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Case Study On Alibaba Group

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DOI: 10.6084/m9.figshare.27229389.v1

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 Case Study On
Alibaba Group
Khalid Md Ashik
Dortmund University of Applied Sciences and Arts
Dortmund, Germany
[email protected]

Abstract
The case study examines the development and business strategy of Alibaba Group, a well-known
online retailer established in 1999 by Jack Ma. Alibaba was once created to help small Chinese
exporters. Still, it has now grown into a major force in technology, shipping, and e-commerce
worldwide. This study looks at Alibaba's distinct business strategy, which emphasizes a
marketplace platform that links suppliers with SMEs more than conventional
company-to-consumer transactions. It also emphasizes how the business strategically uses cloud
computing, data analytics, and creative customer engagement strategies to improve user
experience and operational effectiveness. A thorough examination of Alibaba's customer
experience, service ecosystem, and underlying trends that support its steady growth in the
cutthroat online market are all included in the report.

Keywords: Alibaba Group, E-Commerce, Business Model, MarketPlace Platform, Data

Analytics, Cloud Computing, Customer Journey, Innovation, Global Expansion

1. Introduction

One of the most influential e-commerce business organizations is Alibaba Group. E-commerce,
retail, the internet, and technology are the areas of expertise for this international Chinese
technological giant. The business, which has its headquarters in Hangzhou, China, was
established by an English instructor named Jack Ma in 1999. Launching a website to assist
small-scale Chinese exporters and entrepreneurs with advertising their products was the idea
behind it [1]. It began as an online marketplace but transformed into a technological,
e-commerce, and several other industry powerhouses on a global scale over time. The business is
already well recognized in several nations worldwide, and it is gaining more notoriety in every
European country [2]. The Alibaba Corporation and its subsidiary companies currently employ
more than 22,000 employees across a wide range of territories, notably China, India, Japan,
Hong Kong, Korea, the United States of America, and the United Kingdom [3].

2. Approach for the Literature Review

In scientific writing, particularly case studies, finding appropriate material for reference and
carrying out a methodical literature review are vital. To find relevant material for this case study,
precise search parameters were used. The primary phrases associated with the expansion of the
Alibaba Group, including "Alibaba Group," "growth strategy," "e-commerce," "technology,"
"innovation," and other pertinent terms, have been identified. ResearchGate, ScienceDirect,
Google Scholar, and specialist business and e-commerce databases were also used. These
databases were chosen because of their extensive coverage of academic articles, research papers,
and business reports. An extensive selection of literature from several areas is accessible through
Google Scholar, a popular academic search engine. In-depth research on technology, innovation,
and e-commerce is available from ScienceDirect, famous for its vast selection of scientific
periodicals. Popular among academics, ResearchGate offers access to preprints, publications that
have already been published, and conference papers that frequently present cutting-edge
research. The demands of researchers in these fields are the focus of specialized business and
e-commerce databases, which provide industry reports, case studies, and academic publications
pertinent to company growth plans and e-commerce practices. The usage of search terms like
"(Alibaba Group OR Alibaba) AND (growth strategy OR expansion) AND (e-commerce OR
technology)," for example, ensured a targeted and concentrated search. In order to include new
study findings, the selection criteria for the literature were set to the last 5–20 years. The
extraction from the literature includes key findings on the topic, methodologies, analytical
discussion, and a business model to support the case study analysis and discussion.

3. Description of the solution level

3.1 Business Model

Alibaba's commercial approach is unique compared to that of other companies like eBay and
Amazon. It placed a greater emphasis on company-to-company trading. Alibaba concentrates on
providing a platform for suppliers to sell products in bulk at wholesale prices to small or
medium-sized businesses globally, who thereafter sell them again for a profit in the markets
where they operate, as opposed to the usual business-to-consumer method [4]. Taobao, Tmall,
and Alibaba.com are the three main platforms on which Alibaba bases its business strategy.
Taobao is a C2C e-commerce platform that enables private sellers as well as small companies to
market their goods online. Taobao is a free marketplace where vendors may post their products
without paying anything. On transactions, Taobao levies a commission fee ranging from 2-5%,
depending on the product category. In B2C e-commerce a portal called Tmall enables bigger
companies to sell their goods online. Depending on the product category, Tmall levies a
commission fee on transactions between 0.5% and 5%. Tmall has stringent requirements for
vendors, including having a company license, having worked in the industry for at least three
years, and making at least 10 million yuan ($1.5 million) in sales annually. A B2B e-commerce
site called Alibaba.com links Chinese producers with customers abroad. Suppliers must pay a
membership fee to list their products on Alibaba.com. The platform is free for buyers to use, but
they must pay a commission fee for each transaction [5]. The components of the Business Model
Canvas framework can be used to define the business model of Alibaba Group.

