International Business Alibaba.com case study
I. Case Background
Alibaba.com is the flagship company of Alibaba Group, is the world’s largest
online business-to-business trading platform for small-and-medium size
Founded in 1999 by Jacky Ma in Hangzhou at eastern China, Alibaba.com has
three major marketplaces. The company’s English language international
marketplace Alibaba international (www.alibaba.com) serves to bring
together importers and exporters from more than 240 countries and regions.
The China marketplace Alibaba China (www.1688.com) is developed for
domestic business-to-business trade in China. And Taobao (which means
“digging treasure”) is China's most popular business-to-consumer and
consumer-to-consumer trading site with more than 20 million registered users.
In addition, Alibaba.com offers a transaction-based wholesale platform,
AliExpress (www.aliexpress.com), which allows smaller buyers to buy small
quantities of goods at wholesale prices.
And Alibaba.com has achieved award after award in recognition of its
achievement and impact on e-commerce, including “Best of the Web” by
Forbes Magazine for seven consecutive years, the most popular B2B website
by Far Eastern Economic Review, and other awards, including China Excellent
Business Website and China Best Commerce Website. Alibaba.com is
frequently quoted as one of the top five websites in the world along with Yahoo,
Amazon, eBay and AOL, by domestic and international media.
Business model of Alibaba.com
It is to help sellers meet buyers. More specifically, it provides an Internet based
business-to-business (B2B) platform where sellers (suppliers/manufactures)
can meet buyers (outsourcers /wholesalers) on a global scale.
To Last 102 years
To be one of the world’s top 10 internet sites
To be an essential partner for all business people
To make doing business easy
II. Statement of the Problem
In e-commerce industry, the credibility and reliability is very important for
importers and exporters, the problem of Alibaba case is who has the
responsibility to verify the credibility and reliability of both users and how does
the company reduces or avoids the fraud during the dealing.
i. Everyone in Alibaba shoppers can enjoy the "fake a penalty a", "return
the difference" service, to protect your safety, low-cost shopping.
ii. If you think that buying fake goods, and can provide the relevant national
quality inspection agency supporting documents, after confirmation, the
full return of the amount of goods at the same time, and then return the
form to vouchers doubled the amount of goods.
IV. Recommended Solution
Since the importers and exporters are complete strangers, Alibaba.com as the
owner for the platform, it has responsibility for protecting every user and
verifying the credibility and reliability of the importer and exporters. For solve
the problem as following suggestions:
Implementing stricter authentication and verification procedures; when the
importer and exporter enter in the platform and starting the business, they
need to subject the document authentication and verification, and Alibaba
need to review the user by semi-annual.
Set a section as safety & security center to addressing the fraud; the
importer has the rights to report the fraud, and the section should be strictly
investigation and implementation the fraud.
V. Answers to the case questions (if there are any)
1. List separate columns, the benefits and costs using sites like Alibaba’s to
trade internationally. What does your analysis say to companies like
Grieve (in our opening case) as they think about their export strategy?
The effective promotion engines
You or products will be promoted very quick by Ali's engine. No matter
that you are 'Not so good' in IT, what you do are only give your data and
pictures, then the rest will be organized and managed by Alibaba.
Instantly you will have your website and what more? You and your
products will be automatically be in the Top World Class SE(Search
Engines) and others search tools links that you even never realize it the
Ali's system will do that for you as like Robo engine. The effectiveness of
it are tremendous that beyond your estimation.
Excellent features and Simple operating tools in Alibaba site
Web site, web-mail, Search engine, promo and link engines, IM Ali talks
or Trade Manager, e-shop, Ali Pay, Feeds/alert RSS, Forum and live
help, News and many others that you could find it all as single site only in
Alibaba.com. It is as like a combination of 3 site : Yahoo + Google +
Learning facility and developing your i-biz knowledge.
Become Aleys, it would helps and assisting newbies/beginners in:
learning and improving the knowledge of global trade on-line system
internet business. In Alibaba's forum-community you will find many
articles and postings that are really valuable and good to read and learn
as your resources channel.you can Ask and get info from the Experts to
find answer and free advises. They are Masters in their each
experience/skill. If you are active and diligent in it, with in no longer time
you will know more about i-trade or global trade on-line, from basic of
trades, safe trade, products and biz-cultures.
Resolved interconnectivity problems
Enhanced security, reliability, and content delivery speed
Low cost Listings are free
Access to many suppliers/buyers Searches are free
Quick transaction time Personalized Web pages cost additional
More transparency in transaction Certification costs some
Lower risk of fraud
Easy to make contacts with SMEs
Seamless user experience Reduced server load and energy
consumption, meeting green IT objectives
It reduces costs of your advertising and marketing expense and
some overhead costs.
For both buyer and seller, they will pay certain amount of fee as
disclosed in Alibaba .com Transaction certain amount of money.
There is some historic evidence that the promotion of drop –
shipping being used by the scam artists.
