Professional Documents
Culture Documents
Case Study:: University Institute of Information Technology
Case Study:: University Institute of Information Technology
INFORMATION TECHNOLOGY
CASE STUDY:
1
Certificate
This is to certify that the case study on ERP Implementation in Cadbury aimed for E-
Commerce Laboratory was worked upon by the following individuals under my
supervision at UIIT labs in University Institute of Information Technology, Silver Wood
Estate Summerhill, Shimla.
Ishant Chouhan(64042)
Akshay Chaudary (64009)
It is certified that this case study is done by the team and has been submitted for their
degree curriculum.
(Assistant Professor)
Declaration
I hereby declare that the case study entitled “ERP Implementation in Cadbury “is an
original case study, submitted by us in fulfilment of requirements for the award of the
marks of Industrial/Vocational training of “Bachelor of Technology” for the 7 th Semester.
It has not been submitted elsewhere for the award of marks in any degree or diploma.
We are highly grateful to our Director, Prof. P.L. Sharma, who gave us this opportunity and
always inspires us with his new motivated ideas.
It gives us immense pleasure to express our deep sense of gratitude to our esteemed
teachers of our Institute for their guidance and constant encouragement at every juncture
of present report work.
Every effort is motivated by an ambition and all ambitions have an inspiration. We owe our
deep sense of gratitude to all those who helped us in such a constructive work. It gives us
immense pleasure to express our sincere thanks to Er. Akshay Bhardwaj, our guide and
teacher for his effort to help us in every possible way.
Sr. No. Topic Page No.
1 7-9
Introduction
Customer Relationship
2 10-15
Management (CRM)
4 History 19-21
Easy To Do Business
6 23-24
Everywhere
13 Target Market 39
15 Promotion Strategy 43
16 44
Information Technology
17 45
Expected Market Growth
18 46
Future Strategic Actions
19 47
Discussion
20 48
Conclusion
21 49-50
References
Once you have a defined idea of who your users are, it’s important to then look at
which actions they take, and why those are important to your business. Actions are
defined as a behaviour that brings value to your company. This could be anything
from subscribing to a newsletter, to purchasing a product or writing a review on
your site.
It all comes down to knowing your audience, who you’re trying to convert, and
retain. Users for an e-commerce-based site for example would have purchasers as
one type of user – their action would be to purchase. However you could also have
an e-commerce site that requires its users to sign up in order to purchase, so
members (the user type) would have two actions: registering, and purchasing. This
user and action relationship is something you can measure and infer upon as well
as use as the basis of your retention strategies.
Once you have an idea of your user base, and what actions they possess, you can
then start to analyze them with various metrics.
This is where measuring the data from your site comes into play. All metrics are
important, however some are more important for e-commerce-based businesses
as opposed to Subscription based. There are many different ways to measure your
site’s performance, and below we’re going to cover six critical metrics for e-
commerce and customer retention. 1. Engaged Users
2. Repeat vs. First Time
3. Time between Actions
4. Repeat Action
5. Cohort Analysis
6. Lifetime Value of a Customer (LTV)
Customer relationship management (CRM) is a term that refers to practices,
strategies and technologies that companies use to manage and analyze customer
interactions and data throughout the customer lifecycle, with the goal of improving
business relationships with customers, assisting in customer retention and driving
sales growth. CRM systems are designed to compile information on customers
across different channels -- or points of contact between the customer and the
company -- which could include the company's website, telephone, live chat, direct
mail, marketing materials and social media. CRM systems can also give customer-
facing staff detailed information on customers' personal information, purchase
history, buying preferences and concerns.
CRM SOFTWARE
• Sales force automation: Also known as sales force management, sales force
automation is meant to prevent duplicate efforts between a salesperson and a
customer. A CRM system can help achieve this by automatically tracking all
contact and follow-ups between both sides.
• Contact center automation: Designed to reduce tedious aspects of a contact
center agent's job, contact center automation might include pre-recorded audio
that assists in customer problem-solving and information dissemination.
Various software tools that integrate with the agent's desktop tools can handle
customer requests in order to cut down the time of calls and simplify customer
service processes.
The four main vendors of CRM systems are Salesforce.com, Microsoft, SAP and
Oracle. Other providers are popular among small- to mid-market businesses, but
these four tend to be the choice of large corporations.