Fig 1. Alibaba Business Model Canvas. Source: by author

Value Proposition: Alibaba Group provides a thorough online marketplace that links customers
and sellers, offering a huge selection of goods and services, safe transactions, and a reliable
marketplace. Alibaba has a solid value proposition, which is one of the many reasons why people
trust it. Alibaba's dedication to customer happiness, quality control, and risk-reduction strategies
has helped it develop a reputation as a dependable and trustworthy platform. Alibaba's value
proposition includes a broad selection of goods from trusted suppliers, safe payment methods,
and buyer protection initiatives. The business makes an investment in creating open and effective
communication channels, responding to client inquiries right away, and assuring secure
transactions. As a result of Alibaba's ongoing efforts to improve the user experience, uphold
product quality, and safeguard client interests, its user base now trusts the company more, which
strengthens its value proposition and solidifies Alibaba's position as a reliable platform for online
transactions.
Customer Segments: Small and medium-sized businesses (SMEs), huge corporations, and
individual customers are just a few of the different customer sectors that Alibaba Group caters to
both domestically and abroad.
Channels: Alibaba Group's online platforms, such as Alibaba.com, Taobao, and Tmall, are its
main distribution channels. These platforms allow shoppers to make purchases and vendors to
display their goods [6].
Customer Relationships: Through effective customer service, dispute resolution procedures,
and customized suggestions based on user behavior and preferences, Alibaba Group preserves
client connections [7].
Revenue Streams: The Alibaba Group's primary sources of income include the commissions
and fees it receives from transactions made on its platforms, as well as from advertising and
value-added services like cloud computing and online entertainment.
Key Activities: Platform management, technological research and innovation, marketing and
promotion, logistical coordination, and risk management are some of the main tasks performed
by the Alibaba Group.
Key Resources: The technological foundation, data analytics skills, solid brand recognition,
extensive network of buyers and sellers, and strategic alliances make up the core resources of
Alibaba Group [8].
Key Partnerships: To improve its ecosystem and offer value-added services to its clients,
Alibaba Group collaborates with logistics firms, financial institutions, and technology providers.
Cost Structure: The Alibaba Group's cost structure comprises expenditures in technology and
innovation as well as costs for platform upkeep and development, marketing, and advertising,
logistics management, and customer service [8].

3.2 Exemplary Customer Journey

The procedure or route that a customer takes when dealing with a business or using its goods or
services is referred to as an "exemplary customer journey." From the first step of awareness
through the last post-purchase stage, it involves a variety of touchpoints and interactions. In
order to increase general happiness and encourage customer loyalty, the customer journey map
aids in understanding the experience, emotions, wants, and pain points of the consumer at each
stage [9].
 Fig 2. Customer Journey Map for Alibaba. Source: by author

The following is an example of a customer journey map, or solution map, for Alibaba.com:

