page contents

Alibaba SWOT Analysis: The Chinese E Commerce Giant 

Alibaba.com is a very well known brand and is involved in acting as an intermediary for consumer to consumer, business to consumer and business to business e-commerce.

This name has a very stronghold in China and is now looking to expand to other countries by acquisitions and also setting up its own name in foreign land.ver

Key Figures on Alibaba the Chinese E Commerce Giant 

Alibaba Group had an excellent quarter and fiscal year, driven by robust growth in our core commerce business and investments we have made over the past several years in longer-term growth initiatives,” said Daniel Zhang, Chief Executive Officer of Alibaba Group. “With the continuing roll out of our New Retail strategy, our e-commerce platform is developing into the leading retail infrastructure of China. During the past year we also doubled down on technology development, cloud computing, logistics, digital entertainment and local services so that we are in a position to capture consumption growth in China and other emerging markets.”

“Fiscal 2018 culminated with a quarter we are very proud of. Full year revenue grew 58%, core commerce revenue grew 60%, with profit growth of over 40% and annual free cash flow of US$15.8 billion,” said Maggie Wu, Chief Financial Officer of Alibaba Group. “Looking ahead to fiscal 2019, we expect overall revenue growth above 60%, reflecting our confidence in our core business as well as positive momentum in new businesses. We expect our new growth initiatives will drive long-term, sustainable value for our customers and partners and increase our total addressable market.”

The statistic shows the annual revenue of the Alibaba Group from 2010 to 2018. In the fiscal year ending March 31, 2018, Chinese e-commerce corporation Alibaba recorded consolidated revenues of 250.3 billion yuan. This translates to approximately 39.9 billion U.S. dollars.

KEY OPERATIONAL METRICS*

 

March 31, 2017 December 31, 2017 March 31, 2018 % Change
YoY QoQ
China Commerce Retail:
Annual active consumers(1) (in millions)45451555222%7%
Mobile monthly active users (MAUs)(2) (in millions)50758061722%6%

 

 

Strengths in the SWOT analysis of Alibaba

 

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 no mean feat. This kind of a success story is sure to go a long way in scripting Alibaba’s growth trajectory.

Market Share

As of 2015, Alibaba had a market share of 58% in China and its closest rival was far away at 22%. One of the major strengths of China is that this market share dominance comes because of the backing of solid manufacturers who are capable of manufacturing at mass levels and supplying across the world.

Visionary Leader

Strength, though qualitative in nature, is the presence of a visionary like Jack Ma at the helm of the company. 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.

Good relationship with partners

Alibaba also provides a very conducive environment to all those who participate in scripting its success. Merchants, Consumers, third party dealers etc. all get access to financial schemes, scalable platforms, cloud storage and real time access to all information. This makes it very attractive for more and more partners to join hands with Alibaba.

 

Weaknesses in the SWOT analysis of Alibaba

High discount driven business model

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.

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.

Opportunities in the SWOT analysis of Alibaba

Aggregator based model

Its aggregator-based model helps it reduce costs and keep its operations lean. This also presents an opportunity to replicate the model in other markets.

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.

Threats in the SWOT analysis of Alibaba

Flipkart & Amazon in India

If Alibaba is looking to expand its operations to other countries, particularly to India, and 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.

Price of commodities

Increasing price of commodities will result in further increase in the price. Further increase in price will result in decrease in sales, margins & brand switching.

Overall rising competition

Other entities like Tencent and JD.com are local competitors     to Alibaba in China while Amazon and eBay are the global 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 dire situations.

 

Download the DW App

error: Content is protected !!