By Mirela Todorova

Overview of Alibaba Group

Founded in 1998, based in
Hangzhou, China
By 2010, over 50% of B2B ecommerce and 70% of online
shopping for China
Connects millions of users in
more than 240 countries and
regions
Employs almost 20,000 people
in B2B sales, computer
engineering, customer service
Private company with estimated
valuation $55 billion to $120
billion

Alibaba Group Company

Portfolio

Alibaba.com international B2B marketplace

Alibaba.com.cn Chinese, Japanese, Korean
Taobao.com Chinese largest online shopping
Alimama.com Chinese online marketing
Alisoft.com Chinese management software
and cloud computing services
Alipay Chinese online payment services
China Yahoo! strategic partnership with
Yahoo!

Alibaba Group Timeline

December 1998, Jack Ma and other 17 founders of Alibaba Group named

Alibaba.com and raised $25 million from SoftBank, Goldman Sachs, Fidelity
and SOFTBANK
December 2002, Alibaba.com achieved profitability
May 2003, Taobao.com was founded as a consumer e-commerce platform
December 2004, Alipay.com became an independent business service
October 2005, Alibaba Group took over the operation of China Yahoo!
November, 2007, Alibaba.com successfully listed on the Hong Kong Stock
Exchange.
April 2008, Taobao established Tmall.com (originally called Taobao Mall)
B2C platform
September 2008, Alibaba Group R&D Institute was established
September 2007, Alisoft.com established with own sales team
May 2010, announced a plan to allocate 0.3% of its annual revenues to
fund environmental protection initiatives
June 2011, Alibaba Group reorganized Taobao into three separate
companies: Taobao Marketplace, Taobao Mall (Tmall.com) and eTao
July 2011, Alibaba Cloud Computing launched its first self-developed mobile
operating system, Aliyun OS over K-Touch Cloud Smartphone

Alibaba.com History
1998, over 40 million private small and medium-sized enterprises (SMEs
with 50 to 100 employees) in China needed a good communication
channel and info source to market, sell products, evaluate trading partners
Jack Ma began as an English teacher in China, worked for the Chinese
government business deals, started online China Pages company similar to
Alibaba.com but was bought out by China Telecom
1999, Jack Ma started Alibaba.com to connect mainly small Chinese
manufacturers with retailers, trading companies, downstream
manufacturers
Started as a free service to registered users
By 2008, 1% of users paid for value-added international Gold Supplier and
China Trustpass membership programs
Gold Supplier provided enhanced online storefronts, prioritized listings, company
profile authentication, real-time performance analysis
China TrustPass provided similar services globally, and more payment services

David Wei is CEO of Alibaba.com

Growth of Chinese B2B

Market

Alibaba.com Revenue and

Growth
By 2008, operating profit increased by 48% to $172
million, total revenue to $432 million
By end of 2008, alibaba.com (international) had 7.9
million users and 970,000 storefronts and
alibaba.com.cn (domestic) had 30.2 million users and
3.6 million storefrontstoday over 40 million domestic
Paying customers increased by 41% yearly to 432,031
in 2007
Launched Alibaba.com in Korean and Japanese as well
Revenue stream: value-added services and
commissions from financing, shipping and insurance
services ordered by users in bulk

Alibaba.com Business Model

B2B e-commerce between suppliers and wholesale buyers
Company profiles, online catalogues called storefronts
with listings of products and services
Over 30 industry categories and 5,000 product categories
Buyers can search using keywords, browse online industry
directory, or post listings to buy
Active listings, instant messaging, email, discussion
forums and other community features
Trust ratings for suppliers and buyers
Free or fixed subscription fee
Mission Statement: To make it easy to do business
anywhere

Value-added services

Gold Supplier and TrustPass memberships

Keyword bidding services: Ali-Advance used by Alibaba.com
and Zhi Tong Che used by Taobao.com
Sellers can bid for keywords and preferential ad ranking on Chinese
search page
Pay for performance contracts meant sellers paid only when
customers clicked on their ads

Ali-loan program partners with Chinese banks and uses sales,

payments and collections data to offer loans to Alibaba.com's
paying customers:
Credit loan: company-established credit score on Alibaba.com
assists businesses in borrowing
Security loan: borrow (with a mortgage) to buy equipment
Joint liability loan (group loan): Multiple small companies in one
supply chain borrow using their credit scores online and guarantee
to support each other

