By Mirela Todorova
Overview of Alibaba Group
• Founded in 1998, based in
Hangzhou, China
• By 2010, over 50% of B2B ecommerce and 70% of online
shopping for China
• Connects millions of users in more
than 240 countries and regions
• Employs almost 20,000 people in
B2B sales, computer engineering,
customer service
• Private company with estimated
valuation $55 billion to $120
billion
Alibaba Group Company Portfolio
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Alibaba.com international B2B marketplace
Alibaba.com.cn Chinese, Japanese, Korean
Taobao.com Chinese largest online shopping
Alimama.com Chinese online marketing
Alisoft.com Chinese management software and
cloud computing services
• Alipay Chinese online payment services
• China Yahoo! strategic partnership with Yahoo!
Alibaba Group Timeline
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December 1998, Jack Ma and other 17 founders of Alibaba Group named Alibaba.com and
raised $25 million from SoftBank, Goldman Sachs, Fidelity and SOFTBANK
December 2002, Alibaba.com achieved profitability
May 2003, Taobao.com was founded as a consumer e-commerce platform
December 2004, Alipay.com became an independent business service
October 2005, Alibaba Group took over the operation of China Yahoo!
November, 2007, Alibaba.com successfully listed on the Hong Kong Stock Exchange.
April 2008, Taobao established Tmall.com (originally called Taobao Mall) B2C platform
September 2008, Alibaba Group R&D Institute was established
September 2007, Alisoft.com established with own sales team
May 2010, announced a plan to allocate 0.3% of its annual revenues to fund environmental
protection initiatives
June 2011, Alibaba Group reorganized Taobao into three separate companies: Taobao
Marketplace, Taobao Mall (Tmall.com) and eTao
July 2011, Alibaba Cloud Computing launched its first self-developed mobile operating
system, Aliyun OS over K-Touch Cloud Smartphone
January 2012, Taobao Mall changed its name to Tmall.com to sell brand-name products
Alibaba.com History
• 1998, over 40 million private small and medium-sized enterprises (SMEs
with 50 to 100 employees) in China needed a good communication
channel and info source to market, sell products, evaluate trading partners
• Jack Ma began as an English teacher in China, worked for the Chinese
government business deals, started online China Pages company similar to
Alibaba.com but was bought out by China Telecom
• 1999, Jack Ma started Alibaba.com to connect mainly small Chinese
manufacturers with retailers, trading companies, downstream
manufacturers
• Started as a free service to registered users
• By 2008, 1% of users paid for value-added international Gold Supplier and
China Trustpass membership programs
– Gold Supplier provided enhanced online storefronts, prioritized listings,
company profile authentication, real-time performance analysis
– China TrustPass provided similar services globally, and more payment services
• David Wei is CEO of Alibaba.com
Growth of Chinese B2B Market
Alibaba.com Revenue and Growth
• By 2008, operating profit increased by 48% to $172
million, total revenue to $432 million
• By end of 2008, alibaba.com (international) had 7.9
million users and 970,000 storefronts and
alibaba.com.cn (domestic) had 30.2 million users and
3.6 million storefronts—today over 40 million domestic
• Paying customers increased by 41% yearly to 432,031
in 2007
• Launched Alibaba.com in Korean and Japanese as well
• Revenue stream: value-added services and
commissions from financing, shipping and insurance
services ordered by users in bulk
Alibaba.com Business Model
• B2B e-commerce between suppliers and wholesale buyers
• Company profiles, online catalogues called storefronts with
listings of products and services
• Over 30 industry categories and 5,000 product categories
• Buyers can search using keywords, browse online industry
directory, or post listings to buy
• Active listings, instant messaging, email, discussion forums
and other community features
• Trust ratings for suppliers and buyers
• Free or fixed subscription fee
• Mission Statement: “To make it easy to do business
anywhere”
Value-added services
• Gold Supplier and TrustPass memberships
• Keyword bidding services: Ali-Advance used by Alibaba.com and
Zhi Tong Che used by Taobao.com
– Sellers can bid for keywords and preferential ad ranking on Chinese
search page
– “Pay for performance” contracts meant sellers paid only when
customers clicked on their ads
• Ali-loan program partners with Chinese banks and uses sales,
payments and collections data to offer loans to Alibaba.com's
paying customers:
– Credit loan: company-established credit score on Alibaba.com assists
businesses in borrowing