Data security is a primary concern for companies using a cloud-based system since
the company doesn't physically control the storage and maintenance of its data. If
the cloud provider goes out of business or is acquired by another company, a
company's data can be compromised or lost. Compatibility issues can also arise
when data is initially migrated from a company's previous system to the cloud.
Finally, cost may be a concern, since paying subscription fees for software can be
more costly than onpremises-based models.
Open source CRM programs make source code available to the public, allowing
companies to make alterations with no cost to the company employing it. Open source
CRM systems also allow the addition and customization of data links to social media
channels, assisting companies looking to improve social CRM practices. Vendors such
as SugarCRM are popular choices in the open source market.
Adoption of any of these CRM deployment methods depends on a company's
business needs, resources and goals, since each has different costs associated with
it.
TRENDS
Traditionally, data intake practices for CRM systems have been the responsibility of
sales and marketing departments as well as contact center agents. Sales and
marketing teams procure leads and update the system with information
throughout the customer lifecycle and contact centers gather data and revise
customer history records through service call and technical support interactions.
Social CRM refers to businesses engaging customers directly through social media
platforms such as Facebook, Twitter and LinkedIn. Social media presents an open
forum for customers to share experiences with a brand, whether they're airing
grievances or promoting products.
1) Zendesk
One of the main benefits of customer relationship management tools is that they
enable you to focus all the contact channels customers may use to contact you in
one dashboard. You centralize information gathered by different team members
during customer contact, share any pertinent information, and enable the
customer to feel recognized. There is nothing more annoying than calling a
company, getting transferred to different people, and having to explain your needs
all over again. Zendesk helps keep your team informed regarding contact with
customers made by other team members. Therefore, it helps reduce repetition of
effort and improves response times to customer queries through workflow
scheduling. This customer relationship management tool is cloud based, so you
don’t have to install any complicated software, and your team members can access
the system from home or while on the move
2) Get Satisfaction
Zendesk includes a customer self-service module to help reduce the demands on
your technical support team, but Get Satisfaction takes this concept one step
further by fostering the creation of customer communities. This is like having a
Facebook specifically dedicated to your company, its products, and its customers.
You encourage customers to check out the community when they first visit your
website. This has the benefit of getting existing customers to guide potential clients
on the value and usage of your products. People naturally resist sales pitches, so
being able to talk to existing customers gives first-time visitors the courage to buy.
The community ethos carries through the customer life cycle, enabling customers
to advise each other about how to install and exploit your products to their full
potential. Customers having trouble with a purchase can use the community for
technical advice as well.
3) SurveyMonkey
SurveyMonkey is the world’s leading online survey platform. It includes access to
millions of respondents in the world population, which enables you to research the
appeal of your products while they are under development. However, surveys and
questionnaires are also key tools in CRM, and you can use SurveyMonkey as a
customer relationship management tool. Customer feedback is a key input to
improving your services. People are sometimes reluctant to complain if they
received poor service, but they will tell their friends, meaning you will lose
potential customers without realizing your company is doing anything wrong.
Prompting customers for feedback, especially those that chose not to buy, will help
you highlight and fix weaknesses in your business’s customer services.
4) Casengo
Casengo is a lot like Zendesk, but it’s a lot cheaper. It can be difficult to choose
between these two customer relationship management tools, but fortunately, both
offer a 30day free trial, so whether you choose Casengo or Zendesk may just come
down to which of the two you feel more comfortable using. Like Zendesk, Casengo
centralizes customer contact channels and provides a central store for records of
contact events. Casengo also has a customer self-service module. Both Casengo and
Zendesk have a free version with limited functionality. The free version of Casengo
only allows you to monitor chatbased contacts with customers. The free version of
Zendesk only covers email contact. Casengo is based in Amsterdam,in the
Netherlands, so its tariff is priced in Euros, not US dollars. Casengo’s basic paid plan
costs €9 per user per month, whereas Zendesk’s cheapest paid package costs US $25
per user, per month. Casengo offers a free trial of any of its packages, but Zendesk’s
free trial offers its mid-range package, which retails at US $59 per user per month. The
equivalent package at Casengo costs €29 per user, per month.