Since you can’t be 100 % certain that your supplier has sufficient
stock to fulfill your customer order, there;s a likelihood of back
ordering taking place, which , obviously, could affect shipment
and expectation and therefore, you’re online reputation will be
More prone to fraudulent actions.
Grieve Company they are facing challenges below:
Because it takes more time to develop extra markets, and the pay
back periods are longer, the up-front costs for developing new
promotional materials, allocating personnel to travel and other
administrative costs associated to market a product can strain the
meager financial resources of SME.
When exporting, companies may need to modify their products to
meet foreign country safety and security codes, and other import
restrictions. At a minimum, modification is often necessary to
satisfy the importing country's labeling or packaging
Collections of payments using the available methods
(open-account, prepayment, consignment, documentary
collection and letter of credit) are not only more time-consuming
than for domestic sales, but also more complicated. Thus,
companies must carefully weigh the financial risk involved in
doing international transactions.
Export licenses and documentation
Though the trend is toward less export licensing requirements,
the facts that some companies have to obtain an export license to
export their goods make them less competitive. In many
instances, the documentation required to export is more involved
than for domestic sales.
Cultural Diversification / Market information
Finding information on foreign markets is unquestionably more
difficult and time-consuming than finding information and
analyzing domestic markets. In less developed countries, for
example, reliable information on business practices, market
characteristics and cultural barriers may be unavailable or very
limited. Small and Medium Enterprises must realize that entering
an export business requires careful planning, some capital,
market know-how, a quality product, competitive pricing,
management commitment and realizing the challenges and
opportunities of foreign markets. While there are no hard-and-fast
rules that can help companies make decision to export or not and
to become successful, understanding the advantages and
challenges of exporting can help a smooth entry into new
markets, keep pace with competition and eventually realize profit
2. Is it reasonable to speculate that eventually most trade between
small-and-medium sized firms might take place in the context of sites
like Alibaba.com? If so, does the influence your inclination to consider
importing and exporting?
The challenging opportunities and new avenues cropping in the
corporate arena demands the role of a common mediator to act as a
bridge between buyers and sellers, importers and exporters and the like.
This service facilitates all in the business world to come to a common
platform, thus turning this big world into a tiny global village. Industries of
today have to invest in advertising especially online that helps to raise
the visibility of companies to prospective customers and on the market
where most of the competitors are listed. Therefore yes, it is reasonable
to speculate that eventually most trade between SMEs might take place
in the context of sites like Alibaba.com. The demand in using this kind of
sties is very promising.
3. Visit www.alibaba.com, www.trade-india.com, www.europages.com,
Compare and contrast this websites.
The three websites catered different markets, Alibaba has a Chinese
emphasis and focus, while Trade-India is of course directed to India and
Europages to Europe. Of the three, Alibaba has the broadest appeal,
but all are very useful. Trade-India gives more direct access to product
catalogs for some companies, but does not have the certification and
authentication features of Alibaba. They can also give immediate in
formations how long the members are. Also, the Alibaba contact
templates are much more user friendly than both Trade-India and
Europages. Europages is available in many different languages, while
the others are more limited and are mostly in English.
4. Visit www.alibaba.com, go to “advanced search”, and enter the product
that you seek in the relevant search. Select the required criteria and click
on “Search”. Review the list of companies that qualify and find the
suitable one. Analyze this process for ease, usefulness and potential
The process is very similar with the local version in the Philippines
Sulit.com wherein it has a very user friendly access and buttons. Once
typed or searched the product list of possible options will be displayed.
For example you are searching for laptop the search engine will be
suggesting if you need laptop i7, if its 16 gb, dell laptop etc. The process
itself is very easy and I think it has a potential value. It would take only
seconds for the Alibaba .com to search for the product that you would
want to see. There is also a compare button wherein you can compare
prices among the suppliers. There is also a supplier details and some
relevant information in order for you to investigate if the supplier is really
a valid entity.The method of contact is made very easy by the use of
templates and drop-down menus that help to standardize requests. If
the suppliers will respond to these requests in a timely manner, the
process has huge potential value.
5. How do transparent do sites like Alibaba.com make the import-export
transaction? Would you still worry about fraud?
“These sights increase transparency and reduce the risk of fraud.
Alibaba allows suppliers to post information about their companies,
including video tours of their facilities. In addition, Alibaba has
developed the TrustPass designation. In order to obtain this
designation, companies must pass an authentication and verification
test from a third-party credit agency. Also available is the “Gold
Supplier” designation, which also requires third party verification of
trustworthiness. These mechanisms greatly reduce the risk of fraud,
but do not eliminate it entirely. Mechanisms such as letters of credit
should still be used to safeguard transactions from commercial risk.”.
The companies reason for export is mainly because to increase revenue;
use of excess capacity and to diversity the markets. Companies that new
to exporting, needs to analyze their export strategies that includes
analysis of the company’s resources as well as its export potential.
Exporters must have identified the challenges prior entering into
exporting business. Internet is a good source of information nowadays.
Internet marketing is a new form of direct exporting that is allowing many
SMEs to access export market. For the companies that will be using like
Alibaba.com or the same sites, they should be vigilant.