Why has Alibaba succeeded when earlier B2B marketplaces did not PDF

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1. Why has Alibaba succeeded when earlier B2B marketplaces did not? Alibaba is China’s and by some measures, the world’s biggest online commerce company. Its three main sites — Taobao, Tmall and Alibaba — have hundreds of millions of users, and host millions of merchants and businesses. Alibaba hand...

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1. Why has Alibaba succeeded when earlier B2B marketplaces did not? Alibaba is China’s and by some measures, the world’s biggest online commerce company. Its three main sites — Taobao, Tmall and Alibaba.com — have hundreds of millions of users, and host millions of merchants and businesses. Alibaba handles more business than any other ecommerce company. One can think of it as a mix of Amazon.com, eBay and Paypal. Customers use Alibaba to shop online, sell unwanted goods and make online payments. Alibaba has two retail sites: Taobao, which features thousands of nonbrand name products sold by smaller merchants; and Tmall, which offers brandname products sold by big merchants. Unlike Amazon, which buys goods from suppliers and sells them to customers, Alibaba has always acted as a middleman, connecting buyers and sellers and facilitating transactions between them. This Chinese B2B trading platform connects buyers in North America and Europe with suppliers from China. Alibaba follows an aggregation of supply model (similar to other early B2B players), helping to solve the pain of global sourcing

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2. Why are analysts speculating that Alibaba’s valuation may surpass Facebook? Alibaba’s triumph has been breath-taking. The firm’s portals control four-fifths of all e-commerce in China. Taobao is the country’s leading e-commerce website, and Tmall leads the B2C market. The firm’s sales exceeded $5.7 billion last year on Singles’ Day, a marketing event held annually on November 11th. Measured by the value of goods sold on its platforms, Alibaba is bigger than eBay and Amazon combined. But Facebook later rebounded its shares are up by half since flotation, despite the recent tech rout, and its market value stands at roughly $150 billion. That example suggests that the right way to judge Alibaba’s future is to look beyond the inevitable ructions of the coming weeks to its longer-term prospects.

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3. Why has Alibaba been particularly attractive to small and medium-sized (SME)

businesses?

a) Large number of users

Alibaba.com is the biggest online portal worldwide. It lists more than 8 million suppliers – an impressive number, which of course also attracts many buyers – recording 231 million customers in 2013. At Alibaba, both suppliers and customers become more and more international.

b) Top ranking on search engine.

An Alibaba account also enables SMEs to be found if potential customers do not search directly via online platforms but via search engines. Alibaba invests large amounts of money in search engine marketing (SEM), which results in high rankings for generic search terms such as lathes or screw-conveyor on the most important search engines (e.g. Google, Baidu, Yandex …). Consequently, buyers often end up on Alibaba when searching for B2B products – which is why SME should be present on the platform in order to generate global leads.

c) High lead quality Despite the enormous number of customers and suppliers, Alibaba does offer high quality and safety. The verification requirements for premium accounts (socalled gold supplier accounts) are extremely strict, hence securing a certain quality and seriousness of the B2B-suppliers. Verified accounts are explicitly displayed as

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such. Therefore, buyers are reassured that listed companies exist and that generated leads are of high quality.

d) International reach Alibaba.com does not only offer its services to English and Chinese speaking customers. The platform offers subpages in all major languages (i.a. German, Spanish, Russian, and Arabic). Therefore, registering on Alibaba ensures that B2B companies are quickly found all around the world. One registration is enough – Alibaba.com offers to directly translate entered information into all available languages.

e) Focus on SME and industrial companies Especially in the B2B market, buyers rather search for products and services than brands. Therefore, online-platforms und trade directories such as Alibaba.com provide an optimal start into international business since known and unknown brands are listed and found equally. Registering on Alibaba is a great starting point for SMEs with a restricted budget trying to compete with multinational corporations.

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