5) Deskero
The distinguishing feature of Deskero is that it integrates with Facebook, Twitter,
Google+, LinkedIn, and YouTube. So if you focus your marketing efforts on social
media, it’ll probably be the most appropriate customer relationship management tool
you could choose. The Deskero presentation specifically refers to the system as Help
Desk software, so they don’t aim to fulfill all CRM functions, such as pre-sales and
sales force support. Deskero has four different price packages, the cheapest of which
is free. The free version allows for only one user and integrates with just one social
media platform. The cheapest paid package costs US $15 per user per month and can
be integrated with accounts on all five of the social media platforms that Deskero
supports. Your help desk webpages are hosted on a subdomain of the
Deskero site. Although Deskero’s user interface comes as a standard series of
pages, these can be customized to reflect the look and feel of your main website.
Alibaba Group has total of seven business group namely Alibaba Small Business
Operations, Taobao, Tmall, Alibaba International Business Operations, Juhuasuan,
eTao and Alibaba Cloud Computing (Alibaba.com, 2014). Over the past decade, two
of the subsidiaries include Taobao and Tmall have profoundly assisted Alibaba
Group Holding Ltd in growing tremendously.
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 nonbrand name products
sold by smaller merchants; and Tmall, which offers brandname 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.
Alibaba.com is a truly global network for importers and exporters of raw materials,
component parts and finished goods and it is shown in fig 1.2
Alibaba Group Holding Ltd is now the major Global Electronic Marketplace (GEM) in
the world in terms of its broadly participated users. Jack Ma was formerly just a
teacher but due to the recent success of Alibaba Group is now among the richest
man in China. Alibaba operates a leading e-Commerce business and mobile
marketplace in retail and wholesale trade as well as other services such as
providing a platform which enables consumers, merchants and other participants to
conduct business in their network. The key stakeholders in the company include
Yahoo and Japan’s Softbank.
According to latest Forbes news, Jack Ma is the first Mainland Chinese entrepreneur
that manages to be on the cover of Forbes (Chen, Solomon & Mac, 2014). Alibaba now
runs both markets domestically and internationally. The international marketplace
(www.alibaba.com) focuses on global network for buyers and supplies
for raw material, components, and finished goods whereas the domestic
marketplace (www.alibaba.com.cn) focuses suppliers and buyers mainly in China.
Together, its market consists of 30 over million active users from over 240 countries
all over the world (Alibaba.com, 2014). According to Timothy Leong, Alibaba has
only 18 employees in 1999 and their office was at Jack Ma’s apartment. However, it
grew into more than 20,000 employees last year with offices in few countries. In
2004, Alipay was launch and it sets a record for the highest number of a single-day
transaction in 2012 (Leong, 2013).
Alibaba’s overall mission and goal is to build a strong and profitable customer
connection. The marketing strategy of Alibaba plays an important role in achieving
the overall strategic plan. How did Alibaba achieve its success? The answer is
through market segmentation or target market, marketing mix that made up of
factors under its control such as product, price, location, and promotion. Alibaba
has put in marketing analysis and planning to find its best marketing mix. Through
these activities, Alibaba has won a long-term relationship from its suppliers and
buyers that profit to the company.
Alibaba Group was established in 1999 by 18 people led by Jack Ma, a former
English teacher from Hangzhou, China. From the outset, the company’s 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.
Alibaba Group Holding Ltd’s development can be divided into 5 phases for the past
13 years. The first phase was started since 1998 until 2001. During this phase,
Alibaba provides free information for suppliers to enter the market. At that
moment, China’s trade market was still in the early stage where only information
flowed on the Internet. Jack Ma looked into the needs of SMEs in China in entering
the B2B e-market by providing them with free online services and information
according to the different enterprises and the characteristics of the industries. In
2000, Porter Erisman, now the Vice President of Alibaba was hired by CEO Jack Ma
as a foreign expert to help the company into globalization. During that time,
attracting foreign experts to run the company is essential because people in China
had very little management experiences (Walraven, 2009).
The second phases was during the year 2002 whereby Alibaba invented a
trustworthy credit certification named Trustpass in order for consumers to
purchase without any concern over fraud and deceit as the credit has been the
biggest problem in China’s etrading development. This method for credit
authentication has helped Alibaba in generating more and more profits because
many SMEs started to use Trustpass services in the e-trade market. During this
period, the Internet penetration in China started to increase and the total export
volume grow vastly. Buyers from all over the world lined up to profit from the low
cost products (Walraven, 2009).
The third phase occurred around 2004 when Alibaba started to develop overseas
market to expand the market of e-trade. China suppliers help international
enterprises to construct their own website and independent accounts in order for
consumers to access their business information more rapidly. This helped
enterprises to create more business opportunities and higher profit income.
