1. The Alibaba Group and the O2O Sales
A Case study on The Alibaba Group
Group-5
● Ratan Kumar
● Nikhil Nandyala

2. Alibaba Group (Overview)
● Chinese e-commerce company founded in 1999 in Hangzhou,china.
● It is a wholesale, C2C and B2C marketplace concentrated mainly in
china.
● Mission Statement : Making it easy to do business for everyone ,
anywhere.
● Accounts for nearly 80 percent share in china’s online sales in 2015.
● Raised $22.8 billion on the NYSE making it the world’s largest IPO.
● In 2006 it started developing its online to offline(O2O) business.

3. Alibaba Group (Services)
● Retail Marketplaces
○ Taobao (C2C)
○ Tmall (B2C)
○ Juhuasuan(B2C and C2C)
○ AliExpress(B2C)
● WholeSale Marketplaces
○ Alibaba.com(B2B)
○ 1688.com(B2B)
● Online payment Service Provider
○ Alipay

4. Alibaba’s Retail Marketplaces
● Taobao
○ C2C online shopping portal launched in 2003
○ Accounts for 95 percent china’s C2C Market GMV
○ Repeated improvement with 10 million sellers in 2018.
○ Alibaba’s Signature brand (70 percent share in it’s retail market)
● Tmall(Taobao Mall)
○ B2C online shopping portal launched in 2008
○ Accounts for 57 percent china’s B2C Market GMV
○ Designed for reputed brands to sell their products
○ Better Quality and customer protection compared to Taobao

5. Alibaba’s Retail Marketplaces
● Juhuasuan
○ Flash sales website with deep discounts on merchandise and services
○ Concentrated mainly by Tmall Merchants
○ Marketing platform for Tmall and Taobao
○ Directed to Tmall or Taobao for transactions.
● AliExpress
○ Retail Marketplace for consumers outside china
○ Connects other country buyers with chinese goods manufacturers.

6. AliPay:
● Third Party online payment service provider
● Major payment method on Alibaba’s marketplaces(settling over 78 percent of
Alibaba’s GMV)
● Provides Escrow services
● Later transformed to Alipay wallet.
● Also offers other financial solutions like funds transfers, microfinance etc.
● Has 100 million registered users on Alipay wallet handling 80 million
transactions per day.

7. Alibaba Group -Value Proposition:
● Value and Variety(Retail Marketplaces)
○ Sells everything from popular merchandise to long tail.
○ It has a large number of sellers providing customers with competitive costs.
● Connectivity /Convenience:
○ Connects small enterprises with large international & domestic consumers and
vice versa
○ Low cost for sellers & companies to set up an online store compared to physical
stores
○ Global B2B connectivity for small chinese manufacturers.
○ High Quality services in lower tier areas with inadequate network infrastrucute

8. Alibaba Group -Value Proposition:
● Reliability/Trust :
○ Provides Escrow services for transactions where money is transferred to
the sellers only after customer purchase satisfaction
○ Feedback and ratings from customers for products
○ Very low product mishandling when compared to others.
● Customization :
○ Enables customers to find products from different categories such as
design,brand etc

9. Alibaba Group -Revenue Model :
● Marketing Revenues :
○ Major revenue stream with 59 percent in company’s total revenue.
○ Pay for Performance
■ Sellers bid for keywords in an online auction system for search in Taobao and
Tmall on pay per click basis.
○ Display Advertising
■ Sellers bid to place advertisements in all of alibaba platforms
● Commissions:
○ Second Major revenue stream with 24 percent in total revenue
○ Sellers pay up to 0.3-0.5% commission for transactions settled through Alipay
● Other minor revenue streams are through subscription for wholesale market places.

10. Alibaba Group -SWOT Analysis:

11. Strength :
● Huge Market Share (58 percent vs 22 percent)
● First movers advantage(Blue Ocean)
● Rising chinese economy leading increasing consumer spending
● Faster internet services and falling data services cost.
● Good relations with partners i.e. Merchants and Third party
dealers
● Difficulty of Foreign companies to enter in to chinese markets
due to regulations.
● Backed by the Chinese Government

12. Weakness :
● Too many sellers leading to more competitive pricing
which may lead to lesser profits for sellers
● Over dependence on chinese market
● Failed to do well in other markets
● Political Issues

13. Opportunities and Threats
● Opportunities:
○ Newer available markets in less established developing south
asian countries and african countries.
○ Increasing its market penetration in rural chinese areas
● Threats :
○ Increasing International Tariffs affecting it’s international sales
and indirectly its domestic sales
○ Intense competition from companies such as Tencent in china
and competition from amazon in other markets.

