities and customers, and then captured the application of Internet to build the e-commerce platform. Besides, following the latest technology trend, Alibaba ran a cloud platform called Apsara which offers a suite of cloud services from elastic computing, database storage to large-scale data processing services. (TechRepublic) In addition, to support its business-to-business, business-to-customer and customer-to-customer business, Alibaba cooperated with commercial banks to build the Alipay, the online checking platform. In 2013, Alibaba created its technology forum in 6
the aim to discovering the newest technology dynamic and presenting its technology achievements. In all, Alibaba insists on grasping the technology trends and constantly bringing innovations to its services. Porter’s five forces Barriers to New Entrants: Barrier to new entrants is medium to high due to the high returns of e-commerce business today. Many firms are trying to enter this industry and mimic the way that Alibaba is doing business. It seems very difficult to enter this market since Alibaba has already dominated Chinese market and had a large loyal customer bases. Nevertheless, geographic factors also limit the competition. For example, Amazon China only has 3% of market share. Advanced technologies of operating the e-commerce platform also increase economic of scale. However in global aspect, if Alibaba wants to expand to other countries, they have to be aware of emerging small e-commerce firms, like finechemical.com and Textilehome.come. Those are also B2B platforms, but have differentiated themselves by targeting more narrow segments. Currently, more firms have already entered this market successfully by using differentiation strategies. Bargaining Power of Buyers: If buyers have enough power, they can easily bargain a lower price from sellers. For this e-commerce industry, customers may have the opportunity to choose another platform and there is little to zero transition costs. However, In China, Alibaba is the biggest platform that offers cheap products, which can create a lot of transition costs for customers to change to another platform. Also, Chinese population is large in volume, 7
You've reached the end of your free preview.
Want to read all 21 pages?
- Summer '19
- Alibaba, Alibaba Group, Alibaba.com, Jack Ma