Moreover, Alibaba launched Taobao which now became the largest online
shopping marketplace, overtaking US eBay. Alibaba has also launched Alimama,
the largest online advertising platform for business purpose and Alipay, China’s
leading online payment service, which was approved by the China government.
The fourth stage occurs between 2005 and 2007. Yahoo China was taken over by
Alibaba whereby all the transaction operations are controlled by Alibaba solely.
This creates a new e-trade search engine after Alibaba established its own system
at www.yahoo.com. Alibaba has started to grow broader and provide larger
communication space for e-trade business all over the world.
The fifth phases happened since 2008 until now. Alibaba opened up an office
respectively in Taiwan and Switzerland. In this period, B2C (“business to customer’)
market was lagging far behind B2B (“business to business”) and C2C (customer to
customer”). Therefore, Alibaba adjusted its marketing strategy to enter B2C e-trade
market more easily. Now, the total number of registered users has grown significantly,
revenue and profits raise rapidly. According to Alibaba’s annual report, in 2010 the total
users, revenue and paying members risen to 61.8 million, RMB ¥ 5.5576 billion and
809,362 respectively (Alibabagroup.com, 2014). Furthermore, the mobile application for
Taobao was launched in 2010. In fact, Alibaba also officially launches the AliExpress for
exporters in China to directly reach out to their consumers around the world.
Alibaba has few virtual products that develop a convenient and prompt
management for exporters to update or upload important information freely into
the database in order to contact buyers directly from overseas. Alibaba also
provides multi-functional management system such as products display
descriptions and photos according to the categories, which are available in many
other e-trade marketplaces. In other words, they practically own a “mini website”
which carries their company profiles, contact information, and a virtual showroom
of their products and services. On the other hand, buyers can search any products
they want via the search engine of an extensive database that gives a variety of
products ranging from electronics to computers and automobiles. Almost every
possible segment is included (Chen, Solomon & Mac, 2014). Above and beyond,
registered users have the privilege to subscribe to trade alerts send to buyers on
their selected suppliers.
Alibaba’s has their support from its biggest shareholders-Softbank Corp, a Japanese
mobile company that holds 36.7% of shares while Yahoo Inc. holds a 24% stake.
Softbank Corp has started to invest in Alibaba since 2000 when they saw potential
in them. Yahoo was once the largest shareholder in Alibaba but shortly after that
Alibaba bought backs some of its own share.
Alibaba Group climbed into the top 10 of the world’s most-valuable technology
brands, garnering the No. 8 slot in Brand Finance’s 2017 survey.
The Hangzhou-based e-commerce giant climbed four notches from a year earlier
and is in elite company with brands that include Google, Apple, Amazon and
Microsoft. Its brand value surged 94% to $34.86 billion from the 2016 league table,
and has a strong brand rating of AA+, on a scale where AAA+ is the highest, the
Brand Finance report said.
“Alibaba has created a fair and open portal for small businesses and enterprises. Its
success stems from the opportunities to both open up and simplify commerce for
Chinese communities, particularly rural ones,” the Brand Finance report said. “Its
service has clearly underpinned brand value growth at home, but in order to
accelerate growth abroad by aiding brand recognition, it is investing in marketing
communications including joining McDonald’s, Coca-Cola and Visa as a major
sponsor of the Olympics Games.”
Google unseated Apple for the highest brand value of $109 billion in the 2017
report. Apple had held the top slot for five years.
Overall, Chinese companies fared well in the Brand Finance league tables, with
Huawei holding steady at number 10, while seeing a 28% rise in its brand value,
now around $25.88 billion. Tencent, and its WeChat brand, both placed among the
top-10 BSI scores for 2017.
“Many of these Chinese tech titans were virtually unknown just a few years ago
and some are barely known about side their home market today, but are making
waves financially and building brands that are rapidly gaining traction outside
China.” An earlier report from Brand Finance found a correlation between a
brand’s strength and the performance of its share price.
The initial business model of Alibaba was simple ; 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.
B2B:
Alibaba.com Limited the primary company of Alibaba, is the world’s largest online
Business to business trading platform for small businesses. Founded in Hangzhou
in eastern China, Alibaba.com has three main services. The company’s English
language portal Alibaba.com handles sales between importers and exporters from
more than 240 countries and regions. The Chinese portal 1688.com was developed
for domestic business to business trade in China. In addition, Alibaba.com offers a
transaction based retail website, AliExpress.com, which allows smaller buyers to
buy small quantities of goods at wholesale prices.
