In recent years, with the rapid development of the digital economy, enterprises have applied digital models to their business strategies. When we talk about the digital economy in China, the Alibaba plays a pioneering role which cannot be ignored.
Now, Alibaba’s new retail target is to form an ecosystem which can include social + local + mobile. Although the new retail model may bring them many opportunities which they do not have before, at the same time, it still has many challenges will meet (Zeng, 2018).
From its inception in 1999, Alibaba experienced great growth on its e-commerce platform. At that time, when the Internet was not very popular, Alibaba first proposed the B2B business model, which combined the retail industry with online transactions. In 2009, Alibaba orchestrated a “double 11” online marketing campaign. In this period, Alibaba has successfully grasped consumers’ online consumption psychology they attracted consumers by strengthening early online publicity, including cooperation with new media and issuing coupons, etc. Meanwhile, it has actively cooperated with more well-known brands to increase consumers’ trust in products. After nearly ten years of development, November 11 has become the shopping carnival of people in the country and even the world. Alibaba in 2018 tore through last year’s Singles Day sales record, racking up more than $30.8 billion in the 24-hour shopping event (Wade, Shan,2018).
Furthermore, Alibaba promotes the development of Alipay which is the popular mobile payment method actively. Alipay originally existed as a security guarantee for online transactions. At present, Alipay has developed from a single payment tool to provide a variety of scenarios such as payment, life service, government service, society, finance, insurance and welfare, and gradually opened the platform to cover the entire industry.
Besides that, Alibaba is now building a new retail model that combines online and offline. During the more than ten years of the development of the Internet, numerous e-commerce companies have gushed out like fountains, and the battle among e-commerce companies on the Internet has been in a white-hot stage. Therefore, more e-commerce companies are now putting more funds into offline brick-and-mortar retail. However, some critics may argue that how is this different from the original? Compared with the traditional retail, offline entity retail increases a lot of new technology which includes the use of big data, new media, etc. The Freshhema is based on this which is an offline integration supermarket with big data.
Otherwise, we realize that Alibaba’s special innovation lies in the establishment of a real ecosystem which gets social, local and mobile together leading to a new retail industrial.
As Alibaba group said:” We firmly believe that the online business world and the offline physical stores are not two separate worlds.” Today’s Alibaba is not just an online commerce company, but a vast, data-driven online retail system of sellers, marketers, service providers, logistics companies and manufacturers(Zeng, 2018).
However, it still has some challenge in Alibaba.
First, it is local Chinese rivals such as Tencent-backed JD and the low-cost Pinduoduo that recognize the opportunity to offer limited-time discounts. Both companies now have their own versions of the singles day which gives a strong impact on Alibaba’s online sales(Martin roll, 2017).
Some critics also say Alibaba is full of fake goods and illegal businesses. As for the suppliers in Alibaba, there are a more individual business rather than well-known brands leading to a huge challenge on the quality of goods. Although Alibaba has also adopted some measures in this respect like strengthen the review for merchants, it seems still doesn’t work. Therefore, it seems to be more rigorous in the selection of third-party suppliers in the future, especially in the stage of consumption upgrading and transformation. People’s consumption demand is constantly developing, which requires more high-quality products and the support of trustworthy brands can be introduced into Alibaba(Martin roll, 2017).
Moreover, as e-commerce practices online retail, offline logistics distribution is also one of the challenges faced by Alibaba. Alibaba did not have a unified distribution team before, which often led to consumers’ complaints about the logistics link. However, Amazon and JD have built their own logistics distribution team, which can provide high-quality services. Therefore, Alibaba is determined to build a logistics service network within China and globally.
Therefore, the Cainiao network came into being in May 2013, undertaking the logistics solutions of the entire Alibaba e-commerce trading platform. The Cainiao makes use of Alibaba’s big data to promote the digitization of express business, improve efficiency, and provide high-quality cross-border logistics services for merchants and buyers. Since then, Cainiao network has cooperated with a foreign post trying to realize the direct connection of information with the postal services of other countries at the export level, so as to provide one-stop logistics service of the cross-border full link.
In conclusion, under the background of internet, enterprises want to catch up with this historical opportunity to expand market share and increase their actual profits. However, it is not enough only relying on the online, especially the barrier between online and offline is declining with the use of new technology. Therefore, the integration of digital strategy and physical economy is a key element in developing the economy.
References:
MING ZENG(2018),Alibaba and the Future of Business, http://content.ebscohost.com/ContentServer.asp?EbscoContent=dGJyMNLe80SeprU4xNvgOLCmr1Gep65SsK%2B4S7WWxWXS&ContentCustomer=dGJyMPGosFCwrLBJuePfgeyx9Yvf5ucA&T=P&P=AN&S=R&D=bth&K=131356796
Karolina Kulach (2017), Alibaba: China’s e-commerce giant highlighted, https://www.webinterpret.com/au/blog/alibaba-chinas-e-commerce-giant-highlighted/
Michael R. Wade and Jialu Shan(2018), Alibaba’s Singles’ Day report card,both impressive and disappointing, https://www.imd.org/research-knowledge/articles/alibabas-singles-day-report-card/
Martinroll(2017), Alibaba – The Chinese Brand Leading Disruptive Innovation, https://martinroll.com/resources/articles/marketing/alibaba-chinese-brand-leading-disruptive-innovation/
Tong's digital business blog 
Hi Tong,
Very glad to know more knowledge about the Alibaba company and the competitive situation in China. Your blog use a good economic perspective to illustrate the chances and challenges that Alibaba faced in the past and in the future. I understand why Alibaba company use the marketing techniques like “double-11” per year to give their customers a big discount on almost every goods that customers want to purchase. And there are some competitor use the same strategy recently, so for Alibaba, they have to take this challenge, find some solutions to deal with the problems like the delivery problem.
But I still have two questions, after other competitors imitate Alibaba company’s “double-11”, did Alibaba orchestrate any other activities to attract new customers and keep old customers using their website? And in this highly free market, how Alibaba can keep the competitiveness in this e-commerce companies battle?
Thanks for your sharing.
Yang.
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Hi, Tong
Alibaba is indeed a leading group about e-commerce in China, even in the world. As you mentioned, it was founded in 1999 which is really early for Chinese e-commerce because the internet was even not very common in China at that time and only a small part of population could access to internet or computer. It could be said that Alibaba is the first company to open the market of e-commerce.
For the logistics service, it is very important for the competition of online shopping company, and instead of developing own delivery system like JingDing(another online shopping website) did, Alibaba founded the CaiNiao network company to process the delivery. CaiNiao collects the top nine logistics companies in China to build a Chinese Smart Logistics Network which nearly covers all of the delivery services in China, supporting the online shopping. Also CaiNiao gives more attention on the countryside and overseas delivery which are the weak places before. It is really wonderful. MaYun is always good at consolidating resources.
Thanks for sharing.
Qiang
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