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Prestige Institute of Management and Research,

Indore
(An Autonomous Institution Established in 1994, Accredited Twice
Consecutively with Grade ‘A’ NAAC (UGC) ISO 9001: 2008 Certified
Institute, AICTE / UGC Approved Programs affiliated to DAVV, Indore)

(Session 2018 – 2019)

Summer Internship Report

On

“INDUSTRY ANALYSIS ON ALIBABA”

GUIDED BY SUBMITTED BY

Prof.Sharda HAryani Tanay Soni

Faculty PIMR BBA V Sem

Roll No.160426

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Date: /08/2018

CERTIFICATE FROM FACULTY MENTOR

This is to certify that Mr. Tanay Soni has completed his SUMMER CORPORATE RELATION
PROGRAMME-2018 under my supervision.

His conduct was good and I wish him best luck for his future endeavor.

FACULTY GUIDE:

Prof.Sharda Haryani

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Acknowledgement

I am privileged to be provided with the opportunity of conducting an industry analysis as a part


of my Internship Programme.

I sincerely thank Sharda Haryani mam without whom this analysis could not have been carried
out. She has not only served as my project guide but also has encouraged and challenged me
throughout my academic program never accepting nothing less than my best efforts.

I am also thankful to Dr. R.K. Sharma, Director PIMR UG and Dr. Manish Joshi, Coordinator
Summer Internship for providing me this opportunity.

I am also thankful to all my friends and faculty members who guided me in this industry analysis

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Index

S.No Particulars Page No.

1. Title of Summer Corporate Relation Program

2. Objective of selecting Summer Corporate Program

3. Detailed information of the organization selected

4. Attendance Sheet

5. Overview

6. Area of analysis

7. SWOT analysis

8. Challenges faced by the Industry

9. Learning by the student

10. Recent trends in the Industry

11. Scenario of National/International level

12. Conclusion and suggestions

13. References

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TITLE OF SUMMER CORPORATE RELATION PROGRAM SELECTED

ALIBABA

SUMMER CORPORATE RELATION PROGRAM OPTION SELECTED

INDUSTRY ANALYSIS

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Objective of selecting Summer Corporate Relation Program

 Understanding how industry structure drives competition which determines the industry’s
profits.

 Assess industry’s marketing strategies that attract customers towards it.

 To assess the domestic and global position of the company in the market.

 Exploring probable opportunities that the company can capitalize on and grow their
business.

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Detailed Information

1. Name of the Organization :- Alibaba

2. Address :- HangzhouZhejiang, China

3. Contact No. :- (+86)57188158198

4. Email :- Alibaba.com

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Attendance Sheet

S.No Date Time Work Signature of Remarks if


progress of faculty any
SCRP 2018 mentor

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Overview

Alibaba is a Chinese multinational e-commerce, retail, Internet, AI and technology conglomerate


founded by Jack Ma with 17 other peoples in 1999 that provides consumer-to-consumer,
business-to-consumer and business-to-business sales services via web portals, as well as
electronic payment services, shopping search engines and cloud computing services. It owns and
operates a diverse array of businesses around the world in numerous sectors, and is named as one
of the world's most admired companies by Fortune.

With operations in over 200 countries, Alibaba is the world's largest retailer, one of the largest
Internet and AI companies, one of the biggest venture capital firms, and one of the biggest
investment corporations in the world.

Basically, Alibaba is a conglomerate of 3 major web portals :- Alibaba.com, Taobao and Tmall.
Other than them Alibaba also has 7 more subsidiaries which include AliExpress, 1688, Alimama,
Alipay, Alibaba Cloud, Ant Financial, and Cainiao Network. All these subsidiaries are so well
integrated that they make the Alibaba group a big ecosystem.

Initially, Alibaba was made for all the small and medium sized retailers or businesses across
China to help them in growing their bussiness. Gradually they started their operations overseas
and are now active in more than 200 countries.

The 7 subsidiaries contribute heavily when it comes to managing the business operations of
Alibaba. Their importance can be assessed by the functions they carry out to help Alibaba :-

• Alimama:- It is the biggest open marketing platform in China. It acts like the Adsense in
China. This online advertise trade platform for both publisher and

advertiser lets advertisers from purchase content-based PPC advertising plan or banner or
text link based on cost per impression or cost per time.

