Diving into the SWOT Analysis of Alibaba – China’s Largest Global E-commerce Platform

Recently we examined the SWOT Analysis of Target, a leading American retailer. In this article, we will tackle the SWOT Analysis of Alibaba.

Alibaba is a 24-hour online website where customers can search, analyze, compare and buy products. It is a leading e-commerce website in China and is gradually gaining attraction and popularity globally. Alibaba was called one of the most valuable tech companies in the world after raising $24 Billion.

Due to Alibaba’s effective marketing strategies, they have been able to target specific areas and reach a large customer base. In today’s time, one of the most effective and successful forms of marketing is Digital Marketing. Attend our Free MasterClass on Digital Marketing 101, hosted by Karan Shah, CEO and Founder of IIDE, to discover more about today’s effective marketing. 

Before we go into the SWOT Analysis of Alibaba, let’s have a look at the company, its history, financial situation, products, and rivals.

 

About Alibaba

 

Alibaba Group, aka Alibaba.com, is a Chinese multinational technology corporation specialising in e-commerce, retail, the Internet, and technology. It was established during the late 1900s by Jack Ma. The company owns and manages a diverse portfolio of companies all around the world.

This company began with 18 people under the leadership of Jack Ma. The Alibaba founding group came from humble origins in a tiny apartment in Hangzhou, China. After noticing the significant gaps in China’s internet e-commerce arena, the group began developing their idea of an eCommerce platform that could service China’s internet users efficiently. 

This company deals with consumer-to-consumer (C2C), business-to-business (B2B), business-to-consumer (B2C) via website. 

 

Products of Alibaba 

Alibaba holds its position in the market by selling the following – 

• E-commerce
• Cloud computing
• Artificial intelligence
• Entertainment
• Mobile commerce
• Retail
• Mobile media
• Films
• TV shows

 

Competitors of Alibaba

Alibaba is in constant competition with the following companies – 

• eBay
• Amazon
• JD (Jingdong)
• Walmart
• Shopify

 

SWOT Analysis Of Alibaba

 

SWOT Analysis is formulated to obtain a strategic and detailed framework that is used by a brand to identify its strengths, weaknesses, opportunities, and threats (SWOT). This analysis will help the brand to determine its strategies, policies, and competitors. 

Alibaba SWOT Analysis can be analyzed by the following points:

 

1. Strengths of Alibaba

The strengths determine the qualities that separate the company from the competitor. The skilled and knowledgeable staff can be called strengths of a company. Tangible assets like intellectual property, capital, and advanced technology are additional strengths of a company.  

 

• The scale of Operations – Alibaba has a vast scale of operations which include major markets and upcoming markets. Alibaba is a company originally from China that is very populated and has an enormous market. These all contribute to the factors which will help increase profits for the company.
• Market Share – In 2020 Alibaba had a market share of 69% in China while its closest rival’s market share was 12%. The market share dominance comes from the solid manufacturers who are exceptionally talented and skilled who supply their products globally at a mass level.
• Visionary Leader – Alibaba has the presence of a visionary like Jack Ma. A visionary leader always states their goals, plans strategies, and outlines plans to achieve those goals. Jack Ma has brought massive success to this company with the help of the vision he set at the start of building this company.

• Strong Innovation – Alibaba’s growth strategy is built on a foundation of strong innovation. Alibaba’s go-to-market strategy, which is based on innovation, provides efficiency in its entry. Alibaba typically gains a competitive edge through developing innovations that reduce the company’s expenses, allowing it to undercut its competitors.

 

2. Weaknesses of Alibaba

Weakness is determined when a company lacks in a particular area or field. Following are the areas Alibaba requires to work on –

 

• Many Sellers – Alibaba has numerous sellers who market their products on their website which has resulted in online competition between sellers. A seller will be unmotivated if their products are not earning them profits because of the competition. Due to this reason, many brands have pulled their products from Tmall and Taobao that are the website from Alibaba

• Over-dependent on the Chinese Market – The majority of users are in the Chinese market. Alibaba must seek European and North American markets to increase its base. Estimated retail sales of international commerce were 5% which is less considering the company’s existing infrastructure and free flow of cash.

• Increase in counterfeit goods – China is known to produce counterfeit products in abundance. The country is very lenient on laws regarding patent protection and forged technology and products. It leads manufacturers to copy goods to make forged goods and sell products for lesser value and lesser quality.

• Hectic work schedule – The CEO of the company Jack Ma strongly believes that having a job is a privilege and that an employee must feel honoured that the company has given such an opportunity. The mentality is maintained in the entire administration and policies. Jack Ma strongly advocates a 72- hour workweek that might be difficult for employees who have a family.

 

3. Opportunities for Alibaba

Opportunities lead to an emerging need for the particular product or when you get good media press this will help to increase brand awareness.

 

• Global demand for e-commerce – Due to the COVID pandemic, there was an increase in the use of global eCommerce. Alibaba used this pandemic to its advantage to capture the markets. The extreme changes in technology in developing markets have led to an increase in website traffic. 

• Increased population in China – China has an enormous population which leads to raising income within the country. The middle class is growing at a faster rate which offers the middle-class people to purchase more online.
• Cloud Computing – Alibaba’s cloud computing platform has generated $2.47 billion in revenues. In China, there are  800 million users that are a vast amount of data stored, processed, and analyzes. With the help of advanced technology, this company has been doing a good job.

 

 

4. Threats to Alibaba

When there are new emerging competitors in the market, changes in the regulatory environment, poor media coverage, brand switching are the various threats observed. 

 

• Declining population – China has a fertility rate that is less than 1.5 children per mother. It has resulted in a declining population. A source estimated that India might overcome the population size of China in the next ten years.

• Shortage of skilled workers – When skilled employees are available it leads to profitability and leads to profitable operation. When constraints are on development it will be difficult for Alibaba to expand in other marketplaces.

• Tough competition – Alibaba has created effective e-commerce in China. It is the leading e-commerce in China with an incredible growth market, and due to this factor, many entrants aspire to enter the market. It will lead to competition.

• Fake products – Alibaba constantly continues to face the battle to fight counterfeit goods. These forged goods ruin the reputation and trust of the consumers who are using the website.

 

With this, we come to the conclusion of the SWOT Analysis of Alibaba. Let’s briefly summarise the takeaways of this case study.

 

Conclusion

 

Alibaba has established a strong stance in the e-commerce market with their large scale of operations, innovative ideas, distributions strategies and strong market share. Even though there are counterfeit items being sold and their main market force is China, they still are preferred by many all around the world. China being the second most populated country is alone their major source of income. 

With a strong digital marketing presence Alibaba can reach various countries while benefiting from the cost-effectiveness of digital marketing through multiple channels like SEO, emailing, content marketing, and social media marketing.

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For additional in-depth corporate research, see our IIDE Knowledge site. Thank you for reading, and please share your opinions on the case study in the comments box below.