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Submitted by:
Shrikant Jhajhra (BT14CSE077)
Shubham Patil (BT14CSE078)
Introduction
Jack Ma is a man on a mission. The Chinese
entrepreneur who founded Alibaba and other
companies wants to change the way business to
business (B2B) is conducted. He wants to develop
platform to support small and medium sized
enterprises (SMEs). Alibaba, Taobao, and other Ma
creations have already begun to make some wonder
how this former English teacher, with an unassuming
demeanour, has been so successful, and what the
future holds for his companies and the future of B2B
activity
Company Information
A marketplace, a search engine and a bank, all in
one.
Alibaba is Chinas and by some measures, the worlds
biggest online commerce company. Its three main sites
Taobao, Tmall and Alibaba.com have hundreds
of millions of users, and host millions of merchants
and businesses. Alibaba handles more business than
any other Ecommerce company.
One can think of it as a mix of Amazon.com, eBay
and PayPal. Customers use Alibaba to shop online,
sell unwanted goods and make online payments.
Alibaba has two retail sites: Taobao, which features
thousands of non-brand name products sold by smaller
merchants and Tmall, which offers brand name
products sold by big merchants. 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.
This Chinese B2B trading platform connects buyers in
North America and Europe with suppliers from China.
Alibaba follows an aggregation of supply model
(similar to other early B2B players), helping to solve
the pain of global sourcing.
History
Alibaba Group was established in 1999 by 18 people
led by Jack Ma, a former English teacher from
Hangzhou, China. From the outset, the companys
founders shared a belief that the Internet would level
the playing field by enabling small enterprises to
leverage innovation and technology to grow and
compete more effectively in the domestic and global
economies. Jack Ma named his company on Alibaba
Open
Sesame. Alibaba is a kind, smart business person,
and he helped the village. Alibaba opens sesame for
small to medium sized companies.
During Late 90s, Alibaba Group raised a total of
US$25 million from SoftBank, Goldman Sachs,
Fidelity and some other institutions. After Alibaba
achieved profitability in 2001, its sister organization
Taobao was founded as a consumer ecommerce
platform. Which further established TMall
(TMall.com), a retail website, to complement its C2C
marketplace. After about a decade since its inception
Alibaba group also beta launched eTao as a shopping
search engine.
Alibaba raised $21.8 billion in its debut, making it the
biggest U.S. listed
IPO in history after the IPO of credit card processing
company Visa in 2008.
Business Model
The initial business model of Alibaba was simple a
facilitate a 24/7 meeting platform for suppliers and
buyers around the world. From the start Alibaba did
not just connect Chinese suppliers with international
buyers, but it had the goal of connecting all importers
and exporters around the world to each other.
Although other B2B websites have always said You
cannot have a global company out of china, it makes
no sense.. From the very beginning Alibaba was, the
first global Internet emerging from china.
In more technical terms three of the most prominent
business models employed by Alibaba are: B2B, C2C
and B2C.
Targeted Users:
Alibaba Group primarily operated within China, where
ecommerce is synonyms to Alibaba. But within last
decade Alibaba has expanded to almost all the corners
of the world, consisting its user base from about 190
odd countries.
Alibaba has been turned into a global organization but
still holding China as its major focus. Almost 75% of
Chinas ecommerce market is dominated by Alibaba.
China has 560 million internet users twice as many as
the U.S. who spend an average of 20 hours a week
online.
Although to get a hold on other emerging markets
Alibaba Group has also established offices in the U.S.,
U.K., India, Japan and Korea. Apart from small to
medium businesses Alibaba group also provides online
platform to individual customers through its parent
websites Tmall.com and Taobao.com.
Order:
Steps for ordering:
Begin Your Search: There are two common approaches to doing a
search on Alibaba. You can either search for items based on
product descriptions, alternatively, from the drop-down menu,
you can select Suppliers instead of Products and instead
search for manufacturers that specialize in that particular type of
product
Unit Price: One of the first things you will likely want to look at is
the price. For this listing we can see a price of $2-$3 USD FOB.
