NAME: Ashma Patrekar

ALIBABA TAKES ON AMAZON OPENING B2B PLATFORM.

Alibaba to take on Amazon, opening business-to-business services to US

companies

Push comes as Chinese giant, which operates the world’s largest

e-commerce platform, seeks methods to enlarge its business internationally

Alibaba Group has introduced its new business-to-business from online platform
marketplace to US companies and connected with other different countries, taking
on its US inspiring Amazon.com as part of the Chinese e-commerce which plan to
grow its market share also through internationally and make it worldwide
connected with different countries.

In the next more step the aim of the Alibaba is to grow its business outside China
and globally, the Alibaba.com platform will let US manufacturers, suppliers and
wholesalers sell their products and services to other American and global
businesses and wholesalers and world wide globally with other many differernt
countries

Alibaba’s American depositary shares (ADS) rose 1.4 per cent to US$176.15 in
New York following the announcement.The company’s shareholders
overpoweringly accepted a 1-to-8 split of the ADS in research for its listings in
Hong Kong.

The statement came a year after US President Donald Trump began a trade war
against China by instituting the first of several rounds of prices on Chinese exports.
Tensions between the two countries have since risen, with confrontations
expanding to other trade and economic issues, academic research and, mainly,
technology.

As a result, the US government has constricted laws for Chinese investors to

purchase US assets and for US companies to export technology to China, fearing
potential national security fears.

In spite of the geopolitical tensions between China and the US,continued to build
US business, carefully,” Alibaba Group President Michael Evans in New York .
“In Washington to make sure they appreciate what they are trying to do in the US,
counting the launch, since it involves some form of technology that want them to
be comfortable with,”.

Alibaba, which owns the South China , started in 1999 as a B2B website
connecting producers and wholesalers in China.

The company has since full-grown to become the operator of the world’s largest e-
commerce platform. The business to business unit is detached from its
retail e-commerce platforms, including Tmall.com and Taobao.com, that sell goods
and services straight to consumers.

Alibaba has been making a push for its retail e-commerce internationally as well,
most freshly launching an English-language website of Tmall Global to attract the
overseas new consumer and customers.

With this introducting, Alibaba takes on Amazon.com, which has a similar B2B
platform since 2015 – Amazon Business – that caters to similar clients in the US.

To contend against Amazon, John Caplan, head of North America business to

business at Alibaba Group, Alibaba.com would offer clients a flat participation fee
of thousand dollars a year. Thus the Amazon and the Alibaba platform will not
take a cut from the sales and the client makes use of it.

An Amazon spokesperson did not reply to an emailed application seeking

comment. According to its website, a capable wholesaler may sign up for a
minimum of US$39.99 a month. But Amazon takes up to 15 per cent of a client’s
sales generated from the platform, according to a person familiar with the matter.

Jack Ma, Alibaba’s founder and chairman of alibaba, began a universal

development in 2015. The company then since made headway but its international
e-commerce incomes have remained low, at 9 per cent of the company’s totals.

Alibaba reported close to US$56 billion in revenue and US$12 billion in net
income in its most recent fiscal year, although Amazon reported US$233 billion in
revenue and US$10 billion in net income for 2018, permitting to the companies’
financial declarations.
Alibaba, which already has additional than 10 million active business to business,
businesses and 180,000 brands, sees its next growth driver in business to business
– a market US$23.9 trillion, or 6 times the size of the online retail market,
according to the US International Trade Commission.

But Caplan said that most of those trades are lopsided.

“In today’s B2B market, Chinese manufacturers make up about 95 per cent of total
sellers to the rest of the world, but wholesalers in China buy very little from
merchandisers outside the country,” said Caplan.

According to a survey by McKinsey & Company, small and medium businesses

are also slow to go digital, with less than 10 per cent of such companies having a
mobile sales strategy.

Alibaba’s first B2B deal was struck four months ago with the large US office
supply seller Office Depot. The companies launched a co-branded e-commerce
website that gives Chinese merchandisers the ability to sell to Office Depot’s 10
million new customers and consumers and to tap into Office Depot’s logistics and
delivery channels that allows next-day transfer in the US and other countries, the
delivery has been done with the countries on daily basis.

Office Depot had a lot of struggles and issues during these daysa,to increase sales
in recent years as it is with Amazon, the e-commerce.Thus, then as a result,Office
Depot has shifted its focus to B2B, which has grown to become its largest revenue
source in 2018, according to the filing with the US Securities and Exchange
Commission.

Office Depot stock dropped to below US$2 a share in June from US$9.60 in 2015.
The shares traded at around US$42 in 2006.

The company pulled back from international operations three years ago, selling off
businesses in Australia, New Zealand and South Korea. In 2017, its mainland
Chinese business was traded to Shanghai-based M&G COLIPU Office Suppliers.
Natalie Malaszenko, Office Depot’s senior vice president for its e-commerce
commercial, said the connection with Alibaba would help her company’s efforts in
the US.

