Thursday, 5 April 2018

Alibaba and Amazon: Journey Unfolded

Jack Ma, founder and CEO of Alibaba and Jeff Bezos founder and CEO of Amazon.com Inc. In book of Porter Erisman: Alibaba is a Chinese company changing face of global business. International public relations for Alibaba was handled in 2006 when Ma gave speech at Web 2.0 conference in San Francisco, has breakthrough appearance before prestigious Internet conference for Chinese company.

Nowadays, Ma's company, Alibaba Group Holding Ltd. Has stock market value exceeds that of Amazon. Few people don't know the story behind this that previously Ma was English teacher with no computer training, developed Alibaba from its founding in his apartment in Chinese city in 1999 to pulling off world's largest IPO in September 2014, Alibaba raised $25 billion on New York Stock Exchange.

Between 2000 to 2008, Alibaba was pipsqueak daring to challenge giants, eBay Inc., which influenced inexperienced e-commerce world in China when Alibaba was getting started.

Erisman wrote a book after producing film documentary on Alibaba called Crocodile in Yangtze. Main aim is to share offerings of Alibaba to entrepreneurs around the world. There are plenty of lessons regarding offerings.

Most powerful lessons emerged from battle between Alibaba and eBay. When Alibaba created its first consumer-facing shopping portal, Taobao in 2003, eBay claimed for its China site which is accounted for 955 online retail sales in China.

Big concession is that how big webmaster has to know his customers and orient his service according to their needs. While listing fee is charged and take commission on sales by eBay. Ma and his Alibaba colleagues decided to move sellers by promising to make free service for three years. They helped to attract many small retailers on eBay to try out Taobao.

Since there is no fee charged by Taobao, so there is nothing to fear of loss from buyers and sellers communication. In case of eBay, communications lead to sellers getting pay fees of eBay. For example, a owner of small shop can tell a customer price of item is 200 yuan on eBay, but if customer go into his shop, he will sell it for 160 yuan because he don't have to pay eBay's fees.

Taobao is least concern about this and team of Alibaba recognized Chinese shoppers want to know the customers. Among Chinese Internet users live chat was taking off at that time. Taobao created chat function called Wang Wang providing facility of exchanges between buyers and sellers. With enhanced selection on Taobao, it helped to influence millions of Chinese online shoppers to Taobao.

eBay made a mistake to make standardization of its global sites on single technology platform based in Silicon Valley. Difference of time between China and California means that there is a little opportunity each day in China to consult with decision-makers in home office. In addition to it, eBay China hosting of China's firewall which is collection of web servers.

As growth of Taobao, price was cut by eBay to retain sellers, causing concern among investors in publicly traded company. In January 2006, seller fees were eliminated by eBay in China. At that time, Alibaba understood the environment and moved for development.

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