Alibaba Business Model – How Does Alibaba Make Money?

Key Takeaways:

Among online marketplaces, Amazon is the first that springs to mind. One upcoming e-commerce company that is poised to (and has already started to) overthrow the Amazon e-commerce company, but which is likely to exceed its size, is eMarketplace. Founded by a former KFC menu executive, it operates out of China. The e-commerce giant Alibaba created him the status of the richest man in China.

This company is on its way to influence the online marketplace globally. Its business model is the one that has made it one of the most successful in the world. Providing digital marketplaces for merchants and consumers, Alibaba is a digital marketplace platform. While cloud computing is the fastest-growing part of Alibaba’s business, e-commerce is its most prominent business.

Aiming to be at the forefront of commerce infrastructure development, Alibaba seeks to be a primary technology contributor. The Alibaba Group operates three other companies, apart from these three e-commerce businesses, and currently services three markets, including the business-to-business market, the mass consumer market, and the upscale consumer market.

 The dailyThe previous year’s daily record from Singles Day was $38.4 billion, approximately double Alibaba’s earlier $74.1 billion sales day. That was billed as the date of the annual Chinese Black Friday. Alibaba.com was launched in 1999 by a former English teacher and former English teacher Jack Ma, along with a group of 17 companions, and defies the ongoing trade wars with the U.S. and the worldwide impact of the recent coronavirus outbreak. It connects manufacturers and wholesalers with nationwide buyers, connecting them with the enterprise that they can reach.

Company Profile:

Company NameAli baba group holding limited
WebsiteAlibabagroup.com
Founded- In:June 28, 1999
Headquarters:Headquarters    No. 969 West Wen Yi Road[2], Yuhang District, Hangzhou, Zhejiang and George Town, Cayman Islands[3][4]
FounderJack ma
Key PeopleDaniel Zhang, (executive chairman & CEO) Joseph Tsai, (executive vice-chairman) J. Michael Evans, (president
Business ModelEcommerce,retail,internet,technology etc.
Product/ServicesE-commerce.Cloudcomputing.Entertainment.Mobile commerce.Retail.Mobilemedia.Films.TV. shows  
Competitive AdvantageApplication software, online food ordering, delivery
RevenueCN¥509.71 billion[5] (US$72 billion, 2020)
CompetitorsAmazon
Area servedWorldwide

What is Alibaba?

A leader in e-commerce and giant retailer, Alibaba is one of the world’s largest retailers. It can be said to have become the world’s fifth-largest artificial intelligence company in 2020. Generally regarded as the world’s largest online commerce company, Alibaba is China’s leading e-commerce company. There is not a company that has as much business as Alibaba. There are hundreds of millions of users on each of its significant sites and hundreds of millions of suppliers, merchants, and companies. In the last year, it processed more than twice as much as eBay and Amazon.com combined.

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Alibaba Group operates M2M marketplaces, including Alibaba.com, Taobao, and Tmall. Revenues have increased by triple percentage points year after year with its expansion into the media industry. The firm has also been a venture capitalist of reputation, with a track record of being one of the world’s most giant investment corporations—several state-owned enterprises in China list CITIC as one of their most valuable public companies.

A Short History of Alibaba:

Alibaba.com was founded in Jack Ma’s Hangzhou apartment on June 28, 1999, by 17 friends and students whose initial goal was to leverage the wholesale internet marketplace’s power. It took Ma’s real-world vision to turn the startup into a successful and efficient e-commerce company in China, reaching the 730 million internet users within the nation on a timely basis.

Alibaba laid out development in a small apartment in Palo Alto, Calif., in a way modeled after the world-famous Apple, just as its parent company, Alibaba Group, launched Alibaba in Hangzhou, China, out of a small apartment. Although Ma originally intended to become an English teacher at Hangzhou University, his career path was different.

Taking advantage of capitalism’s advent, Chinese consumers began to demonstrate a real thirst for English language skills. Despite being rejected for a job at Kentucky Fried Chicken in China, Ma moved to the U.S. to enroll in his dream school – Harvard University.

Ma’s dreams of an Ivy League education were dashed after using the internet and realized too late that there were too few Chinese companies moving into the expanding e-commerce market. His first success came from launching a website that specialized in China commerce, and after a few months, he was approached by Chinese investors who favored his vision for a Far East-based e-commerce company. China Pages, a Chinese business database, earned him a $1 million value in just three years.