• AliExpress :- It is a global retail marketplace that enables consumers from around the world
to buy directly from manufacturers and distributors in China. It allows consumers from

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countries like Russia, USA, Spain, Brazil, France, UK, etc, to shop directly from Chinese
businesses.

• Alipay :- It is a third-party online payment platform to assist buyers with their transactions. It
is an eWallet platform just like Paytm in India which helps shoppers store funds and use the
stored funds securely with an ease to transact online and offline.

• 1688.com :- It was launched by Alibaba in 2010 primarily for targeting the wholesale
business segment within China. The company reportedly hosts more than 500,000 quality
suppliers offering over 150 million different types of products.

• Alibaba Cloud :- It began as a private cloud to serve the internal demands of Alibaba’s e-
commerce businesses. It is a global cloud computing company that provides various cloud
computing services: elastic computing, object storage, relational database, big data analysis,
and artificial intelligence. It operates in eight geographical regions around the globe.

• Ant Financial :- It is the most valuable fin-tech company in the world that brings inclusive
financial services to the world. The company operates Alipay, the world’s largest mobile and
online payments platform.

• Cainiao Network :- It is a Logistics data platform operator dedicated to meeting the current
and future logistics demands of China’s online and mobile commerce sector. The company
has taken a collaborative approach to logistics and aims to realize delivery anywhere in
China within 24 hours, and across the globe within 72 hours.

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Area of Analysis : Marketing

Marketing mix of Alibaba :- 4 P’S

1. Price :- Like any other portal, Alibaba has a very lenient pricing and its commission are
very low to allow businessmen to do their own business. This is the reason that Alibaba
has reach such great heights so fast. Due to the low cost nature of Chinese products, it
can be said that Alibaba has penetrative pricing.When compared with the hefty fees that
Amazon or other portals charge to their sellers, Alibaba has a very nominal fee and hence
it can be said as penetrative pricing.

2. Product :- The primary product in the Alibaba group is their E-commerce portal –
Alibaba.com. This portal has the distinction of being the world’s largest business to
business portal. Where Amazon and other E-commerce portals sell business to consumer,
Alibaba captured the business to business market and is currently the leader.
Alibaba, through its other service – Aliexpress.com also provides smaller buyouts for
small businesses as well. The major advantage of Alibaba.com as an E-commerce portal
is that it can export to 240 countries, thereby immediately giving it the reach to have a lot
of revenue turnover.

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3. Place :- Alibaba has far and wide reach across the world. It recently entered US with an
IPO and is also building its teams in various countries of Asia. One of the major
advantage of Alibaba is that it hails from China, where bulk manufacturing is done. There
are exporters ready to do business and there are importers ready in other countries who
want to import things. Thus, it is a win-win situation for both.

4. Promotion :- Alibaba is known to heavily promote its E-commerce portal digitally.


Naturally, as most of the services are digital, across the world digital ads are shown.
Within China, Alibaba promotes the portal above the line as well as below the line. It
uses Hoardings, digital advertising and sales promotions to advertise below the line. And
in Above the line, it uses television, print as well as radio.

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Working Model of Alibaba :-

The working of Alibaba along with it’s various subsidiaries is a successful marketing
model in itself. Alibaba effectively stitches it’s subsidiaries to promote itself in the
market.
Alibaba mainly operates on it’s major three subsidiaries : Alibaba.com, Taobao, Tmall.
They work on the following way:-

 Alibaba.com :- Alibaba.com was launched in 1999. It is a business-to-business trading


platform, connecting manufacturers from countries such as China, India, Pakistan, the
United States, and Thailand with international buyers. Merchants can list their products
for free on Alibaba.com, but also have the option to pay for a range of benefits such as
greater exposure on the site and unlimited product listings.

 Taobao :- Taobao.com has grown to become China's largest shopping website and is
ranked the ninth most popular website in the world. Launched in 2003, Taobao lists
hundreds of millions of products and services from millions of sellers. Taobao doesn't
charge transaction fees and the site is free to join for merchants, a policy which helped
the site gain its enormous user base in China.

