When you’re already big it can be hard to get bigger. That’s
why Alibaba is working hard 10 continue to expand its e-tailing empire.
In 1999, Jack Ma, inspired by a trip to the U.S. where he
first encountered the Internet, led a group of 17 friends to form
Alibaba.com. Initially, the website was a business-to-business
portal to bring together Chinese e,porters, manufacturers, and
entrepreneurs with overseas buyers. Today, the Alibaba Group,
ohen called the Chinese Amazon, is a leading online and mobile marketplace in retail and wholesale trade, cloud comput- ing, and other services. As of 2016, the group·s retail businesses
had more than 423 million active users, 12. 7 million annual orders in its marketplace, and 86.2 percent of the Chinese mobile
shopping market.
According 10 research by McKinsey Digital, only 19 percent of rural China is using online buying services. Due to
the constraints of lower incomes, dispersed populations, and
poor logistics, rural traditional retail options are limited, have
higher prices, and inferior product quality. These limitations
make for tremendous prospects for expansion of online sales.
To take advantage of this opportunity, Alibaba’s e-commerce
business, Taobao, has opened service centers in many rural
villages. There, residents can search for deals on products
like mobile phones, toothpaste, apparel, and more using
company-provided computers. To implement this strategy,
Alibaba has committed to investing over USD$1.5 billion
on logistics, hardware, and training in more than 100,000
villages.
Michael Evans, President of Alibaba, says “Globaf,zation is a
critical strategy for the growth of Alibaba Group today and well
into the future.• E-commerce accounts for less than 1 percent
of retail sales in Southeast Asia, compared with 6 percent in
Europe and 8 percent in China and the U.S., according to data
from consulting firm A.T. Kearney. Credit Suisse, a multinational
financial services company, found that as a share of total retail
sales, e-commerce may soon be larger in emerging markets than
in developed countries. They assert that nearly 1 billion online
shoppers will emerge in these markets in the next few years.
The company recently acquired a controlling stake in
Singapore e-commerce firm, the Lazada Group, which operates
e-commerce portals in other Asian countries including Indonesia,
Malaysia, the Philippines, SingaµOfe, Thailand, and Vietnam. The
portals are online shopping and selling destinations that offer
mobile and web access, multiple payment methods, customer
care, and free returns. Alibaba will be able 10 contribute its extensive infrastructure and advanced logistics abilities 10 Lazada.
The shared tools and knowledge are important because parts of
Southeast Asia do not have the necessa,y distribution netwooc.s
and infOfmation technology management.
Of course. there are still challenges for the Alibaba Group.
The compan~ home market of China is struggling with slowing development as the overall economy faces some challenges. Expansion means dealing with Southeast Asia’s weak
infrastructure and slower Internet speeds. Alibaba also faces
growing competition. Western competitors such as Amazon.
com and eBay.com are less of a threat that homegrown competitors. These include Tencent, primarily an entertainment
and social media company, that is getting into e-commerce;
JD.com, more like Amazon.com involving direct sales, holding
invento,y, and managing logistics and shipping; and Baidu,
China’s dominant Internet-search engine.that is very similar to
Google in both services and products.
You Make the Call
12-38. What is the decision facing Alibaba?
12-39. What factors are important in understanding this deci·
sion situation?
12-40. What are the alternatives?
12-41. What decision(s) do you recommend?
12-42. What are some ways to implement yourrecommendation?
write the references from the book that I will upload
no plagiarism
high quality
follow the instruction