Ali-Talk real-time communication service on Alibaba.com

Other Alibaba.com supporting

businesses
2005 purchased China Yahoo! (www.yahoo.com.cn) to offer
search, email, entertainment but Chinese search engine
market share fell from 21% to 6% by 2009 competition from
Google and Baidu
Alipay escrow service held customer payments until
purchased goods were deliveredbuilt trust
By 2008, had 50% of all online payments in China
Competes with PayPal internationally

2006 started Alisoft.com to provide enterprise management

software, inventory management, financial management, and
Cloud Computing and mobile OS by 2011
2007 started Alimama Chinese advertising exchange
Small and large ad publishers can offer their ad inventory and ad
agencies can book the ads
Inventory of billions of ads

Competition
Global Sources: Hong Kong-based
international B2B website
Reaches 230 countries, but has less
total users
Offers similar services as
Alibaba.com
Has additional services such as
monthly trade magazine for
consumer products, other monthly
magazines and sourcing research
reports, trade-specific exhibitions in
China

ChinaChemNet: vertical coverage

of chemical industry in China
Other marketing service
providers and trading channels
like search engines and
magazines

Alibaba.com goes Public

Alibaba Group remained private but listed 19.25%
of Alibaba.com and Alibaba.com.cn on Hong Kong
Stock Exchange in Nov. 2007
IPO $1.7 billion and stock tripled in value on first
day, trading at 306 times projected 2007 earnings
Benefits
Publicity and recognition for B2B customers
Attracted management talent
Equity-based incentives for management

CEO Jack Ma continued to focus on building a

Chinese brand rather than quarterly profits

Corporate Strategy:
Decentralization
To maximize flexibility, Alibaba Group subsidiaries
have independent technology teamsno Chief
Technology Officer
Technology platform includes systems architecture and
development, data analysis, data storage, and application
development

Bottom-Up process for annual budget, strategy and

operating plans:
Every fall, subsidiary Presidents submitted plans to Group
corporate headquarters for review by Chief Strategy
Officer, CFO, Chief People Officer and CEO
Presidents encouraged to do whats best for their
subsidiaries and not to force BU synergy

Corporate Culture:
Entrepreneurial
Company will remain a start-up no matter
how long it has been in existenceJack Ma
Values
Entrepreneurial and innovative spirit
Customer service
Transparency in processes, systems, decisions
Solid financial ground, ethics
Contribute to welfare of society
Rotate managerial talent
Harmonious and supportive internal environment

Alibaba.com Future
Alibaba Group CEO Jack Ma plans to
step down in 2013
Plans to expand through acquisitions,
investments, licensing and partnerships
Expand user base and value-added services
Widen geographic coverage
Advance technology with user demand
Cross-selling and marketing with other
Alibaba Group subsidiaries

Quiz Question 1
Tmall.com is typically categorized as
a
A. B2B website
B. C2C website
C. B2C website

Answer 1
Tmall.com is typically categorized as
a
A. B2B website
B. C2C website
C. B2C website

Quiz Question 2
Which Alibaba.com supplier valueadded service provides
authentication and enhanced online
storefronts, prioritized listings, and
real-time performance analysis?
A. PassTrust
B. Gold Supplier
C. Alibaba Platinum
D. Ali-Business

Answer 2
Which Alibaba.com supplier valueadded service provides
authentication and enhanced online
storefronts, prioritized listings, and
real-time performance analysis?
A. PassTrust
B. Gold Supplier
C. Alibaba Platinum
D. Ali-Business

Quiz Question 3
Who is the CEO of Alibaba Group?
A. David Wei
B. Jack Ma
C. Daniel Wong
D. John Min

Answer 3
Who is the CEO of Alibaba Group?
A. David Wei
B. Jack Ma
C. Daniel Wong
D. John Min

Quiz Question 4
True or False?
Both suppliers and buyers can post on
Alibaba.com for free

Answer 4
True or False?
Both suppliers and buyers can post on
Alibaba.com for free

References
Alibaba.com: A Smiling Community with A
Dream. 2005.
http://www.ft.com/intl/cms/c6aba388-74a6-11db
-bc76-0000779e2340.pdf
Farhoomand, Ali. Alibaba.com Asia Case
Research Centre University of Hong Kong. 2008.
Wulf, Julie. Alibaba Group. Harvard Business
School. April 2010. 9-710-436
www.Alibaba.com