14. O2O(Online to Offline) Business
● Finding customers online and directing them to offline stores.
○ Example: Ola ,Uber ,Zomato ,Oyo
● New form of E-Commerce rising in this decade with potential
Trillion dollar market share.
● Online component of O2O made offline services measurable,
and efficient.
● More direct form of revenue for businesses when compared to
other online services.

15. Alibaba’s O2O Strategy:
● Major Player in the O2O market
● Used Map services and other subsidiaries to migrate offline
customers to online platforms which connects them with offline
merchants.
● Alipay enabled cash flow for such transactions while other
platforms provided information flow
● Launched Taobao Life to enable this strategy which dealt with
local lifestyle services.
● Partnership with advertising companies which redirected users
to alibaba websites using QR codes

16. Alibaba’s O2O Mobile Applications:
● Due to higher engagement levels in Mobile Commerce O2O
expanded it’s O2O Platforms.
● Launched Taodiandian an app to food ordering and delivery.
● Partnered Taxi-hailing app Kuaidi Dache and integrated this
application in to Alipay.

17. Alibaba’s O2O Important Components:
● AliPay :
○ Backbone to all its O2O mobile platforms
○ 80 percent share in mobile payments
○ Infrastructure to incorporate various mobile applications
● Autonavi (Map Services):
○ Acquired by Alibaba in 2014
○ Location based searches leading to location based services
○ Connects location based searches with Taodiandian Offline
network

18. O2O Market -Opportunities
● Brick and Mortar Partner :
○ Introduce O2O strategy for much more Traditional
merchants.
○ Introduce new features like BigBasket to this platform.
○ Partnership with retail giants like Intime

19. O2O Market -Challenges
● Fierce Competition :
○ Major challenger is Tencent
○ Tencent has 500 million active users in Wechat.
○ Tencent integrated it O2O strategy in to Wechat.
○ Alipay vs Tenpay(48 percent vs 19 percent)
○ Price War for acquiring O2O apps
○ Tencent Partnered with Baidu and Wanda posing a
huge threat to Alipay.

20. Q1:Explain The Alibaba Business Model ?

21. Q2: Why did Alibaba buy Autonavi and What is
Alibaba aiming to achieve with Alipay ?
● By bringing Autonavi under its wing and incorporating Taodiandian
it used this map services as gateway to location based local
services.
● As location based searches often lead to transactions it had high
success rate in O2O markets.
● Alibaba aims to enter in to international markets using AliPay.
● Alibaba is entering in to micro lending to consumers in AliPay Wallet.
● Partnering with traditional physical store chains to incorporate Alipay
in to their payment system.

22. Q3: What is GMV metric? Is there any reason why
Alibaba would favor this metric?
● Used by e-commerce businesses
● Measure of total sales transacted through their platforms.
● It is calculated prior to deduction of any fee or transactions, excludes
discounts, gateway payment, and marketing costs etc.
● Indicates usefulness of site in selling merchandise.
● Merchandise returns may need to be removed from this number to provide
an accurate calculation.
● Since retailers may or may not be producers of the goods they sell,
measuring the gross value of all sales provides insight into the company’s
performance.
● Provide value to Alibaba in the consignment sector

23. Q4. How does Alibaba differ from Amazon, eBay
or any other company that may seem similar?
● Does not engage in direct sales
● Taobao acts as free marketplace where neither sellers or buyers are charged
for completing transactions.
● Alibaba generates revenue based on several source
○ Fees determined by the number of units sold in its retail centers and the
number of paying members in its wholesale centers
○ Fees from its online marketing and internet infrastructure services
○ Commissions from Alipay transactions, Alibaba’s third party online payment
solution
○ Membership fees from its storefronts.

24. Amazon Alibaba eBay
Holds Inventory Yes No No
Advertising Services Yes Yes Yes
E- Payment Service No Alipay PayPal
Direct Sales yes No No
Manufactures
Proprietary Goods
Yes (Kindle/Fire) No No
Membership Fees Yes (Prime) Yes No

25. THANK YOU