C2C:
Taobao, is Alibaba’s yet another portal, which utilizes consumer to consumer
model similar to eBay. Taobao.com is China's largest shopping website, and
tmall.com, which offers a wide selection of branded goods to China's emerging
middle class. It features thousands of nonbrand name products sold by smaller
merchants, With around 760 million product listings as of March 2013, Taobao
Marketplace is one of the world’s top 10 most visited websites according to Alexa.
B2C:
In 2008, Alibaba Group also established another online website Tmall, to
compliment it’s C2C market. Although Tmall is mainly a business to consumer
platform is known for offering brandname products. The two sites (Taobao.com
and Tmall) are hugely popular, and collectively account for more than half of all
parcel deliveries in China. According to The Wall Street Journal, their combined
transaction volume in 2012 topped one trillion yuan ($163 billion), more than
Amazon and eBay's revenue combined.
Alibaba provides a wide variety of products and services through its various online
portals. Some of these are:
Apparel, Textiles & Accessories
Auto & Transportation
Electronics
Electrical Equipment , Components & Telecom
Gift, Sports & Toys
Health & Beauty
Home , Lights & Construction
Jewelry, Bags & Shoes
Machinery, Hardware & Tool
Metallurgy, Chemicals, Rubber & Plastics
Packaging, Advertising & Office
Online marketing
Cloud Computing
Logistics Operations
Electronic Payment Services
Alibaba is one of those online resources which claims a “Get everything and
anything” availability. A consumer can literally buy products ranging to simple toys
to automobiles. Hence, Alibaba is proving to be a onestop platform where a
consumer can choose among a wide variety of options.
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 200 odd countries.
Alibaba has been turned into a global organization but still holding China as it’s
major focus. Almost 75% of China’s 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.
Fig: Alibaba International Marketplace
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.
Alibaba develop a payment instrument named Alipay in China which contributed a
part of the success of Alibaba. Before the emergence of Alipay, many sellers felt
insecure to ship goods to the buyer due to many reasons until the buyers has clear
off the payment. However, when Alipay has been introduced in Alibaba, this credit
system has been very much lessens the risk of e-transactions and ease buyers and
sellers concern upon failure of delivery or delivery of fake and damaged products.
Alibaba has not only introduce Alipay but also focus very much on the sound
evaluation system, in which both sellers and buyers can give feedbacks and
comments on the business transactions that will appear on each other’s website,
hence providing a better and clearer references for their next business partner
(Junsheng, 2014). Feedbacks are very important in a business world because it
helps to reduce dishonest business behaviour and make transaction more
transparent and reliable.
Alibaba online payment is secured with Escrow for international SMEs, which
protect the privacy of the buyers and buyers who are able to pay securely without
exposing their personal details (UKessays.com, 2014) 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.
For buyers: 2.5 out of Since many factories need money in advance to
buy material for production, 30% Upfront TT is
5 stars
1 30% Upfront TT a common payment term for suppliers,
For suppliers: 4.5 out
especially when dealing with an unknown
of 5 stars
buyer.
production starts. This payment method bears
stars
2 100% Upfront TT the same risk as Western Union and is not
For suppliers: 5 out
recommended when dealing with an unknown
of 5 stars
supplier.
Huawei, the world’s third largest smartphone vendor by shipment volume, will also
employ high level encryption and verification to ensure only approved third party
applications, such as Alipay Wallet, are allowed to access the fingerprint information for
transactions.
It’s worth remembering that Alibaba is a pretty safe platform to purchase on. Not only
do you have the standard protection that your payment provide gives, but alibaba hold
mostly all payments in Escrow until the buyer confirms they’ve received the goods and
they’re as expected.
Until the buyer confirms receipt the seller doesn’t receive the funds. Alibaba also
offers some tips for shipping methods:
You can open the shipment in front of the delivery person. If the item is not what you
ordered or if the item is defective due to handling, you have the right to return it to the
delivery person.
• Using sea freight shipping method
If the item that you received is not what you ordered, do not clear customs! You can
always request for a customs officer or a third party Inspection company to conduct an
onsite inspection before being issued a customs clearance certificate. If you only
inspect the delivery after customs clearance, you might encounter legal hurdles should
you decide to dispute the delivery.
