Table of Contents

S.No Topic Page Number

1. Introduction 3

2. History 4

3. Business Model 5

4. Products and Services 7

5. Target Users 8

6. Payment Methods 9

7. Comparison of Alibaba with other 12

TechGiants

9. References 15

2
 Alibaba

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 e-
commerce 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 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.

3
 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 mediumsized 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 betalaunched 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.

B2B:

Alibaba.com Limited the primary company of Alibaba, is the worlds largest online
businesstobusiness trading platform for small businesses.

Founded in Hangzhou in eastern China, Alibaba.com has three main services. The companys
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
businesstobusiness trade in China. In addition, Alibaba.com offers a transactionbased retail
website, AliExpress.com, which allows smaller buyers to buy small quantities of goods at
wholesale prices.

According to some ecommerce analysts. Alibaba is probably the one organization in the world,
which has been able to successfully provide a hassle free platform to small to medium sized
businesses to carry on over the internet.

C2C:

Taobao, is Alibabas yet another portal, which utilizes consumertoconsumer 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
worlds top 10 most visited websites according to Alexa.

B2C:

In 2008, Alibaba Group also established another online website Tmall, to compliment its C2C
market. Although Tmall is mainly a businesstoconsumer platform is known for offering brand-
name 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.

Tmall marketplace is Chinas largest businesstoconsumer (B2C) onlineshopping venue. The site
allows visitors to quickly view vendor fees, required deposits and other factors associated with
operating a Tmall storefront.
 Products and Services
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.
 Target 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 smalltomedium businesses Alibaba group also provides online platform to
individual customers through its parent websites Tmall.com and Taobao.com.
 Payment Methods
Actually Alibaba Group has its own payment solution named as Alipay, is a thirdparty 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.NO Methods Conditions Description

1. 30% Upfront TT For buyers: 2.5 Since many factories need money in
out of 5 stars advance to buy material for production,
For suppliers: 30% Upfront TT is a common payment
4.5 out of 5 stars term for suppliers, especially when dealing
with an unknown buyer.

2. 100% Upfront TT For buyers: 1 The supplier gets full payment before
out of 5 stars production starts. This payment method
For suppliers: 5 bears the same risk as Western Union and
out of 5 stars is not recommended when dealing with an
unknown supplier.

3. 100% Backward TT For buyers: 4.5 If being paid after preshipment

out of 5 stars inspections, it is suggested to use trade
For suppliers: 2 terms of FOB. If being paid after receipt of
out of 5 stars merchandise, it is nearly 100% reliable for
buyer cause 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.

4. Letter of Credit For buyers: 4 Highly recommended for transactions that

out of 5 stars are US $20,000 and above because the
For suppliers: 4 bank guarantees the transaction. But
out of 5 stars complex procedures and high threshold of
registered finance may prevent some SMEs
from being involved.

5. Western Union For buyers: 0 Not recommended when it comes to paying

out of 5 stars suppliers if the payment is not protected by
 For suppliers: 5 escrow on a transaction made online
out of 5 stars through AliExpress. However, it's useful
when transferring money to known
individuals such as family members.

6. Paypal For buyers: 5 A popular payment method for buyers as it

out of 5 stars presents a much lower risk to them.
For suppliers: 3 However, it is less popular with suppliers
out of 5 stars due to difficulties in money withdrawal,
high tax rates and uncertain claim of charge
back from some notorious importers

7. Escrow For buyers: 5 Money is only paid to the supplier after the
out of 5 stars buyer confirms satisfactory delivery of
For suppliers: 3 his/her order. A safe way to buying and
out of 5 stars selling online because Escrow protects both
the buyer and supplier.

In terms of innovation, Alibaba is introducing a new secure mobile payment method as it gets
ready for its IPO.The Chinese ecommerce giant will get ahead of its competitors Amazon,
Google and Paypal with an innovative and secure method of payment using fingerprints instead
of passwords.

The biometric technology, including encryption and authentication managed by Huawei, will
allow mobile users to confirm payments for a wide variety of goods and services with their
smartphones simply by swiping a digit instead of entering a lengthy code, the company says on
its blog.

Huawei, the worlds thirdlargest smartphone vendor by shipment volume , will also employ
highlevel encryption and verification to ensure only approved thirdparty applications, such as
Alipay Wallet, are allowed to access the fingerprint information for transactions.

Its 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

10
payments in Escrow until the buyer confirms theyve received the goods and theyre as expected.
Until the buyer confirms receipt the seller doesnt receive the funds.

Alibaba also offers some tips for shipping methods:

Using express companies such as FedEx or DHL

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 thirdparty 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.
 Comparison of Alibaba with Other
TechGiants
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 , Alibabas 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 its growing.

Fig : Revenues of various famous Techgiants

The comparison is not exactly applestoapples. Alibabas business model is similar to that of
Ebay, in that it is a middleman coordinating sellers and buyers. Alibaba doesnt 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. Thats 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.
Alibabas revenue is the cut it takes out of each sale. In comparison, WalMarts 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 youve got to understand the growth of Chinas e-
commerce economy and the stronghold that Alibaba has on it.

China has over 618 million internet users and theyre spending lots of money. Thats twice the
population of the United States, but only half Chinas total population. So theres lots of room
for growth in a sector thats already exploding. In 2010, Chinas ecommerce market was $74
billion dollars. In 2013, it was $295 billion. By 2017, its estimated to reach $713 billion.

And Alibaba is cashing in big time. It controls 80 percent of online sales. Even though its 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.
 References
1. http://www.cnbc.com/id/101590855
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3. http://expandedramblings.com/index.php/alibabastatistics/
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money
5. http://www.marketwatch.com/story/howtounderstandalibabasbusinessmodel20
14031594855847
6. http://www.forbes.com/sites/chriswright/2014/09/16/sowhatexactlyisalibaba/
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rnetgiantwillsoongopublicworldsgreatestbazaar
8. https://gigaom.com/2013/06/30/alibabaisjustthebeginninghowb2bmarketplaces
/
9. https://www.techinasia.com/alibabaamazoninfographic/
10. http://www.alizila.com/alipayhuaweirolloutbiometricsecuritymobilepayments
11. http://www.alibaba.com/help/safety_security/class/buying/pay_ship/002.html
12. http://fortune.com/2014/09/12/alibabaisontracktobecomethebiggestusipoeve rhere-
arethreechartsyouneedtosee/
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itsalibaba
14. http://www.alibaba.com/Products
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odelandthechinesemarketmakeitsipohot.html
16. http://www.bbc.com/news/business29077495