 Tmall :- mall.com, launched in 2008, offers a wide selection of branded


products oriented towards China's growing middle class. While Taobao
caters more to small merchants and individuals as sellers, Tmall is focused
on larger companies, including multinational brands such as Nike, Apple
etc.

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After marketing analysis of Alibaba we will now look at an elaborated view of it’s various
marketing strategies. It uses vast array of marketing strategies to reach it’s desired objectives.
Here are some of the strategies used by Alibaba and their respective results on it’s business.

 Networking :- Alibaba mainly focuses on connecting it’s consumers to various certified


suppliers which are already enrolled with Alibaba. It tries to connect each and every
small and medium supplier to the customer so that they transact at the minimum price
possible with quality products and services.
This has helped Alibaba immensely in acquiring a big pool of suppliers and consumers.
The number of shoppers in the month of July 2018 were 552 million. That’s huge!!

 Attractive membership for suppliers :- Alibaba provides it’s suppliers with the option
of joining via 2 types of membership schemes :

1. Free supplier membership :- Suppliers on Alibaba do not need to pay anything to


list their goods on the online marketplace. They are free to display up to 50 Products
online and to get business inquiries. Alibaba only makes money from them in the
form of commissions if the money is paid through Ali Pay and the seller is from
mainland China.

2. Premium gold supplier membership :- There are limitations to being a free


supplier member of Alibaba as these suppliers are not verified (reduces buyer’s
trust) and are only able to display up to 50 products on the website. The suppliers
from China can’t even list themselves as free suppliers and have to buy the premium
gold supplier membership plan to start a business on Alibaba.com.

These two supplier membership helped Alibaba to attract more than 5 lakh suppliers to Alibaba.

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 Singles Day :- Call it the anti-Valentine’s Day. The date 11/11 is significant because of
the implications of the number 1. And it was originally meant for people who wanted to
celebrate being single. Though, much like Amazon’s Prime Day, it has turned into more
of a retail event.In the year 2016 Alibaba grossed $17.8 billion in sales on Singles Day.

 Value added services :- Alibaba provides various value added services to both it’s
consumers and suppliers. Instant messenging services , mobile business applications and
various CRM strategies to read the consumers preferences and allocate theie resources in
accordance to their needs.

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SWOT ANALYSIS

As a tech giant Alibaba thrives on it’s experience and immense abilities. It has many
strengths and opportunities to grow it’s business continuously but even the best in field
too have some weaknesses and external or internal threats that they cannot avoid.
Alibaba’s SWOT Analysis tells us about this four important aspects that impose a great
effect on it’s business operations.

Strengths :-

 Scale of operations :- One of the first strengths of Alibaba that come to my mind is the
sheer scale of operations and the market which it majorly operates. China is the most
populated country in the world and is one of the leading economics and to have a strong
hold in such a market and be a market leader is not an easy thing.

 Good relationship with partners :- Alibaba also provides a very conducive environment
to all those who participate in making it successful. Merchants, Consumers, third party
dealers etc. all get access to financial schemes, cloud storage and real time access to all
information. This makes it very attractive for more and more partners to join hands with
Alibaba.

 Visionary Leader :- Another strength, though qualitative in nature, is the presence of a


visionary like Jack Ma. We all have heard the visionary ideas of Steve Jobs and many
often attribute Apple’s success to him. It’s important to have an iconic founder/leader
who can lead from the front and Jack Ma’s popularity and visions for the company are
not letting them down on this count.
 High level of customer satisfaction :- The company with its dedicated customer
relationship management department has able to achieve a high level of customer
satisfaction among present customers and good brand equity among the potential
customers.

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 Strong Free Cash Flow :- Alibaba has strong free cash flows that provide resources in
the hand of the company to expand into new projects. Given that Alibaba is a company
with huge cash in hand which helps it to grow in areas where it wants.

 Superb Performance in New Markets :- Alibaba has built expertise at entering new
markets and making success of them. The expansion has helped the organization to build
new revenue stream and diversify the economic cycle risk in the markets it operates in.