Alibaba is also known as Alibaba Group it is called as a

Chinese multinational company specializing in e-
commerce, retail, Internet, and technology and channilised with many
other different countries.The Alibaba was Founded in 4 April 1999
in Hangzhou, Zhejiang, the company provides consumer-to-
consumer , business-to-consumer , and business-to-business sales
services via web portals, as well as electronic payment services, shopping
search engines and different type of services. It owns and operates a
diverse the businesses around the world in different type of sectors, and is
named as one of the world's most admired companies in the world.
At closing time on the date of its main initian oublic offereing – US$25
billion, the world's highest in history in the year 19 September 2014,
Alibaba's market value was US$231 billion. It is one of the most top 10
most valuable and one of the 59th biggest public businesses in the world
by the Global 2000 list globally. In year January 2018, Alibaba became
the second Asian company which break the US$500 billion valuation mark
and also, after its competitor Tencent. As of in the year 2018, Alibaba has
the 9th highest global brand valuation with different type of countires.
Alibaba is the world's largest retailer and e-commerce company, is on
the list of la companies, is one of the biggest venture capital firms, and one
of the biggest investment corporations in the world.The company hosts the
largest business to business (Alibaba.com), customer to customer, and
business to customer marketplaces in the world. Its online sales and profits
surpassed all US retailers combined since 2015.The sales has been
expanding into the media industry on daily basis, with revenues rising by
more and more percentage points year after year.It also sets the record on
the 2018 edition of China's the world's biggest online and offline shopping
day ,Alibaba is one of the biggest shopping platform where people buy the
product globally and from the different countries,world wide.

Alibaba welcomes U.S. small businesses to sell their products globally on

its online platform.
NEW YORK - Chinese e-commerce Alibaba Group Holds on Limited will allow
small U.S. businesses to sell on Alibaba.com, as of the company seeks to tap into
the business-to-business site e-commerce market and fend off like Amazon.com.

The change will open up with the different types of markets to U.S. merchants in
the different type of countries worldwide,served by Alibaba, including India,
Brazil and Canada and different types of countries worldwide. U.S. merchants,
beforehand able to only buy on Alibaba.com, can now also sell to other U.S.-based
industries on the marketplace.

Mostly one-third of buyers on the Alibaba.com are U.S.-based and others. More
than 95% of sellers come from China only.

Alibaba’s pitch to U.S. insignificant industries comes as the company faces lean e-
commerce income growing, which has been further exposed by the U.S.-China
trade spat and a growing number of competitors such as recently listed.

Alibaba, which does not trade record of its own, anticipations to appeal local U.S.
productions as their market platform of choice by offering small- and medium-
sized businesses global selling power. Alibaba highlighted its attention in winning
completed manufacturers, wholesalers and suppliers.

Last month, the company launched an English-language website for its Tmall
Global marketplace aimed at merchants so for the company who knows english
language it will be actual help full for them, in an attempt to dual the amount of
international brands on the stage to 40,000 in the next 3 years.

And also the Amazon, in addition to the selling its own inventory, and allows the
third-party vendors to the list products for sale on its website. Those vendors may
store their goods in Amazon’s barns safely or ship directly to customers and
consumers.

The business-to-business e-commerce market (B2B) is prized at $23.9 trillion,

according to the U.S. International Trade Commission. The business-to-consumer
e-commerce market is prized at $3.8 trillion.
“I don’t think they Alibaba is trying to make any profit financially in the near term,
but this also does open up a complete new market for their B2B business,”.

“Alibaba.com was very well known company as more of a company to China’s

well-established supply chain for global buyers in worldwide. Now they are
opening this up to U.S. small businesses so they could sell their products,to
different countries worldwide.

U.S. sellers is also have to pay a involvement fee of amout roughly $2,000 to get
their stores online on Alibaba.com then only they open the new account after
paying the amount, and also any advertising and promotions and marketing costs
are applied. The Amazon charges third-party sellers by the month or per item on
each and every transactations.

“Compete and act like a multinational company in a way that you’ve never been
had the tools and also the technology to be able to do so,” John Caplan, head of
North America business to business at Alibaba Group, told Reuters.

The United States of America is the first ever market where the company is mostly
focusing on globalizing the supply chain, but Alibaba has a “very clear approach
to other markets when it comes to globalizing the supply chain.”

Shares of Alibaba are trading up about to 1% at $175.71 in afternoon trading. As of

the shares had risen roughly 30% this year.
 BCG MATRIX OF AMAZON
Amazon is an American multinational business based in Seattle that
attentions on e-commerce, cloud computing, digital streaming, and artificial
intelligence. It is measured one of the Big Four tech companies, alongside
with Google, Apple, and Facebook.It's been stated to as "one of the most
significant economic and cultural services in the world.

Amazon is known for its interruption of well-established businesses through

technological innovation and mass scale. It is the world's major online
marketplace, assistant provider, and cloud computing platform as
measured by revenue.

Amazon is one of the most largest company in the world.It is the one of the
second largest private employer in the whole United States of america and
one of the world's most valuable business in the whole world.

A finalized matrix can be used to evaluate the strength of your business and
its merchandise portfolio. Business would ideally like to have a good mix of
cash cows and stars. There are four positive points when we use this matrix
they are as follows:

1. If you want to gain the market share of the company you will need to invest
in a proper viable package, especially through the proper investment in
marketing field.

