Team 7 Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy 1
Team 7Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy1
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 # Team7: Alibaba.com Marketplace Strategy2
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 # Team7: Alibaba.com Marketplace Strategy3
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 # Team7: Alibaba.com Marketplace Strategy4
Core Values
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy5
Superior Performance Cycle
Core Competencies• Culture• Deliver on
Promises
Firm Activities• Marketing• Supliers &
customers• Technology• R&D
Competetive Advantage• Network Size• Econ of Scale• Econ of
Scope
Superior Firm Performance• International
Presence• Largest
e-marketplace
Resources• Network• Products• Scope/Costs
Capabilities• Easy Pay• Easy Delivery• Low Price
Rethink, Reinvest, Hone, Upgrade
Rethink, Reinvest, Hone, Upgrade
SWOT AnalysisSTRENGTHS:• 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)
WEAKNESSES:• Easy to imitate business model• Counterfeits • Influenced by Chinese Government• Chinese culture is not innovative enough • Disorderly business platform • Slow delivery time
OPPORTUNITIES:• Government Support / Regulations• Growing internet penetration• Increasing delivery efficiency • SMEs moving away from own web shops
towards online marketplaces• Strong economic & Industrial background
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
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy7
PESTEL: CN e-Commerce
STRATEGIC GROUP
INDUSTRY
ECONOMIC• Growth Rate • Levels of employment • Interest Rates• Inflation• Currency exchange rate
SOCIAL/CULTURAL• Demographics • Education • Immigration• Emigration
TECHNOLOGICAL• Online payment • 3D printing • Internet penetration
ECOLOGICAL• Low Impact
LEGAL• Chinese vs. US
government • IP rights protections• IP taxes • Privacy • Consumer rights
POLITICAL• Strong Relationship with Government• Pros – access and strength in CN• Cons – Limits to other countries
Porter’s Five Forces
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy9
Rivalry(HIGH)
Threat of Substitute(HIGH)
Threat of New Entry(LOW)
Power of Suppliers(LOW)
Power of Buyers(HIGH)
- Many small suppliers- Margin matters- Need many customers
- Capital Facilities- Government- Scale / Volume
- Many buyers- Price matters- Commission from seller
- Offline Retail- Disruptive technologies- Social Commerce- M-Commerce
- Logistics- Trust - Price
ERRC Strategy Canvas
00
01
02
03
04
05
Offlin
eInfrastructure(Shops,
Wareh
ouses)
ProductDescrip
on/Quality
CustomerSupport&OtherServices
Innova
veM
arke
ng/Promo
ons
LoyaltyProgram
/Reten
onRate
Convenience/CheckoutProcess
Fast&ReliableDelivery
Brandaw
aren
ess
Personaliza
on/BigDataAnalycs
Price(Lowest–5,H
ighest–1)
Assortment/Quan
tyof
Products&
Sellers
ProductOfferingEvalua
on(0—5)
Compe ngFactors
OfflineMalls(RaffleCity,…)
ChineseOnlineMalls(Tmall,JD…)
Interna onalOnlineMalls(Amazon,…)
Alibaba
Strategy Map
C2C B2C B2B
Aliexpress
Alibaba
Ebay Amazon
Taobao
Do
mes
tic
Inte
rnat
ion
al
Made in CN
1688
Groupon
VRIO MODEL
YES YES YES NO
Resource: Database of Sellers & Buyers
• Ownership• Counterfeits• Doesn’t control
affiliated businesses
TEMPORARY COMPETITIVE ADVANTAGE
• Unique Database
• Well recognized platform
• Brand• Relationships• Data• Scope of
business
AFI Model: 3D Printers
ANALYSIS FORMULATION
IMPLEMENTATION
Future Scenario:Emerging of 3D printer at home
• Install innovative system • Increase Marketing (online, newsletter)• Grow finance services
Strategic Plan:• System to trade IP • Build a Bank New Vision:• Become Global leader
in 3D/IP trading
Strategic Option:• Highlight 3D printed
products • Analyze non-3D market • Create new AFI • Push Finance Services
Feedback loop:MonitoringPerformance
Activate New PlanIf necessaryDiscard Dominant Plan
If necessary
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy13
AFI Model: M&A Amazon & JD.com
ANALYSIS FORMULATION
IMPLEMENTATION
Future Scenario:Amazon & JD.com M&A
• Strategic international partnerships• Open foreign headquarters
and sales offices abroad
- International supplier relationships
- Sustain relationships in China
- Compete on cost level- Improve delivery system
Strategic Option:• M&A with eBay• Create new AFI • Push Finance Services• Vertical Integration
Feedback loop:MonitoringPerformance
Activate New PlanIf necessaryDiscard Dominant Plan
If necessary
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy14
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 # Team7: Alibaba.com Marketplace Strategy15
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy16
Q&AAlexander Kudasov [email protected] Tangga-An [email protected] Grecu [email protected] Embley [email protected] Olea [email protected]
Alibaba Group: Zoom Out
Date: May 5, 2015 Slide # Team7: Alibaba.com Marketplace Strategy17
Core Competence Market Matrix
Existing Market New Market
New
Co
mp
eten
cies • Delivery Speed
• International Delivery Reliance• Alliances/Creating Related
Diversification
• Disruptive Technology• Forward Integration into
Smartphones
Old
Co
mp
eten
cies
• Ease and Speed of Payments• Lower Prices• Scale/Product Offerings
• Entering International Markets• Trading Physical Commodities
ALIBABA.com
Organizing Economic Activity: Firm vs. Market
Firm «Make» Markets «Buy»
Ad
van
tag
es
• Command and Controlo Flato Hierarchical Lines of
Authoroty• Coordination• Community of Knowledge
• High-Powered Incentives• Flexibility
Dis
ad
van
tag
es • Low-powered Incentives• Principal-agent problem• Administrative Costs
• Search Costs• Opportunism: Hold-Up• Incomplete contracting
o Specifying and Measuring Performance
o Information Assymetrics• Enforcement of contracts
ALIBABA Marketplace
• High Market Orientation• Vendors can design
sales as they want• Buyers can look for
sellers how they want• Through Internet and
optimization Alibaba tackles Search Costs
• Not Involved in Buyer/Seller Contract
• Merely a «Middleman»
Alibaba Group: Zoom Out
Alibaba Group Core
- Alibaba.com
(Global Wholesale – B2B)
- 1688 (China Wholesale)
- Aliexpress
(Global Wholesale –[CN]B2C[World]
Related Diversification
- China Smart Logistics
-Alimama (Marketing Services)
- Juhuasuan (Group Markeplace)
- TMALL (High End Brand Marketplace)
Forward Vertical Integration
- Aliyun (Cloud Computing)Unrelated Diversification
- Weibo (CN Twitter)
Backward Vertical Integration
- Alipay (Payment System)
Ant Financial Services Group