Alibaba Business Model Case Study

Chosen Case Study and E-Commerce

Discuss about the E-Business Application for Alibaba Case Study.

E-commerce is the type of commercial exchange of products and monetary units that in which, every transactions are conducted through the internet (Yao et al. 2015). In this system, the buyer orders a product by choosing from a wide variety of products in the official website of a certain e-commerce company and the company delivers the selected product to the customer’s home and the transaction is conducted either through the internet (net banking, online payment by cards, etc.) or manually during product delivery.

In this report, the chosen e-commerce company is Alibaba and their e-business strategies and IT infrastructure have been discussed.

Alibaba Group operates its business through e-commerce system and has branches all over the world. Their main business objective is to build a worldwide e-commerce infrastructure in order to provide services to more customers and establish a strong commercial organization (Du et al. 2013). In addition to providing business options, they also allow mutual interaction between the customers as well as the product merchants in order to satisfy customer demands for more efficient business system. For all these processes, they have successfully implemented a strong Information Technology infrastructure that has led them to commercial success (Leong et al. 2016). Alibaba Group’s main aim is to further develop the company in the future along with the implementation of latest technologies in order to increase the existing market competitiveness as well as gaining more control over global market.

The e-commerce site of the company is very easy to use as it has a very customer-friendly interface and any new user can easily find the products and varieties the company provides. Moreover, the company provides a large number of offers and discounts as well as wide variety of products all of which are clearly displayed on the official website of the company (Zheng et al. 2015). Any user, who wants to buy a product, can find the product of his needs as well as its varieties and different sellers from which he can choose one of the choices. The company enjoys massive popularity within the regular customer base due to this user-friendly appearance of the site and the availability of the services as per the displayed information in the website.

Alibaba is the largest e-commerce company in the world and hence, it must have a suitable e-business application that will help run the business in the company efficiently. For this, Alibaba has subscribed to Big Data services paired with a microfinance system. Big data is a virtual data storage technology that stores huge amount of business and commercial data and provides an efficient system for managing and calculating the business records and statistics (Xiao et al. 2015). Again, Alibaba has partnerships with different online vendors for different online operational procedures like online payments, virtual data storage system and others. For example, the online payment system of Alibaba is managed by a vendor named “Alipay”. All these e-business applications together have promoted the growth of Alibaba as the largest e-commerce and e-business company in the world.

Company Operation

Alibaba’s main marketing strategy is to spread business over different regions by taking over small and medium sized regional retailers and varying the price of products according to the demand in that particular region (Xue et al. 2015). Alibaba promotes the growth of the regional retailers, which in turn promotes its control over the regional market.

Alibaba also has the end goal to expand its e-commerce business all over the world with the help of latest technical upgrades and a successful marketing strategy. Hence, the company mainly focuses on developing the e-commerce system further and mixing it with more innovative marketing strategies.

Alibaba mainly operates its business with the help of supply chain strategy. Alibaba is not a manufacturer or even a retailer. Alibaba has a number of subsidiaries that manufacture and sell products (Fan et al. 2015). The products of these companies are sold in the name of Alibaba and the subsidiaries are only responsible for delivering the products to the home of the customer. Payments are also directly made to Alibaba and the subsidiary companies get their share of the sales. Since Alibaba deals with e-commerce system, it provides product description in the website as well as the name of the product seller. Upon service booking, these companies pick the selected product from manufacturer or their own factory and deliver them to the customer in the name of Alibaba (Cheung 2016). This is how, Alibaba has built up a successful global supply chain and promotes growth of its subsidiary suppliers in order to gain control over the regional market.

The main weakness of the company is in the application of its security strategies. The whole business system of the company depends on the activities of the third party vendors with whom the company has forged partnerships. The company also uses highest technical systems for conducting its business (Dongwei 2016). However, aside from some basic security measures, the company will have no particular answer if it is attacked by some serious third party cyber attack. Hence, the security strategy of the company needs to be revised for ensuring the safety of the business system of the company.