Payment Methods:
Actually Alibaba Group has its own payment solution
named as Alipay, is a third-party online payment
platform with no transaction fees. Other than that,
Alibaba also offers many ways to pay suppliers. Six
most commonly used ways are Telegraphic
Transfer(TT)/Bank Transfer, Letter of Credit, DA/DP,
Western Union, PayPal and Escrow. Buyers are advised
to consider each option carefully before committing to
one.
S.n Methods Condition Description
s
o
1. 30% Upfront TT For Since many
buyers: factories need
2.5 money in
out of 5 advance to buy
stars material for
For production,
suppliers: 30% Upfront TT
4.5 out of is a common
5 stars payment
term for
suppliers,
especially when
dealing
with an unknown
buyer.
2 100% Upfront TT For The supplier gets
buyers: 1 full payment
out of 5 before
stars production starts.
For This payment
suppliers: method
5 bears the same
out of 5 risk as Western
stars Union and
is not
recommended
when dealing
with an
unknown
supplier.
3. 100% Backward For If being paid after
TT buyers: pre shipment
4.5 inspections, it is
out of 5 suggested to use
stars trade
For terms of FOB. If
suppliers: being paid after
2 receipt of
out of 5 merchandise, it is
stars nearly 100%
reliable for
buyer because
buyer can cover
the whole risk,
however, on the
opposite,
suppliers are not
willing to accept
this way due to
big
potential risk of
dispute or fraud.
Delivery of Products
1.1 Delivery: Delivery will take place at the place of
delivery specified in the relevant order. If the order
does not specify a place of delivery, Buyers place of
business indicated by Buyer on the order will be
deemed to be the place of delivery. In case of return,
Suppliers place of business indicated on the order will
be deemed to be the place of delivery.
1.2 Transfer of risk: unless the relevant order
provides otherwise, the products remain at Suppliers
risk until the products are delivered to Buyer. The risk
of loss or damage to the products will pass to Buyer
upon delivery.
1.3 Time of delivery: Buyer may cancel the
Transaction and request refund before Supplier
commences the shipment. If Supplier continues to ship
the products despite Buyers cancellation, Supplier
does so at its sole responsibility and risks, and Buyer
is not obliged to take delivery. If Supplier has already
commenced shipment before Buyers refund request
despite that Supplier has not yet notified Buyer of the
shipment, upon Suppliers proof to Alibaba.coms
satisfaction, Buyers refund request will be void.
1.4 Prohibited and restricted products: Buyers and
Suppliers shall not deal with products in breach of
the Sites Product Listing Policy and the applicable
services agreements. If Supplier delivers any
prohibited or restricted product not in conformity with
the relevant order, Buyer has the right to refuse to
take the delivery and Supplier should be responsible
for all the costs including the costs for the return of
the products. If Alibaba.com discovers that Supplier
and Buyer intentionally deal with prohibited or
restricted product, Alibaba.com reserves the right to
refuse to make the payment to Supplier and report the
same to the relevant government enforcement
authority.
Negotiating
Once you have begun conversations with several
suppliers and have a good idea of each of their prices,
MOQ's and payment terms, you can begin negotiating
with them. As mentioned previously, the minimum
order quantities are almost always negotiable, it's
simply a matter of asking. Remember, a good
negotiation leaves both parties happy with the
outcome so push a little but not too hard.
Performance
Alibaba Group revenue was US$4,838 million, an
increase of 59% year-over-year. China retail
marketplaces revenue was RMB23,383 million
(US$3,518 million), an increase of 49% YoY; and
mobile revenue of China retail marketplaces was
RMB17,514 million (US$2,635 million), an increase of
119% year-over-year, representing 75% of Alibabas
total China retail marketplace revenue.
Innovations:
A Big-Data Business: Alibaba focuses relentlessly on
big data. In fact, big data underpins all of Alibabas
efforts to harness the capabilities of everything from
cloud computing to AI to smart logistics to digital
entertainment. And big data has helped Alibaba build
what has become the worlds largest retail platform.
Enabling AI: Alibaba uses innovative AI to build a
smart business. Personalized search and
recommendation engines help e-commerce platforms
better "understand" users likes and intentions. In
addition, the technology can build comprehensive
shopper and seller credit systems and valuation
models. For instance, robots now handle 95 percent of
Double 11s customer service.