Alibaba, the Asian retailing giant, went public today. The company raised a staggering 21.8 billion dollars and is now worth more than Amazon. The business-to-business wholesaler from Hangzhou has grown from a modest idea from a high school teacher to one of the five largest Internet companies in the world. How did the company manage to ever grow this big?
The first strategic success factor is the fact that Alibaba, in contrast to Amazon, doesn’t own any inventory. The online marketplace takes care of the selling of items, not the products themselves. This way, the company has no inventory risk neither any investment in costly warehouses. Neither does Alibaba have its own delivery trucks; it simply controls a whole network of delivery companies. This way the company manages to stay flexible, while growing fast.
Another factor is the integration of Alibaba in all areas of e-commerce. It has become a huge network of related businesses that handle complementary products and services. The businesses’ activities in transactions, sales, delivery, cloud computing and advertising serve each other as well. But it doesn’t stop there. The company has recently developed it’s own mobile operating system, offers trade financing to vendors and rumour has it they start offering consumer loans anytime soon. Whereas most Western online retailers have a clear focus and just one or two touch points with their customers, the Asian retailer appears to mingle into the (digital) lives of its customers as much as possible.
As the company has hit the stock market just now, it will be interesting to see where this move takes the company next. It surely made the owner, Jack Ma, a whole lot wealthier. You can buy stocks for around 93 dollar. Will you join Alibaba’s adventure into the Western world? And would you consider buying from the retail giant?
Del Rey, J. (2014, September 19). Alibaba Now Public As It Raises 21 Billion In Biggest Tech IPO. Retrieved September 19, 2014, from http://recode.net/2014/09/19/alibaba-will-ring-the-bell-at-nyse-this-morning-to-a-historic-ipo/
Wohlsen, M. (2014, September 19). Chinese Giant Alibaba Is Ready to Become the Next Google. Retrieved September 19, 2014, from http://www.wired.com/2014/09/chinese-giant-alibaba-ready-become-next-google/