Awareness: Through a variety of sources, including online advertisements, search engine results,
social media, or word-of-mouth referrals, the client learns about Alibaba.com. They learn that a
global internet marketplace called Alibaba.com connects buyers and sellers.
Research and Exploration: To learn more about Alibaba.com's offerings, features, and
advantages, the customer starts investigating and exploring the website. They browse the
website, look at different product categories, read product descriptions, and assess costs and
features. Additionally, they can contact Alibaba's customer service for clarifications or ask other
users for feedback.
Registration and Profile Setup: The customer decides to register on Alibaba.com after
becoming persuaded by the value of the platform. They register for an account and fill out the
essential information, including their contact information, business information, and preferred
payment methods. They can also alter their profile to highlight their corporate brand.
Product Search and Selection: The customer logs onto Alibaba.com and begins looking for
particular goods or providers. They use search criteria, peruse product listings, and read customer
and expert evaluations. Customer selections are contrasted based on cost, value, minimum order
sizes, and supplier reputation.
Communication and Negotiation: After identifying possible suppliers, the consumer contacts
them using Alibaba's messaging service or other means made available by the site. They may
inquire about the specifics of the goods, ask for samples, haggle over prices, and talk over
delivery and payment terms. Communication between the parties goes back and forth during this
phase until an agreement is reached.
Purchase and Payment: The customer goes on to place an order through Alibaba.com after
completing the specifics. They decide on the needed quantity, check the price and shipping
choices, and then complete the transaction. A secure transaction between the buyer and seller is
ensured by Alibaba's secure payment platform.
Order Fulfillment and Shipment: The supplier processes the order, gets the goods ready, and
makes shipping arrangements as soon as the payment is verified. Alibaba.com gives customers
access to order status information, enabling them to monitor the progress and expected delivery
dates. The platform's communication channels can be used to handle any post-purchase questions
or updates.
Delivery and Quality Assurance: When the shipment arrives, the consumer opens it and
examines the contents. They evaluate the product's quality and adherence to the established
standards. If problems do occur, the client can use Alibaba's dispute resolution procedures to
address them or try to work things out with the supplier.
Post-Purchase Support: Alibaba.com offers post-purchase assistance to make sure customers
are happy. This could involve helping with product returns, refunds, or replacements, as well as
providing comments or reviews for the vendor. On the platform, trust and the development of
long-lasting relationships are facilitated by the experience and happiness of the consumer.

3.3 Discussion of the Underlying Business Model Pattern

A pattern is a grouping of various elements that results in a particular outcome. For example,
architects frequently position large windows facing south in living spaces to let in a lot of light.
Buildings in hilly places could adopt a different shape, with thicker walls and fewer windows, to
better retain heat in the cold. Architects frequently choose particular designs because they
produce the best results. The same logic can be applied in business. Business model patterns are,
nevertheless, still hardly used today. Many companies just focus on one or two elements of a
business model rather than considering all of the elements and all of the potential arrangements
for them. The aspects that are most often stressed are either the pricing, the product, the service,
or the technology [10]. Several business model patterns may be found in the case of Alibaba
Group. Alibaba is a prime example of the Marketplace Platform design since it functions as a
marketplace platform that links customers and merchants. Alibaba facilitates transactions and
offers users value-added services through websites including Alibaba.com, Taobao, and Tmall
[3]. Additionally, Alibaba Group provides enterprises with cloud computing services using a
Platform-as-a-Service (PaaS) architecture through Alibaba Cloud [11]. Customers can use the
infrastructure and resources of Alibaba Cloud to develop, launch, and manage their apps using
this paradigm. Additionally, Alibaba has a data-driven business model and leverages data as a
critical asset. The massive volumes of data produced on its platforms are used for targeted
advertising, operational enhancements, and tailored suggestions. The primary functions of
Alibaba as an online marketplace, its growth into cloud services, and its focus on data-driven
decision-making are all in keeping with these business model patterns [3].

Fig 3. Business Model of Alibaba. Source: by author

Alipay is an online payment system that was launched in 2004 and is accessible at
www.alipay.com. According to a professional investigation, Alipay has the largest market share
in China. The company claims that as of the end of 2010, it had more than 550 million
registered users. To provide Taobao and more than 500,000 Chinese enterprises with payment
solutions, Alipay partners with over 65 financial institutions in China, including Visa and
MasterCard. For direct sales to Chinese customers, more than 300 enterprises and merchants
from around the world use Alipay [3].

The expansion of e-commerce in China, Alibaba's creative business strategy, and its strategic
investments and acquisitions have all contributed to the company's success.
Alibaba had its first public offering (IPO) in 2014, raising a record-breaking $25 billion on the
New York Stock Exchange. Jack Ma became one of the wealthiest people in China and the entire
globe as a result of the IPO. Since that time, Alibaba has expanded into new markets and made
investments in cutting-edge technology. Alibaba paid $1 billion to acquire the Southeast Asian
e-commerce site Lazada in 2016. For $9.5 billion, the business purchased the Chinese meal
delivery service Ele.me in 2018. Additionally, Ant Financial, a financial technology firm that
runs Alipay, China's largest mobile payment platform, has received major investments from
Alibaba. Ant Financial raised a record-breaking $14 billion in one of the largest initial public
offerings (IPOs) ever in 2019. Additionally, Alibaba has been entering new markets, such as
Southeast Asia, India, and Europe. In order to develop the joint e-commerce business,
AliExpress Russia, Alibaba, and the Russian internet giant Mail.ru Group entered into a joint
venture. The business has also made investments in cutting-edge technology like cloud
computing and artificial intelligence [5]. Due to a number of elements, Alibaba's corporate
structure is regarded as solid. First off, Alibaba runs a diverse ecosystem of platforms and
services that meet the needs of different market groups and customers. By diversifying one's
portfolio, one can lessen the dangers that come with relying too heavily on a particular market or
business. Additionally, Alibaba has a strong infrastructure that supports efficient operations and
scalability, including its e-commerce platforms, cloud computing services, and logistics network.
In addition, Alibaba's emphasis on technological innovations like data analytics and artificial
intelligence helps the business stay ahead in the rapidly changing digital market. Also
contributing to Alibaba's overall business strength and endurance are the company's solid
financial condition, strategic alliances, and competent leadership [3].

