Why is Alibaba Considered the future of the eCommerce business?

Why is Alibaba Considered the future of the eCommerce business?

Alibaba is a Chinese multinational firm started in 1999 by Jack Ma with the help of his friends and some students in his apartment that grew into a billion-dollar company in 2022.

The name was chosen by Jack because of the recognition the name had for the Arabian Fairytale. He asked many people if they know Alibaba. They all replied “open sesame“. He realized that other names can be recognized easily in all regions of the world.

This made them the number 6 most recognized brand in the entire world.

Alibaba also became the fastest growing eCommerce market and introduced B2C, C2C, and B2B eCommerce solutions. So that, people can stage their products globally and develop the domestic eCommerce business

This mainly benefited people who were small and medium-sized firms to showcase their products and increase the chance of them earning profit by selling their products.

They operate with three different sites namely Alibaba (B2B), Taobao (C2C), and Tmall (B2C) for different sectors they provide their service for.

But Since they all come under Alibaba let's take a deep dive it how they are maintaining a growing income and penetrated a new market where eCommerce was expected to play a role.

Alibaba’s eCommerce And Retail Service Platforms:

They have been operating on 3 main services namely;

  1. Alibaba.com is the world's largest B2B trading platform for importers and exporters.
  2. Another portal is 1688.com for domestic B2B trading platforms.
  3. AliExpress is for small and medium sellers to find and buy small quantities of products for a wholesale price.

These three fronts were used for B2B practices only on a different level so that the right category of people will find it and make a purchase based on their economic valuation.

They used Taobao for C2C eCommerce and it was a very successful idea and helped many small businesses to make more sales in a short time. And many people used the advertising platform for which they have to pay for the ads and this made up 72% of the whole revenue in the year 2009. 

And in 2010 they made a groundbreaking profit of 62.9 billion USD and this was contributed by increasing the sales of the vendors to a 60% rise.

They later introduced a platform called eTao where people can compare any product from all the shopping sites in China to find the right product they are searching for. They also introduced a group shopping website where people can make purchases in a group with the best offers and deals in the market.

As we have heard about the resurrection of the traditional brick and mortar stores they introduced a chain of supermarkets called Hema. So that, they can have a multi-channel presence and do their business to reach even more people.

They didn't stop there and also invested 3.6 billion USD in Sun Art and took control of it which doubled their stakes in the chain of supermarkets and expanded all over China and increased their presence.

Even though they did this all and became the most earning eCommerce market in China they had a downfall because they managed to break their reputations for cloning. Let's see how they managed to wipe that reputation off and still managed their identity and profit in the competitive market.

Gold Supplier Membership:

This membership was paid for by many suppliers and vendors to ensure they have a qualified product with the best quality that they could find on the entire market. 

This made many sellers clear their names of fraudulent products and reduced the mistrust people had of the business. This was more stringent for people who were selling outside the country but also ensured that people had faith in the purchase they made.

This became strict and regulated the customers and sellers of their products and the years they have been doing business on their platform. They later listed the names of sellers to ensure the quality of the products based on the years of business.

This is how Alibaba cleared the duplicate and fraudulent identity on their name to ensure the maximum quality of their services.

B2B Market Capitalization:

Alibaba became one of the most valued technology companies on a global level since its US IPO generated around 25 billion USD.

It is also ranked fourth in the market capitalization metric on a global scale after its IPO went public. This helped them increase their Gross merchandise value and the brand value of their business.

They mainly generate revenue from the advertisements that were made by sellers. Thus attracting more sellers on a global platform because they don't have to pay a high commission fee for a small scale.

This is how they captured the B2B market capitalization and let's take a look at the reasons for their success. Takeout from it is to start your own eCommerce B2B marketplace that is growing at an exponential rate.

Reasons for Alibaba's Growth and Success:

  • Think different

The key to success as said by Jack Ma is to think differently and do something out of the box. This may be slow at the beginning but if you can provide something different you will definitely catch the eye of the world.

  • Unconventional and Unique Business Model

Create something unique that is not something regular and create your business around that idea to come up with the best business model like Alibaba did by focusing on the B2B market which people possibly didn't think would be possible.

  • Focusing On Small Businesses 

Most businesses focus on the giants in the field but leave out these small vendors and sellers but they are present in a large preposition of the entire business population. 

  • Reliable Platform

Make sure you provide products and services of utmost quality so that you can create a reliable platform for people to purchase from. Create trust whenever possible and the best way is by maintaining good quality.

  • Simple User Experience

Create a simple user experience where anyone in the world can make a purchase and use your service easily for people around the world.

  • Business Opportunities For B2B eCommerce

This is where they find the best opportunity to create something that people can use and you can offer something different to the world. B2B was confined in the older days but they adapted to these digital trends because they have a wide range of options and categories they can purchase from.

  • Global Expansion

Think and invest based on a global level and invest thinking about the growth in the future.

  • Flexible And Reliable Credit Model

They have a very reliable credit system so that sellers can use the credits to run their business and use credit cards to make payments.

  • Diverse Range Of Products

The best way to attract more audience is by expanding your product range as much as possible and as they have focused on small and medium businesses. This will be easy to provide a wide range of options and deals to buy from.

  • Understand Evolving Needs

The best strategy you can implement is to understand the growing and changing needs of your customers. This is how you can make more sales in a short period of time.

  • AI Implementation To Analyze Data Flow

The best investment you can make is in technologies like AI and ML etc. These are all helpful to study, analyze and forecast your data. This identifies possible pitfalls and growth in your area of business.

These are the reasons why Alibaba is considered the future of the eCommerce business

So you can create your own business that can handle the B2B sector like Alibaba to penetrate the growing eCommerce B2B market. You can use the above-mentioned strategies that were used by Alibaba to sustain in the market and generate more profit in a short period of time.