2. Market share increases have the potential to yield a cash excess due to the
effect of economies of scale.

3. The expansion phase of the product life cycle is where any cash surplus is
most likely to be produced

4. The top chances to build a durable market position usually occur during a
market’s growth period.
The Boston Consulting group’s product portfolio matrix (BCG matrix) is
designed to do with long-term strategic planning, to help a business consider
growth opportunities by reviewing its portfolio of products to decide where to
invest, to discontinue or develop products. It's also known as
the Growth/Share Matrix.

The Matrix is divided into 4 quadrants based on an analysis of market growth

and relative market share, as shown in the diagram below.

When the management wants to examine its product portfolio and

differentiate between cost-effective and unprofitable business units, BCG
Matrix is a useful tool to carry out this analysis.
The matrix comprises 4 quadrants, cash cows, stars, question marks and
dogs. The identification of a product in relation to these categories is based
on the market share and industry growth prospects. Amazon.com Inc. has
been a part of the online market, using its website to access the customers
across the globe.

Currently, the company has divided its operations into three units; North
America, International and Amazon Web Service (Amazon, 2016). The
range of products and services offered by Amazon include merchandise as
well as electronic, audio and other forms of content that is purchased from
the vendors and provided to the buyers. The following analysis presents
BCG Matrix of Amazon’s products.
Cash Cows

There are some product categories that bring in enough revenue for a
business entity to regulate its operations of different business units. These
products are labeled as a cash cow and the manager’s task is to take
leverage of these products and utilize their high market share for gaining
high revenues. The industry is mature enough to support the high sales
and the high consumer demand further facilitates in positioning the product
as a cash cow.

There is limited chances of gaining any massive growth in future, however

the current profitable position of the business unit communicates a positive
outlook for the company. Amazon has generated a great deal of cash
through the sale of its e-books, making them a cash cow for the company.

The company has recognized the potential held by electronic books, and
provided its readers with low cost options for people seeking books. Kindle
has supported the company to use the e-books segment as a cash cow.
Miller and Bosman (2011) have observed that the sale of e-books has
significantly increased over the years, supported by the increasing number
of users of Kindle.

It has been further speculated that the number of e-book readers will
increase in the coming years, making the e-books a high value item for
Amazon. Another product that is cash cow for Amazon is its audio books
which have also achieved significant sales.

In addition, movie on demand has also generated high amount of cash and
holds a significant market share in the industry. The example of IMDB is
another case of cash cow as it helps the company to manage the sales of
its movie DVDs, along with lending support to the movie on demand
business.

Stars

The second category of products that is a part of the BCG Matrix is star or
rising star, which holds a high market share. As the name reflects, these
products are emerging as the leading revenue generator for an
organization. They do not yield the same financial return as cash cows, but
the future growth of these business units is promising, thus encouraging
the management to continue with the investment in them.

Even though these products require high investment, they are in a growing
phase which suggests that these business units are likely to become cash
cows once the industry has reached maturity. The electronic items being
sold at Amazon are in demand, making this business unit a rising star for
the company as the market share in this domain is also increasing with
time.

The industry for electronic items is growing, creating vast opportunities for
further growth of Amazon. Grisworld (2016) has asserted that the financial
performance of Amazon in consumer electronics category shows that it has
achieved higher sales as compared to brick and mortar retailers such as
Best Buy.

This trend is further expected to increase due to increasing number of

users of online shopping portals. In addition, the cloud computing segment
has shown positive growth prospects in the future, hinting at the product to
become a cash cow in future once a significant level of market share is
established.

Question Marks

The next quadrant included in BCG Matrix is question marks. These

products have the chances of growing into a profitable business, however
the limited market share makes it impossible to use these business units as
prime revenue generator. The industry is still in growth phase, which
indicates that question marks may emerge as a rising star if the business is
able to set the right direction for these products.

Moreover, environmental conditions that promote growth of these items is

also a key consideration in determining the future of question marks. The
segment of video on demand had some issues such as poor connectivity
which has limited the growth of this segment, making it a question mark.

The business units of Zappos has faced similar issues of low growth and
return on investment after Amazon’s acquisition of Zappos (Stone, 2009).
For zappos and video on demand, the company will need to address the
issues which have resulted in low market share as it would help the
company to tap into the needs of the market and position these units as
more profitable, taking benefit of the growing industry. There is a possibility
that the video on demand and zappos may move out of the question mark
category in future.

Dogs
The last category in BCG Matrix is used to identify those products that are
not generating high sales and have not been able to establish a notable
market share. The industry is slowly progressing with little scope of further
development, further adding to the complexity of the external business
environment. These products do not offer significant financial gain to the
company, instead they consume cash investment.

Due to this attribute, dogs are recognized as cash traps, since they are not
expected to help the business through high ROI. For Amazon mp3 has not
been able to provide the company with any solid financial gains, therefore it
can be placed into the category of dogs. The mp3 business doesn’t have a
high market share and the industry is also growing at a slow pace.