What You Should Know About Alibaba
China’s Largest E-Commerce Company: Whether you’re an importer/exporter or have a small online store where you sell cheap Chinese products at profitable margins – you cannot afford to ignore Alibaba – the Amazon.com of China. In fact, in terms of market valuation, Alibaba is actually a bigger company than Amazon. It had the largest US IPO in history, worth $22 billion, back in 2014. Since then, the company has gone from strength or strength.
Founded by the visionary Jack Ma, who has been described as the “Steve Jobs of China”, Alibaba is a company you must know more about. Let’s start with the fact that Alibaba is the largest e-commerce company in Asia. It handles over 80 percent of the e-commerce transactions in China. Alibaba’s headquarters are in the Xixi District of Hangzhou, China.
Alibaba: What is it about?
Alibaba is not just one website and in fact has a collection of websites. They are:
- Alibaba – the main website and the biggest e-commerce site in Asia
- Alipay for Online payments
- Aliyun for Cloud services
- Aliyun App Store for Mobile apps
- Taobao for Consumer-to-consumer (C2C) e-commerce
- Tmall for Business-to-consumer (B2C) e-commerce
Of the Alibaba websites, Taobao and Tmall are the engines behind the company’s success. They handle more merchandise than both Amazon and eBay together! They don’t sell the merchandise themselves, but provide a marketplace that connects sellers to buyers. Alibaba makes all its money through advertising and commissions from sellers. Alibaba does not charge buyers anything.
Jack Ma has always been a people-centric person who is committed to his employees and has succeeded in creating a friendly, encouraging environment for the workers at Alibaba, which is unusual in China, where companies tend to treat their employees like dirt. Jack Ma has always sought to make it easier to do business rather than to add layers of complexity in any manner or form. His stated goal is to enable his employees 'work happily, and live seriously.'
One of the factors behind Alibaba’s rise is the explosion of smartphones in China, where a majority of online transactions happen through the mobile. Alibaba has been one of the first companies to truly understand the importance of the mobile for e-commerce and has made several strategic moves to expand its business on the mobile. So much so that Alibaba even has a competitor to Android called AliYun or Yun OS, which has been installed on millions of smartphones in China.
One of the secrets to Alibaba’s success is its focus on technologies such as Big Data and data analytics. According to Wikipedia, It is one of the premier users of Hadoop and a cloud platform called Apsara. In fact, it has a massive 15-node Hadoop cluster powering it on. The cloud platform it runs on, Apsara, offers a vast array of cloud services such as elastic computing, database storage as well as large-scale data processing services through a web-based API.
What you may not know is that Yahoo owns a significant part of Alibaba. Yahoo was actually one of the early investors in the Chinese giant, when it wasn’t as big and powerful as it is today. For long, Yahoo held a share of 24% in Alibaba, but since then the company has sold a plenty of its shares. Even so, Yahoo’s holdings continue to be massive.
The question many have asked is if Alibaba can replicate its success in China in other countries such as the US. It’s not so easy because in China, Alibaba has a huge first mover’s advantage and has no real competition. Outside China, Alibaba has to reckon with powerful competitors such as Amazon and eBay. Besides, there are several regulatory hurdles to overcome before it establishes a serious presence in North America and Europe.
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