Alibaba provides free membership from the beginning to attract clients its way to etrade
market that became the core competency and contributing to more business
opportunity in Alibaba. After a big number of registered clients at Alibaba, it began to
charge membership fees. Alibaba earn profits by two major aspects. The primary
revenue came from advertising fees from Alibaba. The second source of revenue comes
from customers for value-added services, listing fees as well as membership fees.
Furthermore, Alipay also began to collect technical service charge from business
transaction that take place outside of Taobao and Alibaba (You Fei, 2012).
Alibaba uses a competition pricing in setting the price of a product in comparison with its
competitors. It uses the price that does not have extreme differences with its competitors
and provides the cheapest prices with good quality to attract its target market. Due to
Alibaba's dominant market position in ecommerce, Alipay has emerged as the online
payment processing leader in China and it clears 80 million transactions per day, including
45 million transactions through its Alipay Wallet mobile app (Shih, 2014).
Next, Alibaba provides products within the same range with different prices depending on
the suppliers to offer buyers a wider choice of variety. Penetration pricing is one of the
marketing strategies that Alibaba implies to set a low price in order to increase sales and
market share. Furthermore, Alibaba also bring into play discount to stimulate the sales as
well as retaining their customers. Discounts are given provided that the customers buy
products in bulk or during festival. Buy one free one is the best method used by suppliers to
attract customers. Last but not least, value-added services are applied whereby product is
offered at a cheap price but services such as shipping, instant delivery, guarantees,
warranties and many more are added up to make sure that the total cost of the products
with added services is higher than the production cost in order to make profit
(UKessays.com, 2014). By December 31, 2013, Alibaba has generated revenue of RMB40.5
billion and net income of RMB17.7 billion. Its fiscal year ends on March 3.
Alibaba target two marketplaces which include the global marketplace based in English
Language that cater to international exporters and importers and the China
marketplaces whose aim is to focus on suppliers and buyers trading locally in China.
China is by far the largest Internet marketplace in the world with double the size of U.S
market. There are 560 million Internet users spending 20 hours a week online. Notably,
China is skipping with the traditional retailing and in favour of the e-retailing. These two
marketplaces are collectively the most- visited B2B website on the Internet. Alibaba also
target on small and medium-sized private enterprises and individual businessmen,
which have great potential in succeeding in the e-trade. In order to get a huge portion of
market share, Alibaba has localized the e-trade services by developing websites that
locate to different languages and modify their design and layouts, which suits the local
cultural in overseas. For example, English website is target to buyers from oversea in
general while Chinese website targets China traders and Japanese website aims at the
Japanese market. Alibaba has also creates Korean and Spanish language website in order
to expand its market in different regions and to achieve highest profit and goals.
All these play an important role in Alibaba’s global success.
Alibaba is really a technology company that serves retail customers and controls 80% of
the Chinese ecommerce market. Alibaba will compete most directly with online retailers
like Amazon, EBay or Zalando in Europe, Rakuten in Japan, Kobo in India, Wuaki in Spain
and other major online providers with strong presence in their home and adjacent
markets.
Take market capitalization, or the total value of available shares times the value of a
single share , Alibaba’s market capitalization value is estimated at $155 billion. That
number makes it look pretty small compared to the top three US tech giants: Apple
($593 billion), Google ($400 billion), and Microsoft ($378 Billion). But it compares nicely
to Amazon, which also has a market cap in the $150billion range. And it’s growing.
The comparison is not exactly apples to apples. Alibaba’s business model is similar to
that of Ebay, in that it is a middleman coordinating sellers and buyers. Alibaba doesn’t
house and manage any products itself.
“Gross Merchandise Volume (GMV), the metric the company likes to highlight, is the total
sum of goods and services transacted on all its sites.” In 2013, Alibaba hosted GMV of $248
billion in transactions last year. That’s more than Amazon and eBay managed to do
— combined. And while Amazon takes home a lot more revenue than Alibaba from its
fewer transactions, Alibaba takes a much higher net income from its revenue than
Amazon. Alibaba now takes home 80 percent of its revenue as profit.
Alibaba’s revenue is the cut it takes out of each sale. In comparison, WalMart’s nearly
$250 billion in revenue represents the total value of all the goods purchased along with
its builtin margins. This shows how complicated it is to value Alibaba. To really
understand how big a deal Alibaba is you’ve got to understand the growth of China’s
ecommerce economy and the stronghold that Alibaba has on it.