The IT architecture of Alibaba includes a worldwide network of cloud computing services as well as a central Big Data system. Alibaba has subscribed to several cloud computing services and conducts all the business related activities through these services. Moreover, the Big Data system is used to store all the business data and statistics within a central virtual storage server (Hu et al. 2014). Alibaba also has partnerships with different online vendors for different online operational procedures like online payments, virtual data storage system and others that have been successfully interconnected by the company to build up an efficient IT architecture system.

Ease of Use of the E-Commerce Site

Conclusion

From the report, it can be concluded that Alibaba is a successful e-commerce company because of its successful business plan and a very efficient e-commerce service using the latest technologies in the internet. Their main business objective is to build a worldwide e-commerce infrastructure in order to provide services to more customers and establish a strong commercial organization. Alibaba has partnerships with different online vendors for different online operational procedures like online payments, virtual data storage system and others. All these factors as well as a successful IT architecture have allowed Alibaba to flourish over a large area of the world.

In spite of international success, Alibaba has certain weak spots. Some recommendations for compensating these weak spots are as follows.

Low End Market – Although Alibaba promotes growth of the regional market, it mainly deals with the high end market i.e. it mainly deals with high priced advanced technical products that are mainly purchased by the higher levels of the society. Alibaba should also promote the medium and low end markets in order to enjoy even more control over every layer of the global market.

Too Much Virtual Interface Dependence ­– Alibaba depends on the virtual interface and cloud services too much. Moreover, they use third party vendors for the online payment management. This is a very risky business as a large scale cyber attack from a third party can cause massive damage to the company’s business. Hence, the company should start its own online transactions and data management systems in order to have more control over the commerce related activities.

References

Cheung, M., 2016. 28. the e-commerce revolution: ensuring trust and consumer rights in China. Handbook of Cultural and Creative Industries in China, p.412.

Dongwei, S., 2016, January. Cross-border e-commerce helps SMEs reach global markets. In International Trade Forum (No. 2, p. 16). International Trade Centre.

Du, J., Lu, J., Wu, D., Li, H. and Li, J., 2013. User acceptance of software as a service: Evidence from customers of China's leading e-commerce company, Alibaba. Journal of Systems and Software, 86(8), pp.2034-2044.

Fan, J., Tang, L., Zhu, W. and Zou, B., 2015. The Alibaba Effect: Spatial Consumption Inequality and the Welfare Gains from E-Commerce. Available at SSRN 2707293.

Hu, J., Holt, S., Marques, J. and Camillo, A.A., 2014. Marketing Channels and Supply Chain Management in Contemporary Globalism: E-Commerce Development in China. Handbook of Research on Effective Marketing in Contemporary Globalism, p.325.

Leong, C.M.L., Pan, S.L., Newell, S. and Cui, L., 2016. The Emergence of Self-Organizing E-Commerce Ecosystems in Remote Villages of China: A Tale of Digital Empowerment for Rural Development. Mis Quarterly, 40(2), pp.475-484.

Xiao, Z., Wang, J.J. and Lenzer, J.H., 2015. The role of geographic specificity of logistics for e-commerce companies' Inter-firm integration: A case study of Alibaba. In Proceedings of the 20th International Conference of Hong Kong Society for Transportation Studies, HKSTS 2015: Urban Transport Analytics.

Xue, W., Xiao, B. and Mu, L., 2015, December. Intelligent mining on purchase information and recommendation system for e-commerce. InIndustrial Engineering and Engineering Management (IEEM), 2015 IEEE International Conference on (pp. 611-615). IEEE.

Yao, Y., Yen, B.P. and Yip, A., 2015. Examining The Effects of The Internet of Things (IoT) on E-Commerce: Alibaba Case Study. In 15th International Conference for Electronic Commerce (ICEB), Dec. 6-10, 2015, Hong Kong.

Zheng, L., Yihui, Z., Shen, W. and Guanqi, D., 2015. Micro Characteristics and Problems Reflected in the Development of Peasant E-businessman: A Case Study on an Alibaba's E-business Town in Fujian, China.