What Makes Alibaba So Interesting
Alibabaâs mission is to make it easy to do business everywhere. Being one of the leading e-commerce websites in the world, we have come to known, Jack Ma champions small businesses. Global wholesale is his âthingâ. Alibaba helps small businesses buy and sell. They do not buy and sell merchandise themselves and they also do not deliver products. They do not own warehouses or inventories, and are home to 120 million buyers every day. â Walmart has 245 million customers per week. This is the opportunity for a smaller Chinese manufacturer to sell globally. This is probably what is most interesting about the company.
There is an evident focus on business to business partnership and it seems to provide Alibabaâs customers with a network of access to various products and other manufacturers. It is the biggest marketplace in the world and represents 80% of e-commerce in China. Although Wal-Mart may be the largest company in the world with regards to its annual revenue, Alibaba is 3x larger than they are when it comes to foot traffic measured by the number of customers per week.
China is ruled by the Alibaba âmonopolyâ because they are the ones who created the necessary infrastructure for retail in the country. There arenât international corporations on every block in China like you would see in North America. The offline retail infrastructure is underdeveloped. There are a bunch of smaller businesses instead. We all know how difficult it can be for small businesses to make money, grow, and surpass the 5 year mark in business. The easiest and most inexpensive way to build infrastructure to improve commerce in China to help small businesses make money was through the internet, and thatâs what Jack Ma took advantage of. The internet facilitates globalization. Not to mention, Alibaba helps small businesses bypass the middleman locally - No sourcing has to take place, and we can safely eliminate a distributor/wholesaler. These businesses can then offer their products to other businesses around the world at really competitive prices. Itâs like an online shopping mall for manufacturers!
As a consumer, you can buy merchandise, but youâll have to buy it in bulk. Consumers would instead use AliExpress which has been up and running for just under a year now. It is a global retail market place version of TaoBao that was created for the shoppers that seek value and convenience in their purchases.
The second most interesting thing about Alibaba is probably Jack Ma himself. Not only the story behind Alibaba, TaoBao, TMall and the rest of the Alibaba companies, but the vision he encompasses for the future. It is almost as simple to shop online across the world, as it is to go into the store a few blocks away and pick up the dress you want to wear to the beach. Finding and partnering a manufacturer/supplier from China used to be so complicated. How did you pay? What if you werenât satisfied with the quality of the product? Or the quantity you received? With regards to payment, you had a letter of credit, but those were expensive and the process took forever! You had a representation from the bank as a buyer and a seller, but it again, the process was not timely. Because Jack Ma recognizes how easily accessible it is to shop online and receive the same product (as we all do), his vision is to have a maximum delivery time of 72 hours anywhere around the world. To boot, anywhere in China in 24 hours or less after purchase. By 2020 Jack Ma wants sales to hit $1 trillion USD. What he is especially proud of is creating 14 million direct and indirect jobs in China. He wants his company to last at least 102 years so that it spans across 3 centuries. The 1900âs since he started the company in 1999, the 2000âs and he wants it to last until at least the year 2101. The business model is fantastic for any developing country, where infrastructure is a challenge; This would easily fit in countries such as India, Africa and South America.
He recognized an opportunity that nobody else had well before 1999, and made it happen. Check out the video below to see his speech to The Economic Club of New York earlier this month.