Team 7

Date: May 5, 2015 Slide # 1 Team7: Alibaba.com Marketplace Strategy

 Vision
We aim to be pioneers in the revolution of global
trade. We envision that our unique team will
build the future infrastructure of commerce,
which will serve our clients in parts of three
different centuries.

Date: May 5, 2015 Slide # 2 Team7: Alibaba.com Marketplace Strategy

 Mission
Alibaba’s Mission is to make it easy to do
commerce anywhere:

We operate leading online and mobile marketplaces

in retail and wholesale trade. We provide
technology, logistics, payment platforms and
fulfilment to enable consumers and merchants to
conduct commerce in the most convenient and
reliable way possible.

Date: May 5, 2015 Slide # 3 Team7: Alibaba.com Marketplace Strategy

 Strategy
Connect suppliers and buyers globally to become
the worlds largest online marketplace in terms
of turnover in the next five years. Through an
innovative, integrated and reliable platform we
will create consumer trust.

Date: May 5, 2015 Slide # 4 Team7: Alibaba.com Marketplace Strategy

 Core Values

Date: May 5, 2015 Slide # 5 Team7: Alibaba.com Marketplace Strategy

 Superior Performance Cycle
Resources
• Network Rethink, Reinvest, Hone, Upgrade
• Products
• Scope/Costs

Core Firm Activities Competetive Superior Firm

Competencies • Marketing Advantage Performance
• Culture • Supliers & • Network Size • International
• Deliver on customers • Econ of Scale Presence
Promises • Technology • Econ of • Largest
• R&D Scope e-marketplace

Capabilities
• Easy Pay
• Easy Delivery Rethink, Reinvest, Hone, Upgrade
• Low Price
 SWOT Analysis
STRENGTHS:
• Leading position as the largest internet
market
• Brand popularity & investor trust
increasing internationally
• Good relations with Chinese Government
• Expanding network orchestrator –
increases customer traffic and value
• Connected with own payment system
(ALIPAY)
OPPORTUNITIES:
• Government Support / Regulations
• Growing internet penetration
• Increasing delivery efficiency
• SMEs moving away from own web shops
towards online marketplaces
• Strong economic & Industrial background
Date: May 5, 2015 Slide # 7 Team7: Alibaba.com Marketplace Strategy
WEAKNESSES:
• Easy to imitate business model
• Counterfeits
• Influenced by Chinese Government
• Chinese culture is not innovative enough
• Disorderly business platform
• Slow delivery time
THREATS:
• Government Regulations / Nationalization
• E-commerce competition
• Possible M&A of other players
• Global Economic Crisis
• Growth of M-commerce
• Disruptive new Technology (e.g.: A.I.)
• Lawsuits from brand holders
 PESTEL: CN e-Commerce
POLITICAL
• Strong Relationship with Government
• Pros – access and strength in CN
• Cons – Limits to other countries
LEGAL ECONOMIC
• Chinese vs. US • Growth Rate
government INDUSTRY • Levels of employment
• IP rights protections • Interest Rates
• IP taxes • Inflation
• Privacy
STRATEGIC GROUP • Currency exchange rate
• Consumer rights

ECOLOGICAL SOCIAL/CULTURAL
• Low Impact • Demographics
• Education
TECHNOLOGICAL • Immigration
• Online payment • Emigration
• 3D printing
• Internet penetration
 Porter’s Five Forces
- Many small suppliers
Power of Suppliers - Margin matters
(LOW) - Need many customers

Rivalry
(HIGH)
Threat of Substitute - Logistics Threat of New Entry
(HIGH) - Trust (LOW)
- Offline Retail - Price - Capital Facilities
- Disruptive technologies - Government
- Social Commerce - Scale / Volume
- M-Commerce
- Many buyers
Power of Buyers - Price matters
(HIGH) - Commission from seller

Date: May 5, 2015 Slide # 9 Team7: Alibaba.com Marketplace Strategy

 Product Offering Evalua on (0—5)

00
01
02
03
04
05

Offline Infrastructure (Shops,

Warehouses)

Product Descrip on / Quality

Customer Support & Other Services

Innova ve Marke ng / Promo ons

Loyalty Program / Reten on Rate

Convenience / Checkout Process

Fast & Reliable Delivery

Compe ng Factors
Brandawareness

Personaliza on / Big Data Analy cs

Price (Lowest – 5, Highest – 1)

Assortment / Quan ty of
Products&Sellers
ERRC Strategy Canvas

Alibaba
Chinese

(Amazon,…)
(Tmall, JD…)