4. Description of the system level

4.1 Overview of the system

The technical infrastructure that supports the case study of the Alibaba Group is intricate and
intertwined. It is made up of numerous important components and how they interact, which helps
Alibaba's operations run as a whole:
Alibaba platforms: Alibaba's online marketplace platforms, including Alibaba.com, Taobao,
and Tmall, constitute the basis of the technical system. Buyers and sellers can connect, view
products, and complete transactions using these platforms. Product listings, search capabilities,
shopping carts, and payment gateways are some of the functions they provide [3].
Cloud infrastructure: The platform's scalability, dependability, and performance are ensured by
the critical infrastructure, which is offered by Alibaba Cloud, the Alibaba Group's cloud
computing business. Processing power, storage, databases, networking, and security are just a
few of the many cloud services it offers. The platforms can handle a massive amount of
transactions, store and process data, and offer services to customers thanks to Alibaba Cloud
[12].

Data management: Alibaba's technological infrastructure is heavily reliant on its data

management and analytics capabilities. The system collects and analyzes large amounts of data
from user interactions, platform activities, and transactions. This information is the fuel behind
tailored advice, targeted advertising, and operational optimization. As a result, Alibaba's
enhanced comprehension of consumer behavior, market trends, and supply chain dynamics
enables data-driven decision-making [13].

Payment and logistics: The technical framework of Alibaba includes a transportation

infrastructure and a safe and effective payment processing system. Alibaba's digital payment
platform, Alipay, guarantees secure and practical transactions while enabling a number of
payment options. Additionally, Cainiao and other members of Alibaba's logistics network handle
order fulfillment, warehousing, and delivery, ensuring dependable and timely product delivery.

Fig 4. Technical System Elements Source: by author

Vendors can connect with Alibaba through a procedure called "onboarding." Vendors can
register, make product listings, set prices, and manage their inventory through Alibaba's thorough
onboarding procedure. Vendors can use Alibaba's platforms to market their goods to a large
audience, gain access to a variety of marketing tools, and take advantage of Alibaba's
ecosystem's global reach [14].

4.2 Discussion of Underlying System Pattern

A system pattern is a recurrent configuration of parts and connections that can be seen in several
contexts or domains within a system. It stands for a general framework or style that perfectly
encapsulates the structure and operation of a system. System patterns offer a high-level
conceptual framework for comprehending and evaluating complicated systems, enabling
comparisons, categorization, and the identification of shared traits [15].

Technical system patterns are recurrent arrangements of the technical components and
connections that make up a system and can be seen in a variety of settings. Several technical
system trends can be seen in the case of Alibaba Group:

Client-server pattern: Alibaba's platforms, including Alibaba.com, Taobao, and Tmall, adopt
the client-server model, in which the platforms serve as servers and transmit services to users as
clients through a network. When users access the platforms using web or mobile clients, they
communicate with the servers to do operations such as product searches, purchases, and other
tasks [3].
Distributed computing pattern: Alibaba uses distributed computing to manage the enormous
volume of data and processing needed for its business operations. For instance, Alibaba Cloud
uses a distributed computing infrastructure to offer customers and companies scalable and
dependable cloud services. In order to provide high availability and performance, the system is
designed to split computing and storage over numerous servers [16].
Event-driven pattern: To manage real-time events and triggers, Alibaba's systems use
event-driven architectures. Alibaba, for instance, employs real-time data streams and event
processing to provide customized suggestions, targeted marketing, and dynamic pricing based on
customer behavior and industry trends. Delivering tailored experiences is made possible by the
event-driven pattern's agility and responsiveness [17].
Service-oriented architecture pattern: Alibaba develops its systems using a service-oriented
architectural methodology. Modularization and loose coupling of components are made possible
by SOA, allowing for more adaptability, reusability, and scalability. The platforms and services
offered by Alibaba are created as a group of independent, cooperating services that may be
integrated and coordinated to offer a variety of capabilities [18].
The technical systems of large organizations like Alibaba can encompass a wide range of
patterns because they involve complex and interconnected systems with a variety of subsystems
and components, which is important to keep in mind even though these patterns represent the
main technical system configurations in the case of Alibaba.

