Alibaba: Realizing the Small and
Medium Enterprise Vision
April 23, 2008
China's total e-commerce Yuan
volume grew 54.5% in 2007, with 1.31 million websites as of June 2007,
growing 66.4% YOY. Many more of China's small and medium enterprises (SMEs)
desire to have their own websites with e-commerce capability, but few have
the capability. What may be in the offing is Alibaba (HKSE: 1688).
Alibaba began in B2B
listing and trading. The English website
www.alibaba.com focuses on providing listings of Chinese-made products
to international buyers. International buyers benefit by viewing a rich
array of product offerings; Chinese companies gain worldwide visibility. The
Chinese version website
www.china.alibaba.com focuses on B2B within China.
Alibaba has also expanded
into C2C trading with its www.taobao.com
platform. The company offers other, such as online payment processing,
online advertising exchange, and online SME business management software.
What is particularly
interesting is Alibaba's commitment to China's SMEs. The company's core
strategy, it appears, is to enable SMEs to have same extensive Internet and
software infrastructure capabilities as that of their resource-rich, much
larger brethren. Some fundamental elements are already in place.
At a macro level,
e-commerce, though still early, is flourishing in China. Big Internet
players are providing needed online communities, payment processing, instant
messaging, and platforms to facilitate C2C commerce. (Perhaps what are still
missing are good logistics solutions.)
For Alibaba, the company
has both unique advantages and existing assets that can be leveraged (or
strategically put in place for SME B2B).
- Alibaba has already
established a worldwide audience for Chinese companies.
- The company already has
business management software, delivered online and specifically targeted
to SMEs through www.alisoft.com.
- It has gained
authorization from ICANN in November 2007 as an international domain name
- It has payment
processing and IM in place already.
- The company has existing
value-added services, such as custom research and introductions, to
facilitate B2B transactions.
So the next logical step is
to offer SMEs not only to be able to list and advertise their products, but
to also have their own domain and website; in effect, to have their own
hosted web presence and identity through Alibaba's services. SMEs will have
the powerful infrastructure and visibility benefits of Alibaba.
Alibaba wins because SMEs
will be more likely to use the suite of Alibaba's offerings. This would be a
smart move by Alibaba, because it is essentially expanding the earning
potential of SMEs, which in turn, SMEs will then use more of Alibaba's
services. And, given Alibaba's SME strength among the big Internet players,
Alibaba presents a compelling and unique solution set that competitors would
find difficult to emulate.
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Unless otherwise specified,
all information provided is sourced from CCID Consulting.