1 Location Mas understanding for the local market When Alibaba first started

1 location mas understanding for the local market

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1 Location & Ma’s understanding for the local market When Alibaba first started, only 22M (1.7%) of China population were using the internet. Now, they have 750 M (50%) internet users spending 20 hours a week online, China is by far the largest Internet market in the world, 3 times the size of the U.S. market. China was important for Internet companies not only because of its large market size but also for its vast talent pool. Ma saw the opportunity in the Chinese market & the huge potential for growth, his familiarity with the local environment, customers, local language, culture, and dealings with the government, he as a local player had an edge over foreign counterparts in the Chinese Internet market. 2- Fast response to market conditions Alibaba was always ahead of competition by fast responding to market conditions & proposing effective solutions to boost operation. During challenging international “dotcom” boom period in 2000, Jack Ma with his effective and efficient strategy reorganized Alibaba’s operations, he closed his international operations and strengthened the Chinese market through adapting 3 B2C strategies (Back to China, Back to
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Central & Back to Coast). He then again expanded the Alibaba’s services and reengaged in the international expansion strategy by acquiring Yahoo! China in 2005 & in return Yahoo! Invested $1 Billion on acquiring 40% in Alibaba. Also, when growth in the Chinese e-commerce market was troubled due to the absence of the trust factor between buyers and sellers while trading online, buyers refused to send money to sellers before they had received the goods while sellers were unwilling to ship the goods until they had received payment. To counter this problem, Alibaba launched an online payment platform called “AliPay” payment solution that allowed customers to safely and quickly send and receive money online. Once a deal had been finalized, the buyer paid the money through AliPay. The money was held in an AliPay account and was sent to the seller only after the buyer informed AliPay about the receipt of the product. 3- Building a loyal customer base During the late 90s and early 2000s, the Internet had not yet become too popular in China and banks were not networked. Credit card usage was limited and providing logistics service in the country was difficult, to say the least. In this scenario, Alibaba thought it wisest to limit its business model to connecting buyers and suppliers. Suppliers were allowed to list their products on the website while buyers could post their requests on the bulletin boards. Deals were struck through e-mails or offline messages. The services were offered for free and no other value-added services were offered. Ma believed that Alibaba was still in its infancy stage and had to build a loyal customer base before it started charging for its services.
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  • Spring '12
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  • Yahoo!, Alibaba Group, Alibaba.com, Alibaba.com Corporation

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