Retail Management and Merchandising
What motivated Alibaba Group to enter into the customer retail market with the
Taobao launch? Is that meaningful?
The group Alibaba has a significant footprint throughout China and it certainly justifies its purpose for diversification into the consumers retail market. The corporation realised that Alibaba’s expanding rivalry would harm its market share and domination in China and that the correct measures were necessary to maintain its position. eBay became a dominant power in China’s corporate market slowly and safely (Hafner and Stone, 2006). Jack Ma saw that in the future, eBay can be a major force, with a chance to influence Alibaba’s operations and to affect market share. The idea was built on the creation of a well-defined culturally-closed C2C platform to help satisfy consumer demands, without paying for services (Lu et al, 2007). Taobao’s introduction was based on a notion of expanding the local market share in behalf of Alibaba Group of companies and promoting market competitiveness. Jack Ma also acknowledged that eBay was successful in recognising the value of online channels and concentrated more on preserving Alibaba’s interest in a well business strategy, with a goal to promptly introduce Taobao, so that consumers prefer eBay could receive attention (Chua, 2008).
How was Taobao beating eBay?
Taobao has certainly been founded on a well-planned plan. eBay. The explanation is Jack Ma’s strategic mentality. He has been monitoring the expansion of eBay since long and has been assured that eBay will become a big influence on the Chinese markets, if not prevented. Taobao realised and leveraged various loopholes against eBay. For example, the management realized that Chinese people love colourful sites that are noisy with multiple navigations (Chua, 2008). `
Taobao also realised that Chinese buyers prefer an appealing design to the West rather than a simple one. Taobao also understood that China’s local values concentrated more on the “trust” component that Taobao skillfully employed (Zhangxi et al. 2005). The organisation has concentrated more on increasing the confidence factor between sellers and buyers. eBay never used feedback and reputation until Taobao suggested that both customers and merchants use feedback. The main objective of the organisation was to use Alipay to increase the mutual trust between customers and suppliers. For example, buyers and sellers were not protected by a secure payment mechanism before the adoption of Alipay and payment problems were not sent (Shuang et al. 2007). Taobao has successfully strengthened interaction between market participants and basically worked on the option of paying zero fees for membership and company. By the end of 2007, Taobao won an outstanding market share and was considered as an industry leader. On the whole, the rise of eBay as an industry leader in China was strongly promoted, although some beneficial strategy was put out in the form of strong cultural values and associated business ideas affecting customer thinking and beliefs (Shuang et al, 2007).
Does Ma have to implement Zhao Cai Jin Bao? Why not? Why or why not?
“Zhao Cai Jin Bao,” which means “brining riches and riches,” should be implemented by Jack Ma. The reason for this proposal is the monetisation of Taobao’s business model. Initially, Jack Ma felt that consumers should be doing business while generating money, and when consumers get habituated to the business model, they should make money (Hafner and Stone, 2006). This approach was built on the idea of recruiting, retaining and increasing the commitment factor (Chua, 2008).
There is just no doubt that it was really tough and unexplored to ranking bids and make money. The organisation was unable to identify whether or not the proposal proposed was successful (Lu et al. 2007). The question in 2004 was whether eBay or Taobao could sustain their market share and raise their market value via profit. There is little question that the business model has never been suggested to make cash but rather as a strategic vision to compete with eBay in order to build customer base and values (Shuang et al. 2007). If Taobao has succeeded in generating commercial value and the consumers will probably use the services given, it is vital to commercialize the business strategy. The idea of monetisation looks reasonable and unquestionably rational because it will contribute to the future growth of the company (Hafner and Stone, 2006). The hybrid model that suggests Google and eBay combination could provide more commercial benefits in the market. Initial observations and outcomes are however crucial in influencing net monetisation processes.
Hafner, K, and Stone, B, 2006. “eBay Is Expected to Close Its Auction Site in China,” New York Times, 19 December
Lu J, Zhigang T, and Chan, I, 2007 “eBay’s Strategy in China: Alliance or Acquisition?” University of Hong Kong case HKU701, 27 November 2007.
Chua, R, 2008. Michael Morris and Paul Ingram, “Guanxi versus Networking: Distinctive Configurations of Affect- and Cognition-based Trust in the Networks of Chinese versus American Managers.” Journal of International Business Studies, forthcoming.
Zhangxi Lin and Jun Li, 2005. “The Online Auction Market in China: A Comparative Study between Taobao and eBay.” ACM International Conference Proceeding Series 2005 (113): 123–129.
Shuang Li, Jing Luo, Jian He and H.J. Cai, 2007. “Trust Build-up in Online Transactions.” Wireless Communications, Networking and Mobile Computing, 2007: 3513–3516.