Online Malls
Online Malls
Offline Malls

Interna onal
(Raffle City,…)
 Strategy Map
International

Ebay Amazon

Groupon

1688

Alibaba
Taobao
Domestic

Aliexpress
Made in
CN

C2C B2C B2B

 VRIO MODEL
Resource: Database of Sellers & Buyers
TEMPORARY
COMPETITIVE
ADVANTAGE

YES YES YES NO

• Well • Unique • Brand • Ownership

recognized Database • Relationships • Counterfeits
platform • Data • Doesn’t control
• Scope of affiliated
business businesses
 AFI Model: 3D Printers

ANALYSIS FORMULATION
Future Scenario: Strategic Plan:
Emerging of 3D printer at home • System to trade IP
• Build a Bank
Feedback loop: New Vision:
Monitoring • Become Global leader
Performance in 3D/IP trading

IMPLEMENTATION Strategic Option:

• Install innovative system • Highlight 3D printed
• Increase Marketing (online, newsletter) Activate products
• Grow finance services New Plan • Analyze non-3D market
If necessary • Create new AFI
Discard Dominant Plan
• Push Finance Services
If necessary

Date: May 5, 2015 Slide # 13 Team7: Alibaba.com Marketplace Strategy

AFI Model: M&A Amazon & JD.com

ANALYSIS FORMULATION
Future Scenario: - International supplier
Amazon & JD.com M&A relationships
- Sustain relationships
Feedback loop: in China
Monitoring - Compete on cost level
Performance - Improve delivery system

IMPLEMENTATION Strategic Option:

• Strategic international partnerships • M&A with eBay
• Open foreign headquarters Activate • Create new AFI
and sales offices abroad New Plan • Push Finance Services
If necessary • Vertical Integration
Discard Dominant Plan
If necessary

Date: May 5, 2015 Slide # 14 Team7: Alibaba.com Marketplace Strategy

 Recommendations
• Strategic alliances for consumer trust
• Highlight Vision, Mission, and Strategy
• Based on strategy map – clear positioning
• Take control over ecosystem
• Improve delivery speed

• Overall Alibaba is doing well and only minor

adjustments needed

Date: May 5, 2015 Slide # 15 Team7: Alibaba.com Marketplace Strategy

 Q&A
Alexander Kudasov akudasov2015@student.hult.edu
Chesterphil Tangga-An ctangga-an2015@student.hult.edu
Jon Grecu jgrecu2015@student.hult.edu
Kate Embley kembley2015@student.hult.edu
Lina Olea lolea2015@student.hult.edu

Date: May 5, 2015 Slide # 16 Team7: Alibaba.com Marketplace Strategy

 Alibaba Group: Zoom Out

Date: May 5, 2015 Slide # 17 Team7: Alibaba.com Marketplace Strategy

 Core Competence Market Matrix
Existing Market New Market
New Competencies

• Delivery Speed • Disruptive Technology

• International Delivery Reliance • Forward Integration into
• Alliances/Creating Related Smartphones
Diversification

ALIBABA.com
Old Competencies

• Ease and Speed of Payments

• Lower Prices • Entering International Markets
• Scale/Product Offerings • Trading Physical Commodities
 Organizing Economic Activity:
Firm vs. Market
Firm «Make» Markets «Buy»

• Command and Control • High-Powered Incentives

Advantages

o Flat • Flexibility
ALIBABA Marketplace
o Hierarchical Lines of
Authoroty • High Market Orientation
• Coordination • Vendors can design
• Community of Knowledge sales as they want
• Buyers can look for
sellers how they want
• Search Costs
• Low-powered Incentives • Through Internet and
Disadvantages

• Opportunism: Hold-Up
optimization Alibaba
• Principal-agent problem
• Incomplete contracting
tackles Search Costs
• Administrative Costs • Not
o Involved and
Specifying in Measuring
Buyer/Seller
Performance Contract
• Merely a «Middleman»
o Information Assymetrics
• Enforcement of contracts
 Alibaba Group: Zoom Out
Related Diversification
- China Smart Logistics
Backward Vertical
Integration -Alimama (Marketing Services)
- Alipay (Payment System) - Juhuasuan (Group Markeplace)
Ant Financial Services Group - TMALL (High End Brand Marketplace)
Alibaba Group Core
- Alibaba.com
(Global Wholesale – B2B)
- 1688 (China Wholesale)
- Aliexpress
(Global Wholesale –
[CN]B2C[World] Forward Vertical
Integration
Unrelated Diversification - Aliyun (Cloud Computing)
- Weibo (CN Twitter)