5. Critical Reflection

Regarding the ideals that have been explored, the case study of Alibaba Group presents positive
as well as negative aspects.

Positive aspects

Innovation and Technology: The company has been able to develop new business models,
services, and platforms thanks to Alibaba Group's demonstrated commitment to innovation and
technology. With the help of its technological developments, namely Alibaba Cloud,
organizations now have access to scalable and trustworthy cloud computing solutions [16].
Ecosystem Development: A vibrant ecosystem that links several players, such as buyers, sellers,
shipping companies, and financial institutions, has been developed by Alibaba. This
ecosystem-based strategy has facilitated end-to-end solutions, improved consumer experiences,
and generated synergies [19].
Value Creation: The core of Alibaba's business strategy is adding value for its partners and
customers. The firm provides a variety of services, including marketing, shipping, payment
options, and cloud computing, that assist companies in growing their customer bases and
enhancing operational effectiveness [3].
Negative aspects

Counterfeit Products: The availability of counterfeit and pirated items on Alibaba's platforms,
like Taobao, is one of the major problems [20]. According to reports and statements of the
USTR, a significant number of illegal goods are still being advertised and sold on Taobao.com,
and stakeholders continue to voice concerns about the difficulties and costs of enforcing
intellectual property rights there. Counterfeit goods remain a problem despite efforts to address
them, harming the brand reputation and consumer trust [21].
Market Dominance: Because of Alibaba's huge market position in China's e-commerce market,
questions have been raised concerning its market dominance and potential for anti-competitive
behavior. Critics contend that Alibaba's hegemonic status can constrain competition and impede
the development of smaller businesses.
Data Privacy and Security: Alibaba confronts issues with data security and privacy due to its
substantial use of data analytics. Maintaining customer trust and thwarting cyber threats require
secure transactions and user data protection [22].

6. Outlook

One specific suggestion for the case study's future development is to intensify Alibaba's efforts to
combat counterfeit products on its platforms in light of the positive and negative factors noted in
the preceding section. In addition to putting consumers in danger, counterfeit products also
damage Alibaba's and its vendors' reputations. Alibaba can boost its anti-counterfeit procedures
by utilizing cutting-edge technology like artificial intelligence (AI) and blockchain to handle this
issue. Alibaba may develop sophisticated algorithms to identify and flag questionable postings
that can contain fake goods by utilizing AI. To find patterns suggestive of counterfeiting, these
algorithms can analyze a variety of data sources, such as product descriptions, seller ratings, and
customer reviews. Using machine learning approaches, counterfeit detection can become more
accurate and efficient over time. Alibaba may additionally explore the potential uses of
blockchain technology to provide a transparent and unchangeable record of product authenticity.
Alibaba can offer verifiable evidence of product origin and quality by storing product
information, such as manufacturing specifics and supply chain transactions, on a blockchain.
This can distinguish between genuine and counterfeit products and help buyers develop a sense
of trust. Alibaba can implement a seller verification program, ensuring that vendors satisfy
severe requirements and uphold strict quality standards, to encourage sellers to deliver authentic
products and deter counterfeiting. To ensure the legitimacy and caliber of the products offered on
Alibaba's platforms, this program may require extensive vetting procedures, recurring
inspections, and ongoing monitoring. Alibaba may collaborate with relevant regulatory bodies,
owners of intellectual property rights, and industry associations to establish industry-wide
standards and best practices for preventing counterfeiting in order to address the harmful effects
of these items and increase consumer trust. Through increased cooperation and knowledge
exchange among stakeholders, this collaborative approach may promote a more robust
ecosystem that places a higher priority on authenticity and security for customers. By
implementing these processes, Alibaba can strongly combat the issue of counterfeit products,
safeguard the interests of customers, and further solidify its status as a dependable and
trustworthy e-commerce platform.
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