Alibaba Report

Group Members:

• Nur Afiqah Binte Abdul Rahim (SIM ID: 10142998)
• Chua Boon Hao (SIM ID: 10088295)

Code: L43

Submitted on: 05/10/2015

Introduction on Alibaba

Alibaba Group Holding Limited started in 1999 when the founder, Jack Ma, founded the website Alibaba.com. It is the first to have launched a commercial website in China. It claims to have 1.7 million users from more than 216 countries. Alibaba has been very successful in the Chinese domestic market. In 2003, it launched Taobao, it is now the largest online shopping marketplace for consumers in China.

While Alibaba.com is business-to-business, Taobao is business-to-consumer or consumer-to-consumer focused, enabling small businesses and individuals to open online stores.

1)         Business Value Proposition

“To make is easy to do business anywhere” is the core value proposition of Alibaba.com, which is a leading business-to-business (B2B) online market place in China. The business model of Alibaba is to facilitate a 24/7 meeting platform for suppliers and buyers around the world. Alibaba did not just connect Chinese suppliers with international buyers, but its goal of connecting all importers and exporters around the world to each other.

2)         Revenue, Pricing & Cost Policy

The best way to understand Alibaba is as a mix of Amazon.com, eBay and PayPal with a dash of Google thrown in, all with some uniquely Chinese characteristics.

Unlike Amazon, which buys goods from suppliers and sells them to customers, Alibaba has always acted as a middleman, connecting buyers and sellers and facilitating transactions between them. While it isn't an auction company, its middleman role is similar to the one played by eBay.

Alibaba's revenues are a fraction of Amazon's because it doesn't actually sell the products on its site. But the Chinese company is far more profitable. In the three months through September, the most recent numbers available, Alibaba's revenue rose 51% to $1.776 billion from a year earlier. Net profit stood at $792 million, giving the company a net profit margin of 44.6%, according to shareholder Yahoo Inc., which owns a 24% stake in Alibaba. In the same quarter, Amazon posted a loss of $41 million on revenue of $17.09 billion.

3)         Market Opportunity

Alibaba.com offers a wholesale platform for small buyers on the global site seeking fast shipment of small quantities of goods. The two marketplace they operate is 1) a global or an international marketplace based in English catering to global importers and exporters in China, and 2) one in a Chinese marketplace whose main aim is to focus on suppliers and buyers trading domestically in China.

Taobao, Alibaba's biggest website, is like a gigantic Chinese bazaar with about 760 million product listings from 7 million sellers. Merchants don't pay to sell products on Taobao--and that fee-free model is a big part of its appeal in China. Instead, they pay Alibaba for advertising and other services to allow them to stand out from the crowd. Much like on Google, the ads from merchants appear with Taobao's product-search results.

4)         Competitive Environment

Even though Alibaba is still by far the biggest player in China's fast-growing e-commerce market, the company is facing stiffer competition as more Chinese consumers use smartphones. In this new environment, social media and online gaming giant Tencent Holdings Ltd., which operates massively popular WeChat mobile messaging application, is emerging as a powerful competitor to Alibaba, because of its ability to use WeChat as a mobile-based platform to offer other services such as e-commerce. To further bolster its e-commerce capabilities, Tencent earlier this month announced a deal to buy a 15% stake in JD.com Inc., China's second-largest e-commerce firm.

5)         Competitive Advantage

Unlike Amazon, Alibaba Group holds no inventory and owns no warehouses. Rather, Alibaba has created software platforms that facilitate the exchange of goods and services. While Alibaba's revenues are only a fraction of Amazon's, it has higher operating margins and profit margins. The reason for this is largely that Amazon has to manage the expensive and complex logistics of developing and maintaining a network of warehouses to ship products directly to shoppers. In short, software is easier to scale than warehouses. 

Alibaba has fought back with a string of deals, including its offer last month to pay $1.13 billion for the 72% stake in Chinese online map company AutoNavi that it didn't already own and a $585.8 million investment last year for a 18% stake in Sina Weibo, the popular microblogging site majority-owned by Sina Corp. Weibo unveiled plans Friday to sell $500 million of stock in the U.S.

6)         Market Strategy

Alibaba.com is designed in a way so that search becomes easy and efficient for the users. The user can search for buyers, suppliers and products separately. Alibaba.com is playing a vital role in helping small and medium enterprises in China and around the world. The reason is to participate in global trade and become more competitive in the global market, in the long run.

It is also aiding Small & Medium Enterprises (SMEs) in China and also around the world to participate in global trade and be more competitive at the global standard. Not only is Alibaba.com having an added advantage in this, but it is also creating jobs and more opportunities for many companies and their employees. Through this, Alibaba.com provide them with a cost-effective platform to market their products, search for quality suppliers and expand their business.

7)         Organization Strategy

Since Alibaba.com is a leading company, it has to research, develop and create new concepts, responding to the new needs specifically on their customers’ expectations. Through this, it will be able to know how to capture market opportunities and expand its strategies to the SME’s overall growth.