China has over 618 million internet users and they’re spending lots of money. That’s twice
the population of the United States, but only half China’s total population. So there’s lots of
room for growth in a sector that’s already exploding. In 2010, China’s ecommerce
market was $74 billion dollars. In 2013, it was $295 billion. By 2017, it’s estimated to
reach $713 billion.
And Alibaba is cashing in big time. It controls 80 percent of online sales. Even though it’s
not yet putting up the gross revenue numbers of Amazon and Apple, its 80 percent
control of the market and 80 percent profit take from its revenue adds up to a huge,
massive, crazy, growing amount of money.
Alibaba expands its new market through freebies. They offer freebies to attract more
clients and customer to use Alibaba as an online marketing platform. For example,
Alisoft is giving out free copies of Shopkeeper TM, a package that consist of accounting,
stock management, and consumer resource management tools for registered users. The
company also promotes its services via internet promotion strategy such as public
relations, direct marketing, and discounts for certain items during special days such as
festivals, media advertising and sponsoring of events to attract awareness of Alibaba.
In the e-trading marketplace, Alibaba provides a communication platform for trading
partner to communicate in real time through Alibaba’s Trade Manager tool. Alibaba also
has a team of dedicated experts that are always motivated to search for better and
innovative technology platforms to catch up with the changing of the generations.
Alibaba is continuously trying to develop highly complex system to improve the online
transaction for the consumers by setting ample security actions. For example, Trustpass
has given online customers a strong trust and security of online transactions. Moreover,
Alibaba also has the latest technology for anti-fraud and anti-spam that is able to detect
any fraudulent activities and filter unwanted messages. Alibaba’s IT team is constantly
working on improving the accuracy and protection of their customer because customers
are their main source of the entire business.
Alibaba is a “Collective Entrepreneurship” between company and thousands of
merchants that join this network. It offers the platform whereas the merchants provide
the products.
The Alibaba model, which relies on profits sharing rather than listing fees has attracted
many merchants to participate in the network. The larger the network is, the greater
the benefits for both company and merchants as it draw a large volume of sale.
Likewise, Alibaba has a good relationship with the Chinese government, which is
important in China where government acts as a gatekeeper of the economy. Alibaba has
been chosen by the government as one of the five companies to enter the Internet
banking where banks are owned by the government.
Alibaba has also taken over Yahoo in China and thus Yahoo is the largest shareholder of
Alibaba. The two companies will work together in an exclusive partnership to grow
Yahoo brand in China.
Alibaba’s future strategic actions include sustaining domestic Chinese market. It is
essential for Alibaba to maintain its domestic market first in order to success globally.
Without China market, Alibaba would not be able to survive without the economics of
scale. Alibaba is attempting to expand its business in developing countries such as India,
which is the second fastest developing country after China.
India has significant potential growth and profit. Besides that, Alibaba is also enhancing
its technology and R&D development for advance Internet infrastructure to give the
fastest speed and accuracy for online marketing (You Fei, 2012).
Meanwhile, Alibaba has been trying to invest in smart phone users. Forrester Research
analyst says that there’s high potential of integrating other services into WeChat
because many people are using it to communicate with friends and family in China. It
could develop into a foremost e-commerce rival in the long run (Osawa, 2013).
As mentioned by Forbes, Alibaba is not only the largest IPO in U.S. history but has also
risen more than the three largest IPOs by American Internet companies combined.
Alibaba broke records as the biggest IPO, pricing its offering at $68 per share this year.
The IPO is expected to raise $21.8 billion, which values the company at $167.6 billion
overtaking Visa and Facebook (Chen, Solomon & Mac, 2014).
Jack Ma is also good in unifying everyone’s believe through common goal. He is also a
good leader that encourages his employee to achieve higher without limitation. He
works together with them and guide them through the entire success of Alibaba. I
believe in two principles: Attitude is more important than capabilities. Similarly, decision
is also more important than capabilities. The right decision comes with the right attitude
and the worst failure is giving up (Pris, 2014).
In conclusion, Alibaba’s e-commerce marketing strategies have made it so successful in just
a short period that there is no other company that can overtake them at the moment.
Planning to be a company like Alibaba is easy but becoming like Alibaba is another thing.
In this study, we learned very much that the determination of the founder, Jack Ma has
profoundly influenced the success of Alibaba. Jack Ma once said it’s not about the list of
privilege but the story of opportunity that has made him a successful person even
though he doesn’t know much about technology. As one of the China pioneer e-trade
service platform, Alibaba has built a strong connection between SMEs in China and
oversea buyers with a boundless marketplace by providing the high quality services at a
reasonable price with various business marketing channels and promotions.