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With China Pages, Jack Ma envisioned establishing a primary online e-commerce site serving China for business-to-business transactions and talked to various investors and business partners. In late, Looking back on the success ratio of Alibaba, we have a considerable timeline we can use to quantify the company’s performance over the years. In  1999 with $35 million in venture capital. Goldman Sachs led an investment round in Alibaba, which raised $25 million from SoftBank in October 1999. In 2000, the company closed a $25 million plan with Goldman Sachs. After three years on the market, Alibaba.com became profitable in 2002. Alipay, Alibaba’s online payment system, was launched in April 2003, and Taobao, its consumer e-commerce site, is found the following year.

The Hong Kong stock exchange has listed Alibaba since 2007. The year is 2009, and Alibaba has just announced its new cloud computing platform. In 2010 a new path to profit for U.S. businesses doing business in China had opened up with the opening of online stores by Ray-Ban and Gap (GPS). In 2012, Alibaba founder Jack Ma resigned as CEO and was replaced by Jonathan Lu, who he chose himself. In 2014 Alibaba became the world’s largest online commerce platform for small businesses.

The following year it is taken public with a $250 million offer. And finally, A bond sale of $5 billion by Alibaba in February 2021 will be the company’s third major bond issue in the past few years sets priced to yield between 2.143% and 3.251%. The four stages of bonds were $1.5 billion of both ten-year and 30-year debt along with $1 billion of bonds due in 20 and 40 years. The Alibaba Group was expected to improve the domestic e-commerce market and set up an e-commerce platform for domestic enterprises.

What is the Business Model of Ali baba?

A decade when its launch, Alibaba has gained significant market share, surpassing Walmart in revenue, with operations in over two hundred countries as of Apr 2016. Let us understand first how does Alibaba works and what types of businesses it owns, for that matter, for us to understand the model of Alibaba’s business better.

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As opposed to most business-to-consumer models, Alibaba focuses more on trade between businesses. It’s a platform for suppliers to sell items in bulk to small and medium companies worldwide at wholesale prices. Besides catering to business-to-business marketing, Alibaba also supports international trade through e-commerce web portals.

How Does Alibaba Make Money?

Three primary web portals make up the Alibaba Business model: Alibaba.com, Taobao, and Tmall. All of them connect buyers and sellers in various ways. Furthermore, Alibaba has six more subsidiaries: AliExpress, 1688, Alimama, Alibaba Cloud, Ant Financial, and Cainiao Network. Its subsidiaries are integrated perfectly into one another and make Alibaba an enormous industrial giant. Taking advantage of Alibaba.com’s vast e-commerce platform, Chinese domestic and international exporters connect their global businesses with buyers in more than 200 countries worldwide.

The consumers sometimes represent trade agents, wholesalers, retailers, makers, and SMEs engaged within the import and export business.

In addition to supply chain services, the company provides import/export-import services.

  • clearance of customs,
  • Return of VAT,
  • finance for exports, and
  • services related to logistic services.

This website offers the seller the best advantage by allowing simple listings on the website. However, sellers also can pay for extra features like increased exposure on the website and unlimited product listings.

Alibaba,Shareholders Valuation & Revenue:

A company’s revenue will be outlined because of the cash they receive from customers for products or services they sell. Revenue is that the high line of AN profit-and-loss statement from that the opposite income-producing things area unit deducted to gain lucre. Alibaba revenue for the quarter ending day, 2020, was $33.883B, a 46.1% increase year-over-year. In step with analysts’ average predictions, Alibaba includes a current capitalization of 900 billion dollars. 2020 revenue distribution by section.

For the fourth quarter of 2020, sixty-nine percent of Alibaba retail section revenues were generated by the Chinese e-commerce corporation Alibaba cluster. International e-commerce retail sales created up the remaining five percent.

 ASYS CEO Masayoshi Son acquired Alibaba for $20 million back in 2000 when it was a young startup. Softbank’s stake constitutes nearly 25% of Alibaba; it has become Alibaba’s largest shareholder. Among Alibaba’s shareholders, Blackrock is the fifth-largest.

The investment firm owns 2.07% of all outstanding shares.  It started as risk management and fixed-income asset manager in 1988. It currently is managing over $7 trillion in assets. One of the top divisions is iShares, with over 800 exchange-traded funds (ETFs) – one of ETFs’ biggest providers globally.

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