Weakness :-

 Way too many sellers :- Alibaba is not putting a cap on the number of sellers who
register to partner up with the company. This has resulted in a huge number of sellers
competing in the online market place. While this is good for the buyers, it might not be so
good to the buyers. Not being able to taste success because of the huge competition will
make the sellers withdraw from the contract.

 Very high discounts :- Not being able to allow sellers to sell at fair and profitable prices
is another weakness that the company has. It makes most of its revenues by selling
advertising spaces for the sellers. The sellers are being suppressed now and do not have
the freedom or opportunity to sell at profitable rates.

 Over dependence on Chinese economy :- Alibaba is the biggest player in China in it’s
own industry. It has around 9 million sellers registered on it’s website and crosses the
annual sales of Amazon and Ebay combined only in China itself. But this dependence of
Alibaba on Chinese market is proving to be very fatal to it. It has faced many backlashes
in the international market for it’s overdependence on the Chinese market.

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 Limited success outside core business :- Even though Alibaba is one of the major player
in it’s industry it has faced many challenges in moving to other products segments with
it’s present work culture.

Opportunities :-

 Experience in China :- The opportunities that Alibaba has in store are immense. Most
of these result from the strengths. Since it has a sound base in the Chinese market and an
in-depth understanding of the e-commerce business, it has immense opportunities in term
of tapping other markets. Thought the Indian market has two dominant players, a big
blown entry by Alibaba sure has the ability to create ripples.

 Rising Investments and demand of E-commerce portals :- Very few E-commerce


portals garner the amount of trust which Alibaba has. Naturally, when Alibaba expands to
a new country, it comes with the years of trust on the brand. And hence, it gives tough
competition to the local e-commerce players. Plus, it has the backing of the
manufacturers.

 Potential of becoming market leader in Cloud Computing :- Alibaba has been a high-
growth stock in recent years, with all revenue streams contributing meaningfully to
overall top line growth. Cloud Computing has been a key contributor to the company’s
revenue growth, with triple digit revenue increases in recent years. As a result, the
contribution of Cloud Computing to Alibaba’s net revenues has increased from 1.7% of
net revenues in FY’15 to 5.4% in FY’18

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Threats :-

 Stability of the economy :- The stability of the Chinese economy will also play a role in
deciding the success of the business. But since almost all of Alibaba’s business comes
from within China, the global markets will have an impact only in terrible situations.

 Alipay may lose global market share due to local companies :- Alipay plays a very
vital role in Alibaba and is as functional in China as Paypal is in USA. But when it comes
to expanding the business operations across the borders of China then Alipay faces great
threat from local companies like Paypal, VISA etc.

 Increasing number of fake products :- There are many sellers subscribed with Alibaba
which sell fake products in the national and international market. Though Alibaba has
devised some techniques to eradicate the fake products from it’s site but till now it has
not worked efficiently to make the changes.

 Flipkart & Amazon in India :- If Alibaba is looking to expand its operations India,
then the biggest threat will be the presence and solidified establishments of Flipkart &
Amazon. The time that Alibaba will take to set up its full functionality will be long and
the two major players of the Indian E-Commerce industry will start adopting new
strategies to ward off competition.

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CHALLENGES FACED BY ALIBABA

 Quality of the products :- The biggest obstacle facing Alibaba in Hong Kong market is
the lack of consumer confidence in the quality of Chinese-made products. Price is the
main selling point for items listed on Taobao, Alibaba's consumer-to-consumer e-
commerce site. Hong Kong consumers usually think that the market is filled with fake
and shoddy goods.

 Low frequency of E-transactions :- Consumers in China tend to be less keen on online


shopping in general, preferring local stores. Given the country’s high population density,
most consumers live within walking distance of large, easily accessible shopping malls.

 Catching up with the customers :- Alibaba faces a big challenge in the form of it’s
competitors. It face a great deal of difficulty in facing Tencent, China’s another E-
commerce giant. In the internatonal it faces difficulty in dealing with industry giants like
Amazon and Ebay.