Alibaba has significantly attracted large base of consumer with the help of the large
population in China. Online business is not new to everyone since years ago, but Jack
Ma has created a miracle that gives China a huge impact until today, the e-marketing in
the 21st century has become the largest online e-trade platform in the world. However,
there are still some improvements for the Chinese e-market in terms of the protection
of intellectual property rights in China and the reinforcement of supervision over
etransation are still in a hard nut to crack for the China law enforcement and authorities.
Alibaba may be seen as a successful company, but there are also bumpy roads that
Alibaba has gone through such as cultural clash. When Jack Ma started to hire foreigners
into the company to manage the business, the Western cultural of work producing very
detailed and critical analysis was not suitable in the Chinese market because Internet
entrepreneurs would jump into the market and do it without spending much time in
analysing it.
Without doubt, Alibaba is now the leading international Chinese Internet company.
However, it is still struggling in expanding globally as the major revenue still comes from
suppliers in China. Alibaba has been trying to make its way internationally because of its
biggest threat, which is Baidu who has announced its plan to compete with Alibaba’s
Taobao. All in all, Jack Ma was just an ordinary person that had a vision, and it was the
perseverance and dedication that raise him into his current position in Aliababa.
1. Tan,B.,Pan,S.,L., Lu, X., & Huang, L. (2009). Leveraging digital business ecosystems
for enterprise agility: The tri-logic development strategy of Alibaba.com.
2. Alibabagroup.com(2014). Alibaba Group. Retrieved 23 October 2014, from
http://www. alibabagroup.com/en/ir/financial
3. Qing, H. (2008, December). A Model for Valueadded e-Market Provisioning: Case
Study from Alibaba.com. In Future Generation Communication and Networking
Symposia, 2008. FGCNS'08. Second International Conference on (Vol. 1, pp. 4752).
IEEE.
4. Osawa, J. (2014). H o w Does Alibaba Make Money? . The Wall Street Journal
Retrieved 23 October 2014, from http://blogs.wsj.com/digits/
2013/09/09/howdoes-alibaba-make-money/
5. WANG, G., & Lim, Y. T. (2011, August). Research in China’s Alibaba’s Development.
In A r tificial Intelligence, Management Science and Electronic Commerce
(AIMSEC), 2011 2nd International Conference on (pp. 2295-2301).
IEEE.
6. Alibaba.com (2014, September). LinkedIn. Retrieved Oct 20, 2014, from Business
Development and Marketing Director:
https://cn.linkedin.com/jobs 2/view/17317067
7. Doland, A. (2014, September 24). B r anding Lessons From China's Alibaba .
Retrieved Oct 21, 2014, from Adage:
http://adage.com/article/globalnews/alibaba-teach-chinese-brands/295115/
8. You Fei, J. (2012). “E -marketing strategic management at Alibaba.com” (pp. 112).
De Monfort University. MBA Library.
9. Clasen, M. & Mueller, R. A. (2006). Success factors of agribusiness digital
marketplaces. Electronic Markets , 16 (4), 349-360.
10. McGovern, G. (2014). Customer-centric and easy to-use is the new business
model (The Alibaba story). New Thinking . Retrieved from http://www.
gerrymcgovern.com/new-thinking/customer-centricand-easy-use-new-
businessmodel-alibaba-story
11. J.Puglisi, D. (2014). Alibaba Group Holding Limited . (2014) (1st ed.). Hong Kong.
Retrieved from http://www.sec.gov/Archives/edgar/data/1577552/00
0119312514362772/d794345ds8.htm
12. Alibabagroup.com (2014). Alibaba Group . History and Milestones .Retrieved 23
October 2014, from http://www.alibabagroup.com/en/about/history
13. Leong, T. (2013). Int roduction to Alibaba.com. Retrieved October 16, 2014, from
Alibaba.com:http://www.alsma.org/wp-content/uploads/2013/10/Tim
othyLeung-Introduction-to-Alibaba.pdf
14. Sau-ling LAI, L. (2014). Ch in ese Entrepreneurship in the Internet Age: Lessons
from Alibaba.com (1st ed., pp. 1-7).
15. International Science Index: World Academy of Science, Engineering and
Technology. Retrieved from http://waset.org/publications/15135/
chineseentrepreneurship-in-the-internet-agelessons-from-alibaba.com