Despite Alibaba's wide-ranging investments, its core business remains centered on e-commerce. Its business model has combined elements of many of the leading technology companies in the US rather than mirroring any one in particular. After all, the diverse company describes its overall mission as “to make it easy to do business anywhere.”

8)         Key Management


Jack Ma

Chariman and Chieft Executive Officer, Alibaba Group
Chairman and Non-executive Director, Alibaba.com

Jack Ma, founder of Alibaba Group has been chairman and chief executive officer of the company since its inception in 1999.



 





Polo Shao

Group Secretary and Senior Vice President, Alibaba Group
General Manager, China Business Unit, Alibaba.com

Polo Shao joined Alibaba Group in March 2005. As director of the Group's network security department, Shao was in charge of building a security management system for Alibaba's products.

In 2006, Polo served as assistant to the Group's Chairman and Chief Executive Officer Jack Ma. Shao was named senior vice president of Alibaba Group in January 2009.

 
Shao is now responsible for facilitating strategic collaboration among different subsidiaries.


David Wei

Chief Executive Officer and Executive Director, Alibaba.com
David Wei has been chief executive officer of Alibaba.com since October 2007. He joined Alibaba in November 2006 as president of the business-to-business division and as executive vice president of Alibaba Group. 

Before joining the company, Wei was president and chief financial officer B&Q China, the country's largest home improvement retailer.

Wei holds a bachelor's degree in international business management from Shanghai International Studies University, and he is a graduate of the corporate finance program at the London Business School.


Jonathan Luk

Executive Vice President, Alibaba Group Chief Executive Officer and President, Taobao

Jonathan Luk joined Alibaba Group in 1999.

From 2000 to 2004, he served in several leadership roles at Alibaba.com and managed the South China region for the company, In September 2004, Jonathan led a dedicated team to establish Alipay. Luk had served as the company's president for four years before moving to Taobao in 2008.

Prioir to Alibaba, Jonathan was a co-founder of a network communication company.



Lucy Peng

Chief Executive Officer, Alipay 

As one of the founders of Alibaba, Lucy Peng has served in a number of senior roles at the company, including marketing and customer service. 

Peng has been chief executive officer of Alipay, an online payment service, since January 2010.

Peng graduated from Hangzhou Institute of Commerce of Zhejiang Gongshang University in 1994 with a degree in business administration. She had been a teacher at Zhejiang University of Finance and Economics for five years.



Wang Jian


Chief Architect, Alibaba Group
President, Alibaba Cloud Computing

Before joining Alibaba in 2008, Wang Jian was an assistant managing director at Microsoft Research Asia.

He led the development of a large-scale data processing system, which was used to develop Office 2007 and dozens of other Microsoft.

Prior to taking the job at Microsoft in 1999, Wang Jian worked in the Department of Psychology at Zhejiang University.

He graduated from the psychology department of Hangzhou University in 1990 and has a doctorate in enginerring.

Wang is now in charge of the company's technology development.



Tiger Wang

Senior Vice President, Alibaba Group
General Manager, China Yahoo!

Tiger Wang joined Alibaba Group in December 2003. He is now responsible for the company's marketing and public relations operations. Wang also serves as general manager of Yahoo's Chinese unit.

Wang worked for several media and Internet companies before joining Alibaba.

Wang graduated from the College of Chinese Language and Literature of Shandong Normal University in September 1997.


Joe Tsai

Chief Financial Officer and Director, Alibaba Group Non-executive Director, Alibaba.com

Joe Tsai joined Alibaba Group in 1999 as a member of the founding team. He is the chief financial officer and a board member of Alibaba Group. Tsai is also a non-executive director of Alibaba.com Ltd, the publicly listed business-to business subsidairy of the Group.

Before Alibaba, Joe was vice president and general counsel of Rosecliff Inc, a amangement buyout firm headquartered in New York. Between 1995-1999, Joe worked in Hong Kon as a senior investment manager.

Tsai received his bachelor's degree in economics and East Asian studies from Yale University and Juris Doctor from Yale Law School.



Zeng Ming

Chief Strategy Officer, Alibaba Group 
Zeng Ming joined the company in August 2006 as executive vice president of strategy. He had also served as acting president of Yahoo's Chinese unit from November 2006 to December 2007.

Before joining Alibaba, Zeng served as a professor of strategy at Cheung Kong Graduate Schol of Business in Beijing.

Zeng obtained his bachelor's degree in economics from Fudan University in 1991 and his doctorate in international business and strategy from University of Illinois in 1998.


Deng Kangming

Chief People Officer, Alibaba Group Senior Vice President and Executive Director, Alibaba.com

Deng Kangming joined Alibaba Group in July 2004 as vice president of human resources.

Deng also serves as the senior vice president of Alibaba.com, responsible for the company's human resources and administration functions.

Deng holds a bachelor's degree in law from Fudan University and an international executive master of business administartion degree from Rutgers University.


  Jin Jianhang

Senior Vice President, Alibaba Group

Jin Jianhang has served in a variety of management roles since the establishment of the company.

Before joining Alibaba, Jin had worked for the Ministry of Foreign Trade and Economic Cooperation. Jin started his career as a journalist after receiving his degree at Fudan University in early 1990s.