 Tighter regulations on Alipay :-The company pointed out that regulators and third
parties in China have been increasing their focus to online and mobile payment services,
such as those provided by Alipay.The risk is that Alipay’s business is highly regulated, so
any further clampdown could disrupt the business or increase costs.

 Governments structural control over Internet :- Almost all access to the Internet is
maintained through state-owned telecommunication operators’ and under ministry
regulatory control in China. This means it does not have access to any alternative
networks in the event of disruptions, failures or other problems with China’s Internet
infrastructure.

 Restrictions on foreign exchange :- China has a variety of restrictions on foreign


ownership of businesses. As Alibaba gets most of its revenue from foreign-owned

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businesses, and public in the US, it faces the difficult task of keeping certain sectors of its
business under Chinese control.

 Stumbled in America :- American consumers are e-savvy and with the help from
Amazon and EBay, they are used to a mostly good experience in terms of e-commerce.
They expect many products to be available at a competitive price, they expect two-day
delivery, they know they can trust the order and return the products usually without any
hassle. All this issues resulted in the failure of Alibaba’s American web portal 11 Main.

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Learning by the Student

The summer internship has provided me with the opportunity to study one of the most advanced
and sophisticated company of world business. The ability of the company to connect each and
every thread of it is great.One thing that amazed me the most is the amount of operations that
one can carry out exclusively on Alibaba. One can purchase from its website, one can buy
insurance from its portal, one can pay using its online transaction platform and many more.
Having a visionary leader like Jack Ma adds up to its excellence. Here are some of the key
points that I learned from Alibaba :-

 Start with what you can do and be open to growth possibilities :- Alibaba started with
a simple mission to help the local small and medium level retailersof China and now they
are among the biggest giants of the industry. But in the start the also didn’t had enough
resources. This motivates us to start with whatever we have.

 Future thinking is the key to always moving forward :- Entrepreneurship is the long
game. Success does not come simply just from implementing a wonderful idea today.As
Ma says, "we got successful today not because we did a great job today, but because we
had a great dream 15 years ago”.

 The process determines the success :- Alignment within the company is key to success
and what better than to understand itfrom Alibaba. Their each and every subsidiary is so
well structured that they all help in the companies operations effectively.

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Recent Trends In E-Commerce

 Social Shopping :- Social selling is gaining traction and will continue to grow.
Consumers don’t want to be landing on the companies websites. They want to shop from
their respective social media apps. It is also convenient for the consumers as they need
not jump to the other pages for their shopping.

 Machine learning :- It has proved itself as a visionary aspect to help the retailers gather
data about the needs and preference of their customers. It uses various search history
results and device reading methods to find out the most exact result for customer’s
preferences.

 Voice Shopping :- Voice will gain more prominence in 2018 as voice assistants such as
Google Assistant and Alexa become common devices.Walmart and Google recently
announced a partnership to allow shopping through Google’s voice assistant, Google
Assistant.

 Mobile Commerce :- Past patterns of building an ecommerce site meant creating a


desktop site. From the recent years that process is flipped for many new online retailers.
The primary activity will be on creating a great mobile experience, with desktop being a
secondary focus.

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 Chatbots :- Users often find it more convenient to chat. They like to interact with
someone who can understand them. Chatbots are specifically designed to chat with the
prospective consumers of the respective website and try to understand the consumers
needs and preference. They devise results on the basis of chat that they have with the
prospective consumers and help to provide the best possible product to the consumer.

 Product Customization :- There is a lot of buzz about delivering products which are
made specifically for individual consumer requirements. It is a great tool to find a niche
in the market. Companies are looking for ways to be able to do it online by understanding
the consumers preferences. It includes design customization like size, layout and other
physical characteristics by the consumer on an online platform.

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Scenario of National and International level

With growing economy and digitization in the national and global level, Alibaba is setting up
and is successful in expanding it’s operation all across the globe. Here are the insights of it’s
national and international standings.

National level : India

India is the second most important market for Alibaba globally, next only to China for the
company. India is at a critical point at present and from here we will see sharp upswing in
ecommerce

The company has 4.5 million registered users from India, with the country accounting for the
second-highest paid users on the platform after China. SMEs in India can also avail assistance in
terms of financing, logistics (domestic and cross-border), inspections and certifications,

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technology and SME trade-linked education on this platform. The Chinese company has
partnered with enterprises such as ICICI Bank, Kotak Mahindra Bank, Tally to help Indian
SMEs expand their business.