– Security loan: borrow (with a mortgage) to buy equipment
– Joint liability loan (group loan): Multiple small companies in one
supply chain borrow using their credit scores online and guarantee to
support each other
• Ali-Talk real-time communication service on Alibaba.com
Other Alibaba.com supporting
businesses
• 2005 purchased China Yahoo! (www.yahoo.com.cn) to offer search,
email, entertainment but Chinese search engine market share fell
from 21% to 6% by 2009 competition from Google and Baidu
• Alipay escrow service held customer payments until purchased
goods were delivered—built trust
– By 2008, had 50% of all online payments in China
– Competes with PayPal internationally
• 2006 started Alisoft.com to provide enterprise management
software, inventory management, financial management, and
Cloud Computing and mobile OS by 2011
• 2007 started Alimama Chinese advertising exchange
– Small and large ad publishers can offer their ad inventory and ad
agencies can book the ads
– Inventory of billions of ads
Competition
• Global Sources: Hong Kong-based
international B2B website
– Reaches 230 countries, but has less
total users
– Offers similar services as
Alibaba.com
– Has additional services such as
monthly trade magazine for
consumer products, other monthly
magazines and sourcing research
reports, trade-specific exhibitions in
China
• ChinaChemNet: vertical coverage of
chemical industry in China
• Other marketing service providers
and trading channels like search
engines and magazines
Alibaba.com goes Public
• Alibaba Group remained private but listed
19.25% of Alibaba.com and Alibaba.com.cn on
Hong Kong Stock Exchange in Nov. 2007
• IPO $1.7 billion and stock tripled in value on first
day, trading at 306 times projected 2007 earnings
• Benefits
– Publicity and recognition for B2B customers
– Attracted management talent
– Equity-based incentives for management
• CEO Jack Ma continued to focus on building a
Chinese brand rather than quarterly profits
Corporate Strategy: Decentralization
• To maximize flexibility, Alibaba Group subsidiaries have
independent technology teams—no Chief Technology
Officer
– Technology platform includes systems architecture and
development, data analysis, data storage, and application
development
• Bottom-Up process for annual budget, strategy and
operating plans:
– Every fall, subsidiary Presidents submitted plans to Group
corporate headquarters for review by Chief Strategy
Officer, CFO, Chief People Officer and CEO
– Presidents encouraged to do what’s best for their
subsidiaries and not to force BU synergy
Corporate Culture: Entrepreneurial
• “Company will remain a start-up no matter how
long it has been in existence”—Jack Ma
• Values
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Entrepreneurial and innovative spirit
Customer service
Transparency in processes, systems, decisions
Solid financial ground, ethics
Contribute to welfare of society
Rotate managerial talent
Harmonious and supportive internal environment
Alibaba.com Future
• Alibaba Group CEO Jack Ma plans to step
down in 2013
• Plans to expand through acquisitions,
investments, licensing and partnerships
– Expand user base and value-added services
– Widen geographic coverage
– Advance technology with user demand
– Cross-selling and marketing with other Alibaba
Group subsidiaries
Quiz Question 1
• Tmall.com is typically categorized as a
– A. B2B website
– B. C2C website
– C. B2C website
Answer 1
• Tmall.com is typically categorized as a
– A. B2B website
– B. C2C website
– C. B2C website
Quiz Question 2
• Which Alibaba.com supplier value-added
service provides authentication and enhanced
online storefronts, prioritized listings, and
real-time performance analysis?
– A. PassTrust
– B. Gold Supplier
– C. Alibaba Platinum
– D. Ali-Business
Answer 2
• Which Alibaba.com supplier value-added
service provides authentication and enhanced
online storefronts, prioritized listings, and
real-time performance analysis?
– A. PassTrust
– B. Gold Supplier
– C. Alibaba Platinum
– D. Ali-Business
Quiz Question 3
• Who is the CEO of Alibaba Group?
– A. David Wei
– B. Jack Ma
– C. Daniel Wong
– D. John Min
Answer 3
• Who is the CEO of Alibaba Group?
– A. David Wei
– B. Jack Ma
– C. Daniel Wong
– D. John Min
Quiz Question 4
• True or False?
– Both suppliers and buyers can post on
Alibaba.com for free
Answer 4
• True or False?
– Both suppliers and buyers can post on
Alibaba.com for free
References
• “Alibaba.com: A Smiling Community with A Dream.” 2005.
http://www.ft.com/intl/cms/c6aba388-74a6-11db-bc760000779e2340.pdf
• Farhoomand, Ali. “Alibaba.com” Asia Case Research Centre
University of Hong Kong. 2008.
• Wulf, Julie. “Alibaba Group.” Harvard Business School. April
2010. 9-710-436
• www.Alibaba.com