Alibaba Business Model | How Does Alibaba Make Money
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Every person on this planet is fond of online marketplaces these days. There’s no one left who has never ordered something online, and there is no address that has not seen a delivery from an eCommerce shop. You might wonder how it all began and which were the initial companies of such a grand market that has conquered every city or town, of a country, and even union territory.
With Boston Computer Exchange formed in 1982, the ’90s became an era during which most of the biggest eCommerce websites came into existence. Alibaba is one of them. The Chinese multinational company Alibaba Group specializes in eCommerce, retail, internet, and technology sectors.
With being the biggest venture capital firm, Alibaba has also been recognized as the fifth largest artificial intelligence company in 2020. Speaking of its eCommerce capabilities, the second largest financial service group via its fintech arm called Ant Group hosts a plethora of marketplaces. These marketplaces include Alibaba.com which is a B2B marketplace, then Taobao a C2C platform, and Tmall which is a B2C marketplace.
You might recognize Alibaba entering the media and entertainment industry as well, through which the world's largest retailer has earned revenues rising triple percentage year after year.
Forbes has even named the Alibaba group as the 31st largest public company in the world in its Forbes Global 2000 list of 2020.
About Alibaba
Business Model of Alibaba
How Does Alibaba Make Money
USP of Alibaba
About Alibaba
The Chinese B2B marketplace was founded on 28 June 1999. It was founded by Jack Ma and his 17 friends and students in his apartment situated in Hangzhou. The largest B2C company in the world has its headquarters in Yuhang District, Hangzhou, China. The Chinese multinational conglomerate holding company serves its global audience with eCommerce, cloud computing, AI, and other assistance. Alibaba's target market is the global market of international exporters and importers.
Key Products and Services of Alibaba
With specializing in the business-to-business sector, Alibaba has made its place among the leading brands and companies in cloud computing, artificial intelligence, entertainment, mobile commerce, retail, mobile media, and films as well as in the TV shows sector.
Piyush Mishra
Business Model of Alibaba
The global eCommerce market chain serves as a middleman between buyers and sellers through its platform. While playing this role, the Chinese company, Alibaba facilitates the sales of goods. The merchants of its platform are usually small merchants.
Targeting customers who want to shop from the comfort of their homes, the online supermarket sells several products such as food, groceries, tools, beverages, and more via its chain Hemma.
In its value proposition, this retail eCommerce middleman gives its merchants a platform to portray their brand on a global scale and capture a huge market. This grabs the attention of its merchant clients as they can increase the demand for their product and also their profit margin.
Whereas its shoppers can order an extensive amount of products from any part of the world. Alibaba provides a range of products from any niche, through its channels.
In the initial days, the Chinese B2B platform was working via its website but with the technological advancements Alibaba is now available on mobile phones as well.
You can enjoy the treasures of products available on Alibaba’s website through its apps for Android and iOS platforms.
Purbalee Dutta
How Does Alibaba Make Money
The production house that has become a giant in the entertainment industry is a group with a massive holding over its subsidiaries. It has gained profits from multiple sectors and for providing services in the long run.
Its eCommerce arm alone generates 90% of its revenue, while the group has more than enough means to generate money.
When looking at its full-year earnings of 2024, Alibaba is projected to rise by 19% year over year to USD 9.09 per share. Its full-year revenue is expected to rise by 9.5% year over year with USD 133.12 billion.
The aforementioned projected full-year profit growth is the reflection of the optimism that the recovering Chinese economy is portraying.
Speaking more about its earning sources, Alibaba has a commission granted for each of its transactions. This is applied when you make a transaction on its website Alibaba.com. A similar commission transaction is applied on Taobao.com.
Although it might sound just like the commission that eBay charges on its website, Alibaba only charges the merchants for advertising.
Tmall.com on the other hand is known to generate money through the annual subscription fees. This fee is paid by the users and is subject to change which depends on several pre-agreed terms and conditions. These terms are fixed between the user and Alibaba group arm Tmall and focus on the volume of transactions made.
Alibaba Group has other means to earn money as well. Some of these include the advertising sector, membership, delivery services, sales, and more. The company's income revolves around its marketplace offerings that connect its many users from around the world to enjoy its services and products that vary in many categories.
USP of Alibaba
There are several things that Alibaba does that are unique. It is a marketplace for the B2B segment and also the only company that covers the AI and cloud computing sector while also being a leading firm in the entertainment industry. But the Unique Selling Point of Alibaba is its image of being the world's largest retailer.
Similarly, the firm is also the biggest venture capital firm along with an investment corporation that leads among such organizations in the world.
FAQs
What is Alibaba?
Alibaba is a leading Chinese e-commerce conglomerate connecting small merchants with global customers through platforms like Alibaba.com, Taobao, and Tmall.
When was Alibaba founded?
Alibaba was founded on 28 June 1999. It was founded by Jack Ma and his 17 friends and students in his apartment situated in Hangzhou.
What are the revenue streams through which Alibaba earns money?
Alibaba earns money through transaction fees, commissions, advertising, and subscription services.
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