International level

When we look at the international scenario of Alibaba, it is highly active in the following
regions:-

 Europe
 Middle East
 Hong Kong
 Israel
 Australia
 USA

When we look at the competition at the global level there is only one main company that is
proving to be a threat for Alibaba. That company is Amazon. We can compare this two
companies to exactly assess the impact of Alibaba on the global level.

Alibaba and Amazon have approached new opportunities with different strategies — Amazon
acquires while Alibaba invests. Outside the US and China, Alibaba has taken a minority stake in
twice as many companies as Amazon, while Amazon has acquired 5X more companies than

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Alibaba

The two companies, especially Alibaba, are looking for ways to diversify revenue across different
geographies. They also know how successful a retailer can be if it builds a leading e-commerce
presence and brings a country into online retail.

Now we look at the overall international impact created by both the companies at the international
level then Amazon clearly tops the chart in this category. It has established itself as more
customer satisfying company as compared to Alibaba.

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The data above clearly shows that Amazon is soaring ahead of Alibab in the current year. If
Alibaba wants to get ahead of the Amazon in the international market then it has to find a niche in
the global market as early as possible.

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Conclusion and Suggestion]

Preparing this report has helped me a lot to understand about various marketing strategies used
by Alibaba in running and also successfully expanding its business operations all around the
globe. Its general purpose is to connect all the small and medium scale retailers directly to the
consumers and providing both sets of groups with profits in their own way. Suppliers get their
products sold and earn profits and consumers get their desired products at a low price. Alibaba
also earns their share of commission in their transaction.

They align their marketing in such a way that can attract and at the same time benefit both
customers and suppliers.

Suggestions

Alibaba is working fantastically on its mission to expand and grow to become a better company
each and every day. But sometimes the best in their fields too need to work on some holes. Here
are my suggestions that I think are important to Alibaba in terms of growing their business.

 Rule out fake products :- Alibaba is often criticized of delivering fake products in the
Chinese market. This can be due to the fake supplier trying to sell low quality products
and earn profits. Alibaba need to work on strategies to deal with certain kind of suppliers.

 Mark a dominant global presence :- Alibaba holds over 80% of the Chinese online
retail traffic. But when we come out its shell country we can figure out that it needs to put
strong efforts in marking its presence. In a poll conducted in USA revealed that 90% of
respondents had no clue what Alibaba exactly is.

 Dealing with competitors in India :- Alibaba entered Indian market in 2014. Since then
it has invested around $17 billion in Indian startups. But when we talk about its exact
share in the Indian market it is very low as compared to Amazon and Flipkart. Alibaba
needs to devise various promotional strategies that can help it to give a hold of the Indian
market.

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 Development of the mobile phone platform :- Alibaba’s website was usually designed
for desktop and is one of the best in the industry. But when we talk about its website or
app on the mobile platform it needs some serious data filtration improvements. In today’s
e-commerce market majority of the customers are shopping via mobile phones. So a
effort in this area would pay off handsomely.

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References

 https://www.investopedia.com/articles/investing/062315/understanding-alibabas-
business-model.asp
 https://www.marketing91.com/marketing-strategy-alibaba/
 https://www.feedough.com/alibaba-business-model-how-does-alibaba-make-money/
 https://www.marketing91.com/marketing-mix-alibaba/
 http://fernfortuniversity.com/term-papers/swot/1433/1045-alibaba.php
 https://en.wikipedia.org/wiki/Alibaba_Group
 https://asia.nikkei.com/Business/Alibaba-is-finding-new-challenges-in-entering-the-
Hong-Kong-market
 https://www.ig.com/sg/market-news-and-analysis/highlights-and-market-
themes/2014/07/01/alibaba_s-growing-challenges-17506
 https://www.ukessays.com/essays/marketing/market-analysis-and-strategy-for-alibaba-
marketing-essay.php
 https://www.quora.com/What-is-the-marketing-strategy-for-Alibaba

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