As everybody knows, Alibaba is a world-famous brand of global B2B e-commerce. It is one of the leading and the most active online markets for trade and a community for merchants, which until now has integrated B2B and C2C search engines and portals and is helping customers and partners all around the world make it in the business. So now, let’s find out the unique business strategy behind this huge empire.
Development history of Alibaba
In June, 1999, together with 18 partners, Jack Ma founded Alibaba in a small apartment in Hangzhou, and in October the same year, Alibaba gained the first venture capital of $5 million led by the Fidelity Investment.
In October 2000, Alibaba launched the Chinese Suppliers, which provided the e-commerce service for middle and medium-sized enterprises. In August 2001, Alibaba identified the mission ‘Make it easy to do business everywhere’, and set up a framework of core values. For international buyers, Alibaba offered the International TrustPass service, which was launched in March 2003.
In May 2003, Taobao was born, and on the 20th day after its birth, the registered users on the platform hit 10,000. In October, Alipay was released, and with this useful payment platform, Alibaba has achieved a daily revenue of 1 million.
In January 2004, the total turnover of Taobao reached ¥34 million, with daily page views of 3 million, number of items 800,000, and members more than 230,000. In June of the same year Taobao launched Alitalk, an instant messaging tool for buyers and sellers. In the same month, the first Global Netrepreneur Conference was held, where the Top 10 Chinese Online Merchants were selected, which indicated the coming of an online merchant era. In September 2004, Ali College came into being and in December 2004, Alipay was separated from Taobao and started to operate independently.
In February 2005, Alipay was upgraded, and rolled out a new system - Full Settlement. By May, Taobao had had more than 7 million items displayed on the platform, which exceeded Yahoo, and became the biggest online shopping platform in Asia. In August of the same year, Alibaba Group incorporated Yahoo China and, after the successful localisation, Yahoo China became the top search engine that provided the best life experience for billions of Chinese users.
In May 2006, Taobao Mall was set up, making the B2C business available and, the following October, Alibaba Group invested in Koubei (a platform that gathers local life information and services). In January, 2007, Ali Software was established in Shanghai, which meant Alibaba had entered the field of commerce software. In November 2007, Alibaba went public in Hong Kong.
In May, 2008, together with Softbank, Alibaba founded a joint company to expand the Japanese market. By August 2008, the registered users had risen to 100 million, daily trade volume to more than 450 million and daily transactions over 2 million. The online retail culture that Taobao represented was undoubtedly becoming mainstream.
“There is a history of the Chinese Internet; there is no history of global e-commerce, but online merchants are creating one,” Jack Ma said.
Some people thought that Jack Ma might turn to other areas after building a fortune from Alibaba, but he responded that he had never thought about quitting the e-commerce field. “It would be irresponsible and I would feel guilty to give up e-commerce and internet now, especially as we have so many talents and experience that can make contributions to the development of middle and medium-sized enterprises in China”. Jack Ma had a clear vision of Alibaba’s future as well as the coming e-commerce trends. He paid close attention to the changes of e-commerce in America and Japan, and drew lessons from the development mode and speed of his rivals, eBay and Amazon. He expressed a negative view on the Amazon mode of self purchasing and selling and regarded that kind of e-commerce out of fashion.
The widely held opinion that the internet in China just follows the ‘American way’ definitely does not apply to Jack Ma and Alibaba. Starting from B2B to Taobao (C2C), and finally to Alipay, and now even involving software, banking and logistics, Alibaba was talking every step based on changes in the market and in the environment. It was learning whilst growing. In the next few years, according to Jack Ma, Alibaba will be investing RMB 10 billion to build a complete e-commerce chain.
Times waits for no one. Jack Ma clearly knows this, emphasizing that had he not taken the opportunity to build an e-commerce chain, it would be hard for Alibaba to face intense competition in the future. In his opinion, in the next 5 years the surge of e-commerce will be inevitable, and it is important to create a sustainable and harmonious system of e-commerce to cope with that situation. He required the management staffs of Alibaba to refer to Mengniu’s experience of helping dairy farmers to get rich. (Mengniu is one of the biggest manufacturing and distribution companies of dairy products and ice cream in China) “That is the same. If all the online merchants in Alibaba become millionaires, it is impossible not for us to make money.” Meanwhile, Jack Ma also voiced his concern that the predominant market shares of Alibaba, Taobao and Alipay would be bad for the balanced development of e-commerce in China. He believes that the prosperity of e-commerce should be supported by more than one enterprise. If only one is left after the competition, it will lose direction in the end.
“That’s why I hope to see more online merchants doing business on other platforms,” Jack Ma said. He was excited about the future of e-commerce in China, and expressed his positive view that the next 5 to 10 years would be the most rapid growth period for e-commerce. He said online merchants would be the group to create tomorrow’s internet. Jack Ma even pictured his vision of gathering all the online merchants around the world and offering them a place for them to exchange and communicate.
Four keys for success
“There are many people who are smarter and more diligent than us, but why do we earn a fortune while others don’t? An importance reason is persistence.”
Jack Ma said he believed in e-commerce’s bright future, from the very beginning. “Of course, I didn’t anticipate such a scale, but I insisted that it would develop, and have been sticking to it.”
To succeed in something, in Jack Ma’s opinion, you should at least possess the following four factors: first, firm faith; second, persistence; third, learning, and fourth, doing the rights things in the right ways. As for the first key word, Jack Ma gave a sincere suggestion to young people: you should first have one thing that you absolutely don’t doubt about and then you will find it more and more interesting to do it. Learning ability is important as well. “Some people asked me how to be a CEO, I told them one will not be trained to be a CEO, but will grow to be a CEO through learning.” A leader should embrace an open heart and a unique insight which can only be acquired from a broadened horizon.
“Moreover, you need a right direction.”In the wrong direction, the better you do, the sooner you will fail.” Jack Ma said he felt fortunate that Alibaba was on the right way, because e-commerce had